You likely are well-aware of biotech stocks focused on a vaccine for the novel coronavirus. But, what about stocks with long-haul Covid-19 catalysts? Long-haul cases are ones where patients experience Covid-19 symptoms for longer than just a few weeks.
Some health experts say long-haul Covid-19 could be a health crisis post-pandemic. But, rising to the occasion, scores of biotech firms have been working on ways to combat these chronic symptoms, and allow those afflicted with them to get on with their lives.
Many of these names remain under the radar. Yet, as seen from their strong stock market performance in the past year, those in know are cognizant of their potential. So, does that mean it’s too late to jump into some of these opportunities? In some cases, yes. But, in other cases, it may be still early enough to get in before they head to higher prices.
Keep in mind downside risk, if their respective candidates fail to pan out. But, there may be opportunity with these seven biotech stocks:
- AIM ImmunoTech (NYSEAMERICAN:AIM)
- Avid Bioservices (NASDAQ:CDMO)
- CytoDyn (OTCMKTS:CYDY)
- Fulgent Genetics (NASDAQ:FLGT)
- Humanigen (NASDAQ:HGEN)
- Jaguar Therapeutics (NASDAQ:JAGX)
- Puretech Health PLC (NASDAQ:PRTC)
Covid Biotech Stocks: AIM Immunotech (AIM)
Micro-cap AIM stock is far from being a household name. But, in recent weeks, shares have popped as the biopharma company makes progress with its Ampligen drug candidate. Ampligen treats long-term chronic fatigue. This could be effective in treating some symptoms of long-haul Covid.
Ampligen has been approved by the U.S. Food and Drug Administration (FDA). But, clinical trials to test its effectiveness with long-haul Covid patients are still in early stages. Its pandemic-related catalyst may be what’s of most interest. Yet, don’t write this off as a binary Covid-19 play.
Besides chronic fatigue syndrome, AIM is also testing Ampligen’s effectiveness in treating numerous forms of cancer. Also, its Alferon treatment for condylomata acuminata (a symptom of HPV), is pending FDA manufacturing approval. The company may still be in its early stages. But, with the completion of its at-the-market facility, AIM now has enough capital to fund its operations over the next two years.
With the stock’s move from around $2 per share, up to around $2.75, Wall Street’s catching onto its potential. But, with plenty of room for gains, as it makes progress with Ampligen and Alferon, it’s still early enough to pounce on this opportunity.
Avid Bioservices (CDMO)
As its ticker symbol indicates, Avid Bioservices is a CDMO (contract development and manufacturing organization). That is to say, it provides contract manufacturing services for third-party biotech companies. What’s its connection to long-haul Covid treatments?
The company has agreed to provide manufacturing services to Humanigen (more below), for its long-haul Covid treatment Lenzilumab. News of this has spurred more interest in CDMO stock. Shares have soared around 56.7% so far this year.
But, after its rapid move higher in recent weeks, has the ship sailed on this opportunity? Yes and no. On one hand, more progress at bringing Lenzilumab to market could help drive further gains for Avid Bioservices shares. On the other hand, the potential upside from this partnership may be more than factored into the stock.
Currently trading for a forward price-to-earnings ratio of 129.2x, shares look richly priced, considering the company only has secondary exposure to the Covid catalyst. Weighing risk versus return, you may better off buying the direct Lenzilumab play (Humanigen stock) instead.
CytoDyn is another biotech firm looking to tackle this potential post-pandemic health crisis. Its candidate? Vyologix (leronlimab). Developed for HIV/AIDS patients, the company is conducting trials to see how the treatment can help those with long-haul Covid symptoms.
The Phase 2 trial, announced in November 2020, is expected to be completed by July. But, while results may be months away, investors haven’t been afraid to bid up CYDY stock. Shares are up 400% in the past 12 months.
With its flagship candidate as a possible treatment for HIV, cancers, and autoimmune disorders, there’s more to CytoDyn than just its Covid catalyst. However, what if it stumbles in getting Vyologix approved as Covid-19 treatment? It’s easy to see shares pulling back from today’s prices. High-risk, high-return is par for the course with biotech stocks, as there are no guarantees in the world of biotech investing.
Besides the prospects of its pipeline, this over-the-counter listed stock may see a boost in the coming year, if its completes its planned uplisting to the Nasdaq exchange. Uplisting to a major exchange will make CYDY stock more accessible to retail investors. I wouldn’t buy it on this planned move alone. But, consider it an added factor that could work in this stock’s favor.
