After most of 2020 went down the drain in terms of planned events and even mundane social activities, few want to discuss the novel coronavirus pandemic. As a Bloomberg article published earlier this year reported, retailers were getting ready to prepare for a wave of pent-up demand. Unfortunately, society might need to gear up for a different kind of wave, one that would cynically support biotech stocks.
Of course, I’m referring to the Delta variant of Covid-19, a dreadful microbiological threat that not only presented a mortal danger but devastated multiple economic segments. It also forced unprecedented calls for mitigation efforts, which sparked tensions across the board. Inequities that were long brewing in the background spewed to the forefront. We can’t have another repeat, affording greater urgency toward biotech stocks.
But will the present threat be as bad as the first go-around? With the vaccine rollout, Americans and other global citizens are better prepared for the Delta onslaught. However, a paper published by The New England Journal of Medicine noted that while not much difference in two-dose vaccine effectiveness exists between the original Covid-19 variant and the Delta variant, “absolute differences in vaccine effectiveness were more marked” after only one dose.
The conclusion? Based on these rigorous tests, the two-dose vaccine regimen is the way to go, which in theory bodes well for biotech stocks.
I say “in theory” because vaccine hesitancy remains a major hurdle toward herd immunity. Nevertheless, The Hill reported significant progress in this department, with a Morning Consult survey revealing that “reluctance to the vaccine among Fox News watchers fell to an all-time low” recently. Should the trend continue, this dynamic would certainly support the case for biotech stocks levered to vaccines and treatments.
While a positive development, we need more. As the Wall Street Journal pointed out, the Delta variant has started to disrupt a return of consumers in the travel and leisure industry. While the impact isn’t nearly as severe as last year’s disruption, this is a lesson that we’re still not out of the woods.
Therefore, here are some biotech stocks to once again put on your radar:
- Pfizer (NYSE:PFE)
- Moderna (NASDAQ:MRNA)
- Johnson & Johnson (NYSE:JNJ)
- Merck (NYSE:MRK)
- Atea Pharmaceuticals (NASDAQ:AVIR)
- Sorrento Therapeutics (NASDAQ:SRNE)
- Vaxart (NASDAQ:VXRT)
Despite the ominous signs in the media’s reporting of the Delta variant, it’s also possible that there were more infections than were actually reported. If so, the U.S. could turn a corner quicker than originally anticipated. Therefore, you’ll want to carefully perform your due diligence before pilling into these biotech stocks.
Biotech Stocks to Buy: Pfizer (PFE)
When Pfizer began rolling out its vaccines and gaining serious traction with its long-term solution, at one point, I felt that there wasn’t much room for improvement for PFE stock. True, the company’s mRNA-based vaccines impose significant infrastructural demands, such as ultra-cold storage freezers. But this is the U.S. we’re dealing with, not some developing satellite nation that the Cold War forgot about.
However, vaccine hesitancy combined with the rapid spread of different variants of Covid-19 has made PFE again a relevant name among biotech stocks. According to the Centers for Disease Control and Prevention, the share of the adult population that received one dose and two doses are a bit over 71% and 61%, respectively.
Not too long ago, the ratio at which people received only one dose was somewhere in the mid-50% range. Thus, the expanding Covid-19 crisis certainly inspired people to get their second dose (or to get their first one). Given the new sense of urgency, it might not be a bad idea to consider PFE stock, especially since it’s a reliable investment outside the Covid-19 catalyst.
Easily among the biggest beneficiaries within biotech stocks, vaccine developer Moderna had a decent track record prior to the pandemic, with its shares trading hands consistently in the double-digit price range. But that quickly changed following the virus’ rude breaching of our borders. Suddenly, MRNA stock was the must-have ticket.
Over the trailing year, shares have soared over 400%, a stunning confirmation of how valuable the underlying business has been. Along with Pfizer, Moderna delivered a groundbreaking mRNA-based vaccine — and did so quickly. Because of the first-to-market advantage, MRNA has a serious advantage over other solutions that are still in late-clinical stages.
Primarily, word-of-mouth encouragement is going to be vital to overcome vaccine hesitancy. Consider that the people who don’t trust vaccines are not the type of folks to trust mainstream media either. But if someone close to them says, listen, I took the vaccine and there’s no problem, that alone might help assuage concerns.
The other catalyst? As the NEJM paper disclosed, it’s the science: people who only took the first vaccine are at much greater risk than those who are fully immunized.
Biotech Stocks to Buy: Johnson & Johnson (JNJ)
While the mRNA vaccine approach may have won the race in terms of being quickest to market, it has one conspicuous issue: it’s inconvenient. While I don’t have data to prove it, the gap between those who took one dose versus the two-dose regimen could at least partially be explained by the inconvenience factor.
I think I speak for a lot of folks who feel that, if they’re going to get the shot, it might as well be a one-and-done deal. Therefore, the Johnson & Johnson solution of a one-shot approach seemed particularly compelling. Indeed, vaccine hesitancy may have been a little bit worse had JNJ not entered the fray with its distinct approach.
