The biotechnology industry is constantly innovating so that people can live healthier, happier, and longer lives. In a time when health is a top priority for many people around the world, it is no surprise that a myriad of biotech companies have seen their share prices increase or, at least, maintain their pre-crisis levels. Today, I will give you three biotech stocks that will survive this storm and many more.
By Matthew Rojas, Securities Analyst
The stock market crash on March 9, 2020, courtesy of the novel coronavirus, sent the majority of stocks plummeting to their lowest levels since 2009. All three major indices recorded some of their largest percentage losses: the Dow Jones Industrial Average fell 7.79%, the S&P 500 dropped 7.6%, and the Nasdaq Composite shed 7.29%. However, as the economy gradually began to reopen, several stocks rallied and regained much of what they lost in March. Many investors had high hopes of a v-shaped recovery, that is until recent events such as increasing tensions between the United States and China, the death of George Floyd, nationwide protests, and a fresh spike in coronavirus cases sparked another storm that we would have to weather.
Over the past two weeks, these events have created a high degree of uncertainty in the market. As a result, many companies experienced a setback as the rallies came to a halt. These recent losses are a wake-up call for overly-optimistic investors — the road to recovery will have bumps along the way. Regardless of these hurdles, people need to keep their money in the market and invest in stocks that will pull through these difficult times. One sector of the market that has time and time again shown promise, even in times of economic downturn such as these, is biotechnology.
Here are three stocks that are likely to sail through any hurricane…
Genmab is a groundbreaking biotechnology company that specializes in the development of antibody therapeutics, rather than traditional chemotherapy, for the treatment of cancer. Antibodies are critical proteins that protect the body from both bacterial and viral infections by binding to the antigens present in pathogens. Amazingly, Genmab is using hybridoma and recombinant DNA technology so that antibodies can target other molecules besides antigens, specifically cancer cells.
Currently, Genmab has three approved antibodies for various types of cancer such as multiple myeloma. Additionally, the company has patented several technology platforms that they use to create their antibodies. When investing in the biotech industry, especially during a time when most clinical trials not related to COVID-19 have been put on hold, it is critical to invest in companies that already have marketed products and/or technology platforms. That is not to say that you shouldn’t invest in emerging biotech companies, it is just that companies with established products and technologies have a better chance of surviving this storm.
Genmab is also engaged in several strategic partnerships with world-renowned pharmaceutical and biotechnology companies such as Janssen Biotech, Novartis, and, most recently, AbbVie. On June 10, 2020, Abbvie paid Genmab $750 million to jointly develop three of Genmab’s next-generation bispecific antibody products.
Genmab (NASDAQ: GMAB) is a perfect example of a company whose share price has increased over the course of the pandemic. When the market crashed, Genmab’s stock fell to a low of around $17; since then, the share price has increased by over 80% to approximately $31. Furthermore, since the first quarter ended March 31, 2020, Genmab’s market cap increased by approximately 47% from $13.25 billion to $19.51 billion.
After analyzing Genmab’s financial statements, they are in a strong position to continue growing in both the short-term and the long-term. Genmab has a current ratio of 19.04, indicating that they can easily cover their short term debt obligations. Also, the company generated $2.69 billion in net income just during the first quarter of 2020. Moreover, Genmab has an impressive profit margin of 41.70%, which shows its ability to turn sales into huge profits. With Genmab’s patented antibodies and technologies, the recent deal with AbbVie, and their strong financials, they are in a position to confidently survive this storm.
Many companies are competing in the race to develop a COVID-19 vaccine. While Moderna is currently winning the popularity contest, Novavax is an underdog that we need to pay attention to. Novavax is an American, clinical-stage biotechnology company dedicated to developing vaccines for a broad range of infectious diseases. Although not the leader in the COVID-19 vaccine race, Novavax has patients scheduled to participate in a Phase I trial starting this month. They are expecting safety results to come back in July 2020, and the Phase II trial will start shortly after that. On June 11, 2020, the company announced that it would receive up to $388 million in funding from the Coalition of Epidemic Preparedness Innovations or CEPI. As with Genmab, securing a multi-million dollar deal is a strong sign that Novavax should be at the forefront of investors’ minds.
