Mad Hedge Biotech & Healthcare Letter
March 9, 2021
Fiat Lux
FEATURED TRADE:
(AN MRNA STOCK TO CONSIDER)
(BNTX), (MRNA), (PFE), (NVS), (SNY), (AZN), (JNJ), (NVAX), (MRK), (BMY), (REGN), (DNA), (CVAC), (FB), (TSLA), (GOOG)
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Mad Hedge Biotech & Healthcare Letter
January 26, 2021
Fiat Lux
FEATURED TRADE:
(EMERGING COVID-19 ALLIANCES)
(CVAC), (PFE), (MRNA), (TSLA), (NVAX), (JNJ), (SNY), (GSK), (BAYN)
Tesla (TSLA) has been sizzling hot for months now, and it looks like its Midas touch has reached the biotechnology world.
It seems that almost everything linked to Tesla achieves success. That could indicate terrific news for a particular biotech: CureVac (CVAC).
CureVac, an under-the-radar biotech stock, is closing in on the leading COVID-19 vaccine developers today.
A differentiating factor it has from the likes of Pfizer (PFE), BioNTech (BNTX), and Moderna (MRNA) is its bonafide tie-in with Tesla. Although it sounds like quite a stretch for an electric car company to have any involvement with a biotech stock, the connection actually makes sense.
Like Moderna and BioNTech, CureVac has also been working on utilizing messenger RNA (mRNA) technology to develop various vaccines and other treatments. If all goes well, this could even lead to finding a way to immunize people against cancer.
Where does Tesla come in?
It all started in 2019 when CureVac was awarded $34 million in funding by the Coalition for Epidemic Prepared Innovations (CEPI).
The goal was to create and eventually build a prototype of an mRNA “printer.” This high-tech tool would be used to produce mRNA doses in areas that suffer from viral outbreaks. It could be used by hospitals to create personalized medicines.
Having an mRNA printer would be groundbreaking in fighting off viral diseases, particularly in remote regions. As expected, this project faced many technology obstacles along the way.
Here’s where Tesla can offer a solution since one of the companies it acquired in the past years is Grohmann Engineering, which specializes in automated manufacturing.
This makes Tesla Grohmann Automation the logical partner for CureVac to turn for help in building its mRNA printer prototype.
What we know so far is that the two companies have been working closely on the project.
It’s only a matter of time before we find out if Tesla’s magic would once again blow our expectations out of the water and we are presented with yet another breakthrough.
Other than its alliance with Tesla in the mRNA race, CureVac has forged another partnership to transform itself into a stronger candidate in the COVID-19 vaccine competition.
CureVac has tapped into the global reach of Bayer (BAYN) to help it distribute its vaccine once it gains approval.
In terms of its own COVID-19 vaccine candidate, CureVac is anticipated to release positive results.
This is because its technology closely mirrors that used by Moderna and BioNTech, which strongly indicates that the efficacy levels could be just as good.
However, CureVac’s vaccine candidate offers a competitive advantage over the others: it doesn’t require cold storage.
This means it would be easier and more convenient to distribute it compared to Moderna’s and Pfizer’s.
It also requires a much smaller dose compared to Moderna’s COVID-19 vaccine candidate. This translates to cheaper manufacturing costs.
CureVac has secured a deal with the EU to deliver an initial 405 million doses for half of the year plus 300 million doses more in 2021 alone. It also agreed to produce 600 million doses in 2022.
Meanwhile, its alliance deal with Bayer indicates that it has secured a powerful distribution partner.
Therefore, we could expect CureVac to leverage Bayer’s global supply network to deliver its vaccines worldwide.
However, CureVac and Bayer are thinking way ahead of 2022.
The alliance formed by the two companies sees to it that the CureVac vaccine candidate would become the strongest contender in the post-pandemic years.
As per Bayer’s projection, the companies estimate 12 billion to 14 billion vaccine doses just to bring this pandemic under control.
Considering that COVID is expected to become an endemic disease, annual or even bi-annual vaccination programs would become the norm.
While Pfizer, Moderna, and AstraZeneca have been well ahead of the vaccine race, the door is still firmly open for other developers like Novavax (NVAX), Johnson & Johnson (JNJ), GlaxoSmithKline (GSK), Sanofi (SNY), and, of course, CureVac to launch their own COVID-19 vaccines.
Only going public in August 2020, this German biotech company already has $18.2 billion in market capitalization.
Its public offering of 15.3 million shares sold at $16 each generated $245.3 million for the company back in August.
By early December 2020, CureVac shares were already being traded somewhere around $150 as investors quickly began to realize the value proposition.