Recently, new research suggests that the company will benefit once again from Covid-19’s cynical catalyst. According to the New York Times, a “single dose of the Covid-19 vaccine made by Johnson & Johnson is highly effective in preventing severe illness and death from the Delta and Beta variants of the coronavirus.”
Better yet, JNJ isn’t one of those Covid-specific biotech stocks. With broad exposure to the healthcare segment, this is a solid play to include in your portfolio.
Although 2020 may go down as the year of biotech stocks — and specifically, the year of the biotech pivot — Merck hasn’t yet seen much of a positive effect from the pandemic. In fact, it’s quite the opposite. Unlike other pioneering public biopharmaceutical companies, Merck’s shares have yet to cross above its peak price just before the crisis began.
Part of the reason is that Merck’s most popular drug is Keytruda, a cancer therapy. Of course, Covid-19 is particularly devastating for people with compromised immune systems. Therefore, many patients suffering from long-term conditions made the agonizing decision to avoid hospitals and clinics until the crisis faded away. Naturally, this negatively affected Keytruda sales, which did MRK stock no good.
Also, Merck was relatively slow to pivot to the pandemic, eventually discontinuing development of its Covid-19 vaccines. However, the company is still pressing forward with its therapeutics, which might come in handy, because vaccine hesitancy remains a frustrating societal issue.
As the Wall Street Journal pointed out, “Merck has a deal with the U.S. government to supply 1.7 million treatment courses of its drug, called molnupiravir, for $1.2 billion if the drug is authorized by the Food and Drug Administration.”
Biotech Stocks to Buy: Atea Pharmaceuticals (AVIR)
As one of the newest biotech stocks to trade in the public markets, Atea Pharmaceuticals has a speculative aura about it so prospective buyers will want to apply caution. Nevertheless, the potential for AVIR is very much real. Billing itself as a “leader in the discovery of oral direct-acting antiviral therapies,” Atea has tremendous relevance, especially as delta variant cases rise and with many questioning the safety and efficacy of vaccines.
As the New York Times noted, Atea’s compound AT-527 “has already proven safe and effective as a treatment for hepatitis C, and early studies suggested it might also work against Covid-19.” Further, the Times states that Roche (OTCMKTS:RHHBY) has “partnered with Atea to test it in people, and the companies are currently running a late-stage clinical trial.”
To be fair, AVIR stock has been all over the map. Starting off in a range of around $30 a year ago, AVIR later pushed toward $90 territory in February. Of course, that’s when cases were skyrocketing, prompting serious concerns about a pandemic spiraling out of control. Following a sharp decline in new infections, AVIR promptly dropped down.
However, with the Delta variant being a stubborn threat — combined with the lurking menace of the Lambda variant — Atea belongs on your list of biotech stocks to watch closely.
Sorrento Therapeutics (SRNE)
For the last two biotech stocks, we’ll explore the speculative side of the industry. Personally, I’m not going to say one way or the other what to do. Rather, I’ll just say that the opportunity exists and leave the rest to you.
First up is Sorrento Therapeutics, the oncology firm that wowed Wall Street with its all-out blitz toward comprehensively attacking Covid-19. Leaving no stone unturned, Sorrento offered everything you could think of, from testing solutions to treatment options to a vaccine. Full credit to management for making the most of an opportunity. Ultimately, though, the aggressive push hasn’t translated overall to much movement for SRNE stock.
Mainly, the challenge has always been getting a distinct solution out there amid massive competition up and down the spectrum of biotech stocks. Therefore, while SRNE is up 29% year-to-date, it’s down 42% over the trailing six months due to shares rising sharply from the spike in cases in early 2021.
But then, this leaves the possibility that a worsening crisis could once again see SRNE stock rise higher. It’s risky, considering that the technicals don’t look supportive. Still, if you like speculation, this one might work out for you.
Biotech Stocks to Buy: Vaxart (VXRT)
For full disclosure, I’m somewhat skeptical about Vaxart. While I acknowledge that VXRT has potential compared to many other speculative biotech stocks, it’s also a complicated narrative. But with infections surging, you might as well know about it.
Principally, Vaxart rose to fame because the company took a different approach regarding Covid-19 vaccines. Rather than going with injections, Vaxart decided to become the Marine Corps of vaccines, as in one shot, one pill. Through its oral vaccines, the company may provide a more palatable solution (quite literally). After all, many people are legitimately afraid of needles.
Another advantage for Vaxart is the logistical element. With tablets, you don’t need ultra-cold storage. Instead, you can distribute them how you see fit. Indeed, in a truly catastrophic situation, the federal government could mail them to people. The tablet form also makes Vaxart a viable choice for international clients which may not enjoy a robust healthcare infrastructure in their home markets.
Finally, clinical studies reveal that immune responses from Vaxart’s oral tablet vaccines are encouraging. Of course, this narrative could quickly fall apart if cases dwindle from here on out, so due diligence is absolutely necessary.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.