Operation Warp Speed is the U.S. federal program to develop a vaccine against Covid-19 in record time. Importantly, it is also a massive catalyst for biotech stocks.
To date, the government has spent more than $18 billion on Operation Warp Speed and placed advanced orders for hundreds of millions of vaccine doses with the companies that are in the lead. It may sound extreme, but consider that the coronavirus has killed more than 1.2 million people.
Here we will look at four biotech stocks that could inject your portfolio with growth as vaccine candidates receive regulatory approval and come to market. As we work to prepare ourselves against the virus, we should similarly prep our portfolios.
These four biotech stocks should do the job:
- Novavax (NASDAQ:NVAX)
- Moderna (NASDAQ:MRNA)
- Regeneron Pharmaceuticals (NASDAQ:REGN)
- Gilead Sciences (NASDAQ:GILD)
Biotech Stocks: Novavax (NVAX)
Early investors in Novavax have been handsomely rewarded this year. NVAX stock rose more than 4,000% earlier in 2020.
In January, Novavax was a penny stock, trading at $4.45 a share. It hit an all-time high in August of $189.40 before pulling back. While the share price is currently below $82, it may get a charge from Operation Warp Speed in the coming months.
Why? Because Novavax is at the front of the pack. Its vaccine candidate is NVX-CoV2373, and it entered a Phase 2 clinical trial in late August. The trial involves about 1,500 participants and results should come in the fourth quarter. The company also benefits from the fact that it has secured several government contracts for its Covid-19 vaccine.
As part of Operation Warp Speed, the U.S. government has awarded Novavax $1.6 billion to produce as many as 100 million vaccine doses, while Canada has an in-principle agreement with Novavax for it to supply up to 76 million vaccine doses. The United Kingdom has already purchased 60 million doses of the same vaccine. In all, the company has $2 billion in funding from various governments.
Moderna is one of the better-known companies working on a Covid-19 vaccine. And importantly, its future is largely tied up in its success within Operation Warp Speed.
To date, the company has never successfully commercialized a vaccine. But Moderna is now in late-stage clinical trials with its vaccine that uses messenger ribonucleic acid (mRNA) to treat the respiratory disease. The company has already booked $1.1 billion of deposits for its Covid-19 vaccine.
Also working in its favor is the fact that Moderna’s Covid-19 vaccine is one of the treatments against Covid-19 that is furthest along in development. Speculation that Moderna will hit a home run with its Coivd-19 vaccine has helped send MRNA stock up 300% this year.
The company has several other vaccines and medications in development, including treatments for influenza and cystic fibrosis. Together, these should also boost its revenue and shareholder value in coming years.
Biotech Stocks: Regeneron Pharmaceuticals (REGN)
Regeneron Pharmaceutical’s stock has been flying high since early October when news broke that President Donald Trump received its antibody cocktail. Although the drug was still in an experimental state while he was in the hospital, Trump has credited Regeneron with his quick recovery. The company has since filed for emergency-use authorization of its Covid-19 treatment, called REGN-COV2.
Importantly, REGN stock has risen 63% year-to-date. This move comes largely on speculation that its Covid-19 treatment will become widely used around the world.
REGN stock did pull back in recent weeks after board members and executives sold more than $1 million of stock. The company explained the insider trading as the exercising of vested stock options, but the moves sent the stock lower. Still, Regeneron’s Covid-19 cocktail is likely to generate a lot of money for the company as it becomes widely used to treat the disease.
Gilead Sciences (GILD)
Gilead has a solid track record of successfully bringing vaccines to market, including to treat major diseases such as cancer and inflammation. Its success has helped boost its market capitalization to more than $70 billion.
GILD stock has been more up-and-down than many of the other biotech stocks involved in Operation Warp Speed, but it has risen as much as 30% this year before pulling back to trade at $59 a share.
Gilead’s remdesivir medication has been a key treatment for Covid-19 for several months now. Trials have proven the effectiveness of the medication in treating people afflicted with the respiratory disease. Importantly, the U.S. Food and Drug Administration found that it improved the time to recovery in hospitalized patients by five days. With cases of Covid-19 rising around the world heading into winter, expect demand for remdesivir to rise sharply in coming months.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.