If I am to look to invest in a COVID-19 vaccine developer at this point, CureVac would surely be one of my choices.
Mad Hedge Biotech & Healthcare Letter
January 12, 2021
Fiat Lux
FEATURED TRADE:
(DEFEATING GRIMMER REAPERS)
(PFE), (BNTX), (MRNA), (CVAC)
They say there’s always a light at the end of the tunnel, but what a very long tunnel we’re in right now.
More contagious strains of the SARS-CoV-2 have been discovered in the UK and South Africa, with these new variants threatening to make the situation worse before we even get the chance to try to make things better.
However, there’s still hope.
Just take another look at the leading vaccines developed in response to the COVID-19 pandemic and you’ll realize that we could be nearing the light at the end of this dark road.
In fact, the innovative solutions that emerged in 2020 could serve as beacons of light to illuminate the darker paths that the biotechnology and healthcare sector has been struggling with for decades.
The more we study the effects of the new vaccines, the more it becomes plausible that they could not only be used as weapons to fight off the 2020’s ultimate grim reaper, COVID-19, but also annihilate grimmer reapers like cancer.
Among the vaccine developers that launched their COVID-19 program, the technology used by Moderna (MRNA), Pfizer (PFE) – BioNTech (BNTX), and CureVac NV (CVAC) proved to be the most groundbreaking.
All these utilized the nucleic acids, more commonly known as RNA or mRNA, to create their COVID-19 vaccines.
Traditional vaccines are typically injected into the body to trigger an immune response, which would, later on, be useful in fighting off the live pathogen. The problem with this is that it requires so much time and exposes the vaccines to contamination.
In comparison, mRNA vaccines do not suffer from these setbacks. Basically, these vaccines instruct the body to replicate parts of the virus.
In the case of SARS-CoV-2, the mRNA vaccines tell our bodies to replicate the proteins wrapped around the virus. This way, the body gets to practice on the replicated proteins and prepare for the day when the actual virus shows up in the system.
By familiarizing the body with the genetic makeup of the deadly virus, the mRNA vaccines help us perfect the immune response for when the real thing attacks us—and therein lies the much bigger promise of this technology.
mRNA has the capacity to instruct our cells to create whatever protein necessary, which means it can be applied to fight off other diseases apart from COVID-19.
Researchers since the 1970s have been attempting to shed light on this technique but failed to get traction.
Due to the urgency caused by the pandemic, companies like BioNTech and Moderna have been given practically carte blanche of the funds to finally develop the mRNA vaccines and show the world not only how potent it could be but how quickly we can have it ready compared to more traditional processes.
Now, the technology is gaining more attention because it could finally be the cure to a myriad of diseases including cancer.
These days, we treat malignant tumors by zapping them with radiation or via chemicals. These methods tend to damage lots of surrounding tissues in the process.
Moderna and BioNTech have come up with a better idea.
Instead of blindly zapping in one general direction, they believe that each should be treated as a genetically unique tumor. Therefore, it would be more effective and less damaging to the patients if their immune systems are accurately programmed to attack specific enemies.
This is where mRNA comes in.
Once the antigen is identified, the scientists can determine its unique makeup or fingerprint.
Then, they can reverse engineer its entire cellular instructions to be able to come up with the blueprint that can help them develop an accurate plan on how to target the culprit.
Similar to how Moderna and BioNTech’s COVID-19 vaccines work, the body will then be conditioned to do the rest.
What’s more exciting is that these plans are no longer just ideas.
Both Moderna and BioNTech have been filling their pipelines with drug trials for cancer treatments of the skin, lung, breast, pancreas, prostate, and brain. They’ve been working on mRNA-based vaccines for a wide range of diseases as well including Zika, rabies, and even influenza.
The success of Moderna and BioNTech’s COVID-19 programs accomplished more than just giving the companies a marketable product. It turbo-charged decades-long processes.
Remember, it only took 11 months since the discovery of the SARS-CoV-2 virus for the UK and US regulators to declare that the mRNA vaccine for COVID-19 is not only safely tolerated by people but also effective.
Prior to this, no vaccine had been developed in less than four years. The approval period takes even longer.
That is, COVID-19 inadvertently led to the grand debut and definitive proof of concept of this much-awaited technology.
If you missed out on Moderna or BioNTech’s rally in 2020, buying on the dip is definitely a smart move now.
Mad Hedge Biotech & Healthcare Letter
October 13, 2020
Fiat Lux
FEATURED TRADE:
(THE UNDERDOGS OF THE COVID-19 VACCINE RACE)
(BNTX), (PFE), (CVAC), (PFE), (RHHBY)
It’s about time we talk about the German reinforcements brought in to fight this war against COVID-19.
