What happened

The stocks of several biotechs focused on developing treatments and vaccines for COVID-19 jumped on Wednesday. Shares of Dynavax Technologies (NASDAQ:DVAX) were up 4% as of 3:13 p.m. EDT today after rising as much as 10.1% earlier in the day. Novavax (NASDAQ:NVAX) was up 13.4%, and shares of Vir Biotechnology (NASDAQ:VIR) were soaring 16.8% higher.

None of these companies reported news today. But the overall stock market fell on concerns about the increased number of COVID-19 cases in the U.S. This bad news translated to good news for Dynavax, Novavax, and Vir as investors scooped up shares of the key players in the fight against the coronavirus.

Gold model of coronavirus

Image source: Getty Images.

So what

Buying coronavirus-focused biotech stocks just because the pandemic appears to be worsening isn't a great idea without assessing the overall prospects for each individual stock. The dynamics are quite different for Dynavax, Novavax, and Vir.

Dynavax is the only one of the three to already have an approved product of any kind on the market. Its hepatitis B vaccine Heplisav-B generated $10.5 million in sales in the first quarter. The CpG 1018 adjuvant used in Heplisav-B is also being used in four COVID-19 vaccines, including ones developed by Chinese drugmakers Clover Biopharmaceuticals and Sinovac Biotech

Novavax appears to be on track to win its first Food and Drug Administration approval, though. The company reported positive results in March from a late-stage study of flu vaccine NanoFlu. The vaccine could potentially generate peak sales in the ballpark of $1.7 billion if approved, according to one analyst's estimate. Novavax also has a promising COVID-19 vaccine in development that's in a phase 1/2 clinical trial.

Meanwhile, Vir Biotechnology has three clinical programs. The company thinks that its lead candidate, VIR-2218, which is being developed in collaboration with Alnylam Pharmaceuticals, holds the potential to be a functional cure for hepatitis B in combination with other therapies. Vir is also evaluating three COVID-19 therapies in pre-clinical testing.

Higher numbers of COVID-19 cases don't necessarily translate to greater prospects for any of these companies. But headlines about the pandemic definitely drive higher interest in their stocks.

Now what

The main thing to watch with each of these biotechs is their pipeline progress. For Dynavax, investors will also want to keep their eyes on sales of Heplisav-B in the coming quarters. Novavax expects to report initial results from its COVID-19 vaccine study in July. Vir plans to advance its VIR-7831 and VIR-7832 antibody therapies for COVID-19 directly into phase 2 testing this summer pending FDA review. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.