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2 Biotech Stocks Winning the Coronavirus Race

By Mark Prvulovic - Updated Mar 2, 2020 at 8:27AM

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These two companies have emerged ahead of their competitors in having a medical intervention for the coronavirus epidemic.

With the coronavirus epidemic continuing to spread, financial markets have seen significant declines. While major indexes such as the Dow Jones Industrial Average have seen double-digit percentage losses over the past week, certain stocks have instead been surging during this turbulent time. In particular, biotech stocks that are developing potential COVID-19 treatments have seen impressive gains over the past couple of weeks.

While there are a number of companies trying to develop a treatment, only two have managed to make it to clinical trials. Should these clinical tests prove successful, it's quite likely that these two stocks will explode in value.

Abstract image of a doctor touching a tablet.

Image source: Getty Images.

1. Gilead Sciences

Gilead Sciences (GILD -0.99%) was the first biotech stock to break news regarding its potential COVID-19 treatment. While other companies are developing treatments from scratch, Gilead was able to reuse its former Ebola drug, remdesivir, as a potential COVID-19 treatment.

Remdesivir is considered to be an antiviral medication, helping the body fight against viral infections such as Ebola, but can be effective in treating other types of viruses as well. On Jan. 31, doctors decided to give a patient diagnosed with COVID-19 a dose of remdesivir on a compassionate use basis, hoping that the drug might improve the patient's condition. The result was that remdesivir almost completely reversed all major symptoms.

Since then, Gilead has been working with Chinese health authorities to conduct further tests with remdesivir. This includes two ongoing clinical trials in China's Hubei province, a separate clinical trial in the U.S. spearheaded by the National Institute of Allergy and Infectious Diseases (NIAID), as well as two newly announced phase 3 trials taking place across Asia.

Bruce Aylward, assistant director-general of the World Health Organization (WHO), went so far as to say that Gilead's remdesivir is the "one drug right now that we think may have real efficacy." As such, optimism surrounding Gilead's potential COVID-19 treatment remains justifiably high.

2. Moderna

The other company that's made headway on a potential treatment is Moderna (MRNA -2.18%). Moderna's approach to developing a treatment is much different from Gilead's. Instead of developing or reusing an existing antiviral drug, Moderna has created a new vaccine for COVID-19 from scratch.

Moderna specializes in developing mRNA (messenger RNA) vaccines, an area of medicine that hasn't been fully explored yet. The theory behind this technology is that mRNA treatments could be faster and more efficient than their DNA-based counterparts. Whereas DNA-based treatments need to access the nucleus of the cell (where DNA is stored), mRNA can be found all across the cell and is much more accessible.

While the hypothetical benefits of mRNA treatments seem strong, mRNA vaccines haven't been tested on humans yet. Moderna has a large pipeline of vaccines, but most of them are in preclinical or early clinical testing at the moment. As such, there's still some uncertainty as to how humans will react to this new mRNA-based treatment.

Regardless, Moderna impressed the healthcare community by announcing on Feb. 24 that it successfully developed an initial vaccine in less two months after learning the virus's genetic sequence. The company shipped its first batch of COVID-19 vaccines to NIAID to begin clinical testing. The first trial, which will involve between 20 to 25 volunteers, will be finished by the end of April, with initial clinical data likely being available sometime in July of August.

While Gilead Science was the first company to enter clinical trials for a COVID-19 treatment, it was with a drug already developed and tested on other viruses. Moderna, on the other hand, built a potential vaccine from scratch in a remarkably short period. With Gilead Science's candidate being a treatment for someone with the illness and Moderna pursuing a vaccine to prevent the infection, both companies stand to win. But whether each biotech stock will reap the benefits remains to be seen.

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Stocks Mentioned

Gilead Sciences, Inc. Stock Quote
Gilead Sciences, Inc.
$62.21 (-0.99%) $0.62
Moderna, Inc. Stock Quote
Moderna, Inc.
$142.19 (-2.18%) $-3.17

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