For all the horror that this health crisis brought us, it’s nearly impossible to believe that there could be an upside to all these.
However, there is a bit of good news here.
Since the pandemic started, efforts to determine its origin, understand how it works, and search for a cure and vaccine have kickstarted innovation across the entire healthcare spectrum – from the familiar pharmaceutical sector to the volatile oft-misunderstood biotechnology field.
In fact, the biotechnology industry has received more attention in the past 10 months than the combined coverage of this sector since it was first introduced in 1919.
Nowadays, companies like Moderna (MRNA) have enjoyed practically round the clock coverage for their work.
So let’s take a look at the other up-and-coming biotechnology companies that have not received enough air time but are just as impressive.
In particular, let’s check out two of the German companies leading the charge in the COVID-19 vaccine race.
One company that isn’t getting enough credit these days is BioNTech (BNTX).
Since this German company paired up with Pfizer (PFE) in its vaccine development program, it rarely gets mentioned in the news.
After all, Pfizer with its $204.99 billion market capitalization makes for a bigger story compared to BioNTech’s $20.95 billion.
Nonetheless, the duo’s COVID-19 vaccine candidate, BNT162b2, is arguably the leading candidate right now – just ask Bill Gates.
If BNT162b2 succeeds, BioNTech stands to enjoy a financial windfall in the coming years.
So far, its vaccine program with Pfizer has secured them deals with the US, Canada, and Japan.
The German biotechnology company has also sealed an agreement with Fosun Pharma to supply 10 million doses to Macau and Hong Kong.
By 2021, BioNTech is expected to produce 250 million doses of the vaccine every six months.
This is enough to cover roughly 125 million people.
At a price of $19.50 for every dose, the company is estimated to earn $9.75 billion in annual revenue—not bad for a biotechnology company of its size.
The success of BNT162b2 could also mean additional leverage to propel the pipeline candidates in BioNTech’snmessenger RNA (mRNA) platform.
BioNTech has been working with Roche (RHHBY) in developing an mRNA therapy, called BNT122, to offer as a first-line treatment for melanoma and other solid tumors.
Apart from that, the company also has six early-stage mRNA candidates that target various types of cancer.
Aside from its mRNA technology-based programs, BioNTech is working with Denmark’s Genmab (CPH: GMAB) on three antibody therapies in early-stage trials for solid tumors and pancreatic cancer.
Another German biotechnology company flying under the radar is CureVac (CVAC).
A possible reason why it has not been generating that much buzz in the US is because it only conducted its initial public offering on the Nasdaq stock exchange in August.
Ever since the pandemic began though, CureVac has been one of the most active vaccine developers.
CureVac’s COVID-19 vaccine candidate uses the same technology as Moderna, which utilizes mRNA to trigger the body’s immune system to generate antibodies.
While Moderna has a huge head start in terms of clinical trials, CureVac may still have an advantage over the more popular biotechnology company.
Based on recent data, CureVac’s vaccine candidate shows more promise because it can take effect at very low doses of 2 to 6 micrograms.
In comparison, Moderna’s mRNA-1273 COVID-19 vaccine candidate requires a 100-microgram dosage.
Like BioNTech, the success of CureVac’s vaccine candidate would also bode well for the rest of the company’s mRNA candidates in its pipeline.
Two of those candidates are for cancer immunotherapies; one targets non-small lung cancer and the other targets a rare kind of cancer called adenoid cystic carcinoma. These therapies are also being studied for advanced melanoma as well as cancers of the head and neck.
Neither BioNTech nor CureVac has been hailed a household name in the US, and they may never reach that status.
Regardless, both companies will become extremely important and relevant for so many American households in the not-too-distant-future.
Due to the money they received to fund their COVID-19 programs, neither are in danger of running out of capital sometime soon or even take dilutive financing options as an alternative recourse. This stability, albeit short term, makes both biotechnology companies worth checking out.
More importantly, the pipeline programs of BioNTech and CureVac look promising despite being in the early stages.
All things considered, BioNTech and CureVac look like risky bets. However, these are risks with the potential to transform into massive rewards.
So, what should you do?
It all boils down to your investing style.
If you are an aggressive investor with high-risk tolerance, buy shares from dynamic biotechnology players that offer promising gains in a relatively short period.
Companies like BioNTech and CureVac, if successful in their COVID-19 vaccine efforts, could extend those gains to the long term and even leverage them to eventually market new products.
If you have lower risk tolerance, you can still make a play on these biotechnology companies. The key is to take a small position. This will limit your losses if things go south, but would also offer you rewards if the candidates work out.
