Novavax and Regeneron: Speculating on Vaccines

04/01/2020 5:00 am EST

Focus: HEALTHCARE

Nancy Zambell

Editor, Wall Street's Best Investments and Wall Street's Best Dividend Stocks

We are hunkering down, staying extremely defensive, but also looking for opportunities that may help us begin to restore our portfolios, asserts Nancy Zambell, editor of Wall Street's Best Investments.

Right now, there are scores of companies that are working on coronavirus vaccines. Sure, it’s very speculative. At this point, who knows which — if any — of the vaccines will make it to the finish line.

And it will most likely take 12-18 months to develop and test a vaccine. But with cutting-edge biotech opportunities, the time to buy is before a vaccine is approved by the FDA for distribution to the masses.

The companies developing a vaccine for coronavirus run the gamut from mega global drug companies like Roche (RHHBY), Sanofi (SNY), Gilead Sciences (GILD), GlaxoSmithKline (GSK), and Johnson & Johnson (JNJ), that have a wide range of pharmaceutical and medical products, to very tiny companies that have one product — a vaccine in the making.

Please be warned — the risk is huge. But, again, so could the rewards be. Here are two companies that I think have the most potential to profit from a vaccine.

Novavax, Inc. (NVAX) received $4 million from the Coalition for Epidemic Preparedness Innovations (CEPI) and last month reported that it was working on several vaccines in preclinical animal studies, and is looking to begin a Phase 1 clinical study by June.

Not just a one-drug company, investors are piling into Novavax due to its experimental NanoFlu vaccine. The company just achieved a critical milestone with the positive results for its Phase 3, late-stage clinical trial of NanoFlu.

Novavax said the trial met all primary and secondary endpoints in evaluating the candidate’s safety and ability to provoke an immune response in 2,652 healthy adults ages 65 and older across 19 clinical sites.

Shares of Novavax are up more than 200% in the last 52 weeks, and spiked up 107% in February, after its vaccine announcement. They have since retreated with the market crash.

Regeneron Pharmaceuticals (REGN) has a vaccine that is based on Ebola knowledge. In early February, the company reported that it is working on developing monoclonal antibodies as treatments for COVID-19, in which it will select the top two antibodies. Clinical studies are due to start in early summer.

Additionally, REGN is collaborating with Sanofi to study their rheumatoid arthritis drug Kevzara, for treatment of coronavirus. The company says, “We are aiming to have hundreds of thousands of prophylactic doses ready for human testing by end of August.”

On March 16, Regeneron announced that it had begun a Phase 2/3 trial on up to 400 patients hospitalized with severe coronavirus.

A small 19-patient trial in China — not yet peer-reviewed — resulted in reduced patient fevers and 7% of patients had a reduced need for supplemental oxygen within the first few days of treatment. Shares of REGN are up 158% in the past year, and have risen 35% since the end of January.

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