We are wrapping up one of the wildest six months in market history.
In fact, six months ago last Monday, the market began its fastest drop ever into a bear market. In the four weeks that followed, the S&P 500 tanked 33%.
Last Wednesday, the S&P 500 reached another new all-time high. So did Nasdaq.
Am I surprised?
No. In fact, I called for a return to new highs back in March and talked extensively about it in my special Crisis and Opportunity Summit at the time.
And yet, the initial reason for the sell-off hasn’t gone away. The coronavirus is still very much a part of our lives and our world.
So why would the market recover like it has?
There’s a lot to unpack in that question, and we could do a whole webinar on it. But one of the biggest reasons is the clear expectation for a vaccine and treatment … and soon.
The whole world is watching. It would be great news for all of us, and investors need to pay attention to the opportunities it highlights for both now and the future.
We saw the potential last Monday after the FDA approved the Trump Administration’s emergency use authorization (EUA) allowing blood plasma from recovered COVID-19 patients as another treatment for the virus.
This so-called convalescent plasma is rich in antibodies targeting the virus. It’s actually a centuries-old treatment strategy that was also used during the 1918 flu pandemic.
Researchers continue to study its effect on COVID-19, but the move sparked optimism among investors. Sonnet BioTherapeutics (NASDAQ:SONN) climbed over 64% on the news. Liminal BioSciences (NASDAQ:LMNL) shot up 36%, ADMA Biologics (NASDAQ:ADMA) rose 28%, and Cerus Corp. (NASDAQ:CERS) increased 6%.
Those stocks have since pared back Monday’s gains as FDA Commissioner Dr. Stephen Hahn clarified that research into the treatment is still limited and ongoing. But the EUA puts another tool in the box to tackle this horrible disease that has killed more than 177,000 people in the U.S. and 814,000 worldwide.
Also last Monday, the whole market popped after a report that the Trump Administration is looking to speed up a possible vaccine being developed in the U.K. by Oxford University and AstraZeneca (NYSE:AZN).
The administration wants the vaccine ready before the election in November — so about 10 weeks from now. Human trials began in April and are in Phase 2/3. One trial involves 30,000 people in the U.S.
The U.S. Biomedical Research and Development Authority (BRDA) has provided over $1 billion to the project so far, while officials arranged for AstraZeneca to make 300 million doses available to Americans starting as early as October.
The federal government is doing what we investors call “diversifying.” Under Operation Warp Speed, it has paid multiple companies to manufacture a COVID-19 vaccine because it’s still too early to determine which ones will be approved.
Researchers are working on more than 165 candidates, with over 30 in clinical trials. Huge global companies are in the race, and so are much smaller companies.
For example, Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) have teamed up on one of the leading vaccine candidates. Pfizer is a household name and a $212 billion giant, while BioNTech is tiny by comparison with a market cap of just $16.5 billion. The companies recently confirmed they’re on track to submit their candidate for regulatory review as soon as October.
Investors are paying attention. PFE is up more than 30% since its March lows, while BNTX has soared nearly 140%.
The pandemic highlights how far medical science has come. A COVID-19 vaccine by the election would take less than a year, blowing away the current record of four years for the mumps vaccine.
It also highlights how exciting the future is. Regular readers know that I’ve already said this is not just the Year of Biotech but the Decade of Biotech. With an even brighter spotlight on it now, the sector is on the verge of major transformation like it hasn’t seen in many years.
It’s put rocket fuel behind trends like genetic testing and gene editing that will help identify and cure inheritable diseases. Or artificial intelligence that will speed up drug discovery and development faster than any time in human history. Or personalized and longevity medicines that could greatly increase our health and our lifespans.
The next decade will bring amazing breakthroughs, but more and more investors are already waking up to biotech’s potential.
American biotech companies have raised a record $9.4 billion in initial public offerings this year. That beats the previous $6.5 billion record from 2018, and we’re not even to September yet.
In June, a new exchange-traded fund — the Treatments, Testing and Advancements ETF (GERM) — was created to capitalize on the sudden and urgent growth in companies working on infectious disease testing and treatment surrounding COVID-19. It’s up 13% since it started trading on June 18.
Our Investment Opportunities Healthcare 2.0 portfolio is currently up an average of 87%. One company turned into a pandemic leader has performed so well that we sold half our position to lock in a 301% gain … and the remaining half is up more than 400%.
In my Early Stage Investor research service, I recommend smaller biotech stocks with even greater growth potential. Our Future of Healthcare portfolio is up nearly 200% on average. All four stocks in the portfolio have at least doubled at some point this year.
I’m anticipating much bigger gains and many more opportunities over the long term. While the Year of Biotech has been outstanding so far, we’re only seeing the beginning of a revolution.
If you’re not in biotech yet, you’ll want to consider investing soon to make the biggest gains.
On the date of publication, Matthew McCall did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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