Mad Hedge Biotech & Healthcare Letter
September 15, 2020
Fiat Lux
Featured Trade:
(ASTRAZENECA’S BUMP IN THE ROAD)
(MRNA), (AZN), (PFE), (MRK), (JNJ), (GSK), (SNY), (CVAC), (BNTX), (INO)
Moderna (MRNA) was the first company to test its COVID-19 vaccine candidate on humans. However, AstraZeneca (AZN) and its partner Oxford University have been setting out the most aggressive timelines.
In fact, AstraZeneca sealed deals with the promise of delivering vaccine results as early as September.
The possibility of that happening, already precariously hanging by a thread, was completely eliminated earlier this month when the company halted its COVID-19 vaccine program after a subject showed severe adverse reactions.
Needless to say, news of AstraZeneca’s suspension of its late-stage 30,000-patient trial rattled the markets.
However, it looks like investors are simply shaking off the panic as other COVID-19 vaccine stocks continue to gain momentum.
In fact, even AstraZeneca only suffered a 2% slide following the announcement.
Shares of its COVID-19 rivals Pfizer (PFE), Merck (MRK), Johnson & Johnson (JNJ) went up 1% each, while GlaxoSmithKline (GSK) and Sanofi (SNY) rose 2%.
Bigger jumps were seen in smaller biotechnology companies with Moderna and CureVac (CVAC) being 4% higher and Novavax (NVAX), Inovio (INO), and BioNTech (BNTX) climbing 6%.
Still, a lot is riding on AstraZeneca’s vaccine candidate. The company has secured more contracts compared to its rivals.
To date, AstraZeneca has disclosed deals to supply roughly 3 billion doses to different nations including the US, Europe, Australia, Japan, Brazil, Latin America, and even China.
Its leading competitors, Moderna and Pfizer, have only managed to commit a small fraction of AstraZeneca’s supply.
Although AstraZeneca’s decision would cause some delay, experts assure the public that this is a normal occurrence in the vaccine development process.
It is actually a good sign especially given the fast-tracked timelines for the COVID-19 programs.
This voluntary pause from AstraZeneca means that the standards for vaccine development are still stringently followed by the developers despite the tight deadlines and competition.
A third-party safety board was already assigned to review AstraZeneca’s case, with the company expecting results in the next weeks.
So, what happens next?
There are few possible outcomes of this scenario. The ideal result would be for the board to find that the adverse effect has no connection to AstraZeneca’s vaccine candidate.
If this is the case, then the company can restart trials as early as next week. Although it obviously suffered a delay, AstraZeneca says it is still on track and can submit efficacy data before 2020 ends.
If everything else falls into place and from a manufacturing standpoint, AstraZeneca can still deliver a vaccine by the end of the year or early 2021.
If the adverse effect is caused by the vaccine though, then it could spell trouble not only for AstraZeneca but also for some of its rivals using the same technology.
The company utilized a neutralized virus for delivery, which is the same method used by other developers like Johnson & Johnson.
In comparison, Moderna and Pfizer’s vaccine candidates used a new technique involving messenger-RNA. This method stimulates a person’s body to produce a protein, which can help build immunity against the coronavirus.
The worst-case scenario is that if the problem turns out to be an immune reaction to the coronavirus fragments.
This would set back all the COVID-19 vaccine developers because it is the common element among them.
Although the COVID-19 vaccine candidate is a high-value product, AstraZeneca remains poised to prosper no matter what happens as a result of the pandemic or even the overall financial market.
The company is consistently generating strong revenue growth. In particular, its cancer lineup of non-small cell lung cancer treatments Tagriss and Imfinzi, and ovarian cancer therapy Lynparza have been showing remarkable momentum amid the crisis.
However, it is AstraZeneca’s pipeline that makes this stock impressive.
So far, the company has 166 programs that are under clinical development. Of those, 24 have already reached late-stage trials.
What’s even more exciting is that 9 of these late-stage studies are for new drugs. Meanwhile, the remaining 15 are additional approvals for expanded indications of existing products.
AstraZeneca offers one of the most promising product portfolios and clinical pipelines in the healthcare and biotechnology industry. It also provides impressive shareholder reward programs.
Most importantly, this single COVID-19 vaccine candidate is definitely not a make-or-break type of development for the company – not by a very long shot.
Therefore, bargain hunters may want to capitalize on AstraZeneca’s shares on any weakness resulting from this trial suspension.
Mad Hedge Biotech & Healthcare Letter
August 18, 2020
Fiat Lux
Featured Trade:
(MORE DARK HORSES IN THE COVID-19 VACCINE RACE)
(CVAC), (MRNA), (BNTX), (PFE), (GSK), (AZN), (JNJ), (NVAX)