Beyond COVID-19, Novavax has several vaccines for other infectious diseases in its clinical pipeline. Their NanoFlu vaccine for influenza for adults 65+ is currently in Phase III clinical trials and showed “stronger and broader immune responses against homologous and heterologous influenza strains” than Sanofi’s Fluzone HD, the leading licensed influenza vaccine for the older adult market. Additionally, Novavax is attempting to be a first-mover by developing a vaccine for respiratory syncytial virus or RSV, which is currently in phase III clinical trials. Although Novavax has no approved vaccines, they have strong candidates in the late stages of clinical trials.
Something that Novavax does have patented, however, is their Matrix-M adjuvant technology. Matrix-M adjuvants “stimulate strong antibody and cell-mediated immune responses induced by low antigen doses, long-duration immune responses, and carry a low risk for allergic reactions or other adverse events”. Because lower antigen doses are required with this technology, there is a cost-saving advantage for manufacturers. With more manufacturers interested in this technology, investors will reap the benefits of increased revenue.
Moving onto some numbers, when the market crashed, Novavax’s stock (NASDAQ: NVAX) was approximately $7.00. The stock has since increased by over 700% to about $56. To put this increase in perspective, their market cap increased by over 2000% since the year ended December 31, 2019 from $128.76 million to around $3 billion.
Additionally, Novavax has some solid financials to back up its skyrocketing share price. Novavax has a strong asset base; hence, their current ratio is 13.45, meaning that they can easily cover their short term debt obligations. Although the company is currently operating at a loss of about $25 million, this is because they are investing heavily in R&D for their various vaccine candidates. Novavax’s stock price is growing at an unprecedented rate and will most likely continue to do so — they will certainly persevere through this storm of economic downturn.
Regeneron is an outstanding biotechnology company that formulates life-transforming medicines for people with chronic diseases. Currently, they have six marketed products for a wide range of diseases including cancer, rheumatoid arthritis, and hypercholesterolemia. Additionally, Regeneron has one of the largest and most diverse clinical pipelines with 30 different products in Phase I, II, and III clinical trials for many diseases.
Like Novavax, Regeneron recently announced that it has started its initial COVID-19 vaccine clinical trials for its antiviral antibody cocktail, REGN-COV2. According to Regeneron, “The antibody cocktail approach may also have long-term utility for elderly and immuno-compromised patients, who often do not respond well to vaccines”. Regeneron is a solid investment choice because it has initiatives dedicated to COVID-19 and other diseases, so the company can capitalize on the current hype while still working on longer-term projects.
Regeneron’s stock (NASDAQ: REGN) has had an outstanding performance throughout the pandemic. At the beginning of the crisis, Regeneron had a share price of around $430 — the stock price has since increased by about 40% to around $600. In the first quarter of 2020, Regeneron had earnings of $6.60 per share, indicating that investors are profiting heavily on each share that they own. Additionally, the company generated about $1.83 billion in sales, about a 7% increase from the first quarter of 2019. Regeneron has a nearly perfect composite rating of 98 out of a best possible 99; this means that Regeneron is in the top 2% of all stocks. Cleary, Regeneron is more than prepared to tackle the current challenges our world is facing.
Genmab, Novavax, and Regeneron are rock-solid investment choices in this time of crisis. With their patented products and technologies, million-dollar deals, COVID-19 initiatives, and revolutionary clinical pipelines, all of these companies are prepared to take the bull by the horns and emerge from the pandemic stronger than ever. It is always important to recognize that any stock, no matter how successful, will have its ups and downs. The key to successful investing is to remain calm when stock prices decrease and keep your money in the market because, in the end, strong companies will weather the storm.