Our indicative theme on Covid-19 Treatment Stocks – which includes biotech and pharma companies selling or developing treatments for the Covid-19 virus – is up by 25% year-to-date, compared to the S&P 500 which is up about 26% over the same period. Although we were somewhat circumspect about the demand prospects for Covid-19 treatments back in late 2020, considering the progress made on the vaccine front, things are looking quite different a year hence. While vaccines have seen a relatively wide rollout, and have proved successful in reducing the severity of the Covid-19 infections, they haven’t been as effective as we’d hoped in ending the pandemic, given the diminishing immunity and the mutation of the virus. For example, the new and more contagious strain of the virus called omicron is apparently better at evading the immune response provided by the current crop of vaccines. Moreover, Covid cases in countries such as the U.K. and South Africa have been soaring to all-time highs and hospitalizations are also on the rise. This likely means that treatments will play a big role in managing the pandemic and saving lives.
Now the treatment landscape is pretty mixed at the moment, with some treatments apparently far more effective than others. The biggest recent breakthrough comes from Pfizer. The company’s new antiviral drug Paxlovid appears to be almost 90% effective at reducing the risk of hospitalization and death based on a study in high-risk adults, with the pill likely working against the new omicron variant of the virus, as well. Moreover, this antiviral drug can be taken orally, unlike previous treatment options, which needed to be administered intravenously. This can potentially reduce the impact on the healthcare system considerably. Merck and Ridgeback Biotherapeutics have also developed an oral antiviral called molnupiravir, although it appears less effective than Pfizer’s pill, decreasing the risk of hospitalization from COVID-19 by 30%. Other players in the Covid-19 therapeutics space include Gilead Sciences , whose moderately effective Remdesivir was the first Covid-19 antiviral approved by the U.S.Food and Drug Administration and Regeneron Pharmaceuticals which sells antibody cocktails for Covid-19, although it says that the current cocktail has diminished effect versus the new virus strain.
Below you’ll find our previous coverage of the Covid-19 treatment theme where you can track our view over time.
[10/9/2020] Regeneron & Gilead: Covid Treatment Stocks Back In Focus As Winter Nears
Our indicative theme on Covid-19 Treatment Stocks – which includes biotech and pharma companies selling or developing treatments for the novel Coronavirus – is up by 16% year-to-date, compared to the S&P 500 which is up about 4%. While the long-term demand for Covid-19 treatments is not clear, considering the progress being made on the vaccine front, demand for therapies should rise over the next few months, as Covid infections are expected to increase over the winter. Regeneron Pharmaceuticals, up 58% year to date, is the biggest driver of the themes return, while Gilead Sciences has been a laggard, down -1.5% year-to-date. Below is a bit more about the companies and how they have fared this year.
Regeneron Pharmaceuticals recently indicated that its experimental Covid-19 treatment that involves a cocktail of two antibodies was effective in reducing viral loads and improving symptoms in non-hospitalized Covid-19 patients. The drug was administered to President Donald Trump, who tested Covid-positive last week. The stock is up 58% year-to-date.
Eli Lilly and Company
Gilead Sciences’ wide-spectrum anti-viral drug Remdesivir, which was initially developed for Ebola, has received emergency authorization from the FDA for use in hospitalized patients and patients with moderate symptoms. However, the stock is down by about -1.5% year to date, as gains from Covid-19 treatments were likely offset by the rejection of its Rheumatoid Arthritis drug.
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