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Why Heat Biologics Stock Is Spiking Today

By George Budwell – Jul 29, 2020 at 12:05PM

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The biotech's COVID-19 vaccine candidate hit the mark in a preclinical study.

What happened

Heat Biologics (HTBX 1.44%), a prerevenue biotech, is off to a strong start today. The company's shares spiked by as much as 46% in early-morning trading in response to a positive update for its experimental COVID-19 vaccine.

Specifically, Heat announced that its COVID-19 vaccine candidate exhibited compelling evidence of immunogenicity (the ability to provoke a body's immune response) in a preclinical (animal) study. Although the biotech's shares have cooled off a bit over the course of today's session, they are still up by a noteworthy 20% as of 10:56 a.m. EDT.

A small globe covered by a face mask that reads coronavirus.

Image Source: Getty Images.

So what

While Heat is well behind the leaders in the race to develop a COVID-19 vaccine, these positive preclinical data could open the door for a lucrative collaboration with a big-name pharma or perhaps a sizable government grant. The U.S. federal government has been extremely generous in terms of funding when it comes to developmental-stage coronavirus vaccines in general.

Now what

Is Heat's stock a worthwhile buy on this news? Under normal circumstances, preclinical data wouldn't exactly be a material event in the life of a biotech company. Preclinical data frequently don't pan out in human trials, after all.

However, the fact that Heat might now be in line for a large cash infusion from the U.S. government changes the situation entirely. Aggressive investors, in turn, might want to consider opening a small position in this emerging coronavirus play soon.

George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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