Covid Biotech Stocks: Fulgent Genetics (FLGT)
First things first, Fulgent isn’t direct a long-haul Covid treatment play. But, as new variants of the virus continue to crop up, demand for its testing services could remain strong for the long-haul, as the pandemic afflicts the world for much longer than expected.
The continued need for testing has benefited FLGT stock so far in 2021. Also, shares have seen a big boost thanks to the short-squeeze saga. As a Motley Fool commentator recently discussed, with around 30% of shares sold short, the stock has surged, as bears scramble to close out their positions.
Trading for around $70 per share last month, Fulgent stock hit prices well above $180 per share, before pulling back in recent days to around $150 per share. The question now is whether investors should buy the pullback, or wait for this squeezed stock to fall further back to earth. Shares may look bubbly if you look at only a stock chart. But, taking a look at projected earnings, and shares look cheap.
With estimated earnings of $11.55 per share in 2021, the stock sports a forward P/E of around 13x at recent prices. Sure, even with the current hiccups, the vaccine rollout could start to pay off by year’s end. This will hurt demand for Covid-19 testing. But, for a wager that the outbreak lasts longer than expected, Fulgent Genetics may be the ticket.
As mentioned above, Humanigen has been looking to bring Lenzilumab to market as a treatment for Covid-19. Lenzilumab prevents and/or treats the immune hyper-response cytokine storm. Cytokine storm is one of the main fatal complications that can arise from this virus.
Completing enrollment of its Phase 3 clinical trial last month, results will be available by March. With HGEN stock more than doubling since November, investors buying in today could see massive losses if results fall short of expectations.
But, while downside may be material, even at today’s valuation, there may be room for more gains if Lenzilumab proves to be an effective Covid-19 treatment. The company is still in the pre-revenue stage. Yet, as sell-side analysts project sales for this year of around $445.1 million, relative to the Humanigen’s current market capitalization (around $1 billion), shares could be reasonably priced at today’s levels.
Like I said above when talking about Avid Bioservices, there’s no guarantee that Lenzilumab will change the game for either company. But, given the choice of investing in the indirect play (CDMO stock) or the direct play (HGEN stock), go with the latter.
Jaguar Therapeutics (JAGX)
With its status as a meme stock, Jaguar Therapeutics may be the most well-known name on this list. But, don’t let the enthusiasm some Reddit day traders have for this stock blind you from the fundamentals backing up its bull case.
So, what’s the story with JAGX stock? As I recently wrote, this company’s flagship drug, Mytesi (crofelemer) primarily treats chronic diarrhea in HIV/AIDS patients on antiretroviral therapy. But, with chronic diarrhea also a long-term Covid-19 symptom, the company may have a larger-than-expected market.
Since November, investors have taken this possible catalyst and ran with it. Shares zoomed from around 20 cents per share to around $2.85 per share. Yet, with its popularity among online-savvy retail traders, it’s hard to assess how much of its recent performance is to do to Mytesi’s improved prospects as a Covid-19 treatment.
In short, buying now is more a bet that the speculative frenzy in this stock can continue, rather than a bet that Mytesi becomes widely used by those experiencing long-haul symptoms.
Covid Biotech Stocks: Puretech Health PLC (PRTC)
With its LYT-100 candidate, Puretech Health is another contender in the long-haul Covid treatment horse race. LYT-100 is a treatment for some of the respiratory complications that arise in those with long-term symptoms of the virus.
Namely, inflammation and scarring of the lung tissue. As one of the common issues that arise in long-haul patients, Puretech could have a large addressable market. If it’s able to bring its candidate to market. Right now, LYT-100 is in Phase 2 trials. Results are expected by the second half of this year.
In other words, it’s going to be a while until this company’s long-haul Covid catalyst pays off. That may explain why shares haven’t taken off like a rocket, as we’ve seen with similar plays. As seen from this investor presentation, PRTC stock is more than a Covid treatment play. This may limit downside risk, if LYT-100 falls short of expectations.
Also, keep in mind that this US-based company trades as an American Depository Receipt (ADR) on the Nasdaq exchange. Its main listing is on the London Stock Exchange. This may make it a less liquid option for most American investors.
On the date of publication, Thomas Niel held a LONG position in AIM stock.
Thomas Niel, a contributor to InvestorPlace, has written single stock analysis since 2016.