The biotech sector has been a significant contributor to this year's market recovery, thanks to its rapid advancement of several experimental coronavirus vaccines to clinical trials. A successful vaccine would effectively end the coronavirus pandemic, save lives worldwide, and allow governments to reopen their economies safely.
Biotech stocks have no intrinsic value without their science -- so an interested investor's best bet is to buy coronavirus vaccine companies that are publishing good immunization data on their candidates. Today, let's look at six stocks that fit this category, and why any company on this list is a solid option for a $5,000 investment.
Image source: Getty Images.
1. Moderna
First up on our list is Moderna (MRNA 0.62%), which is developing a messenger RNA vaccine candidate (called mRNA-1273) against COVID-19. During phase 1 clinical testing, all participants who received mRNA-1273 developed neutralizing antibodies and showed a robust T-cell response. (Neutralizing antibodies are small proteins that recognize certain components of a pathogen and prevent it from invading healthy cells.T-cells recognize virus-infected cells and tell those cells to self-destruct, preventing the virus from spreading throughout the body.)
The company is currently enrolling participants for a large-scale phase 3 clinical trial -- and it's already receiving votes of confidence for its technology before efficacy data has even been released. The U.S. government has signed a $1.5 billion agreement with Moderna for 100 million doses of mRNA-1273, with the option to purchase 400 million more doses.
Similarly, the company is in talks with Japan's government to supply that country with 40 million doses of its vaccine candidate, and it has an agreement with Switzerland's government for 4.5 million orders.
2. AstraZeneca
AstraZeneca (AZN +0.00%), along with the University of Oxford, derived a potential COVID-19 vaccine called AZD1222 from a weakened version of the common flu virus. During phase 1/2 studies, the vaccine demonstrated favorable characteristics in terms of neutralizing antibodies and T-cell responses in humans. The candidate is now in phase 3, with a data readout scheduled by the end of the year.
It's important to note that management has said they intend to supply 400 million doses of AZD1222 to developed European countries at no profit. Combined with its price-to-sales ratio of 67.4, this might make the company look relatively expensive. Luckily, AstraZeneca has a vigorous franchise along with multiple upcoming phase 3 study readouts.
3. Pfizer
Together with Germany-based BioNTech (BNTX +3.97%), Pfizer (PFE 1.10%) is developing an RNA coronavirus vaccine called BNT162b2. In phase 1/2 clinical trials, the experimental vaccine produced strong levels of neutralizing antibodies and T-cell responses. As a result, BNT162b2 is now in the phase 2/3 stage, and potential regulatory approval could come as early as October in the event of positive top-line results.
The company's science has attracted a lot of attention. As with Moderna, the U.S. government has placed orders for 100 million doses of Pfizer's/BioNTech's experimental vaccine in a deal worth nearly $2 billion, with the option to purchase 400 million additional doses. Americans will be able to receive the potential vaccine at no cost, with all expenses paid by the government. Additionally, the governments of both the U.K. and Japan have secured 30 million and 120 million doses of BNT162b2, respectively, with financial terms not yet disclosed.
That's not all; at a price-to-earnings ratio of 14.5, Pfizer is undoubtedly the cheapest coronavirus vaccine stock in the entire sector. The company also has several drugs in its pipeline that are on their way to achieving blockbuster status. As icing on the cake, the stock offers a 4% dividend yield, making it ideal as a long-term investment.
Image source: Getty Images.
4. BioNTech
The other company behind BNT162b2, BioNTech, will share half of the candidate's gross profits (such as those derived from the aforementioned government orders) with Pfizer, and it will be responsible for half of the vaccine candidate's development expenses. BioNTech will also be able to leverage Pfizer's international commercial network to rapidly deploy doses of BNT162b2.
Since the beginning of its coronavirus vaccine program, the company has secured more than $1.1 billion in gross proceeds through milestone payments, equity, and debt financing. And combating the coronavirus is not its only gig: Investors buying BioNTech now will also be picking up multiple clinical programs in its pipeline, including those in the field of cancer immunotherapy.
5. Inovio Pharmaceuticals
Meanwhile, Inovio Pharmaceuticals (INO +0.95%) is developing a DNA coronavirus vaccine candidate known as INO-4800. In early testing, the vaccine candidate induced favorable levels of neutralizing antibodies and T-cell responses when given to healthy volunteers. The company expects to advance the experimental vaccine into phase 2/3 clinical testing this month.
Although the early results are promising, Inovio ran into a legal dispute with its contract manufacturer over intellectual property use. Additionally, the company's vaccine was not selected as part of the U.S. government's Operation Warp Speed program, and it has not yet secured any orders. Inovio's stock is definitely not for the faint of heart and is more suited for those with a high-risk, high-reward mentality.
6. Novavax
Last but not least, Novavax (NVAX 4.92%) has just recently advanced its protein-engineered coronavirus vaccine candidate, NVX‑CoV2373, to phase 2 clinical trials. In earlier stages, the experimental vaccine demonstrated neutralizing antibody and T-cell response levels similar to those of its competitors.
Since the inception of its coronavirus program, the company has secured over $2 billion in funding for NVX‑CoV2373. Both the U.K. and Canadian governments have faith in the company's science, with orders amounting to 76 million and 60 million doses, respectively. Assuming Novavax prices each dose at $20, the deals could translate to more than $2.7 billion in gross revenue if the vaccine succeeds in clinical trials. That's excellent news, considering the company's market cap is only $6.5 billion. Hence, this is a stock biotech investors will not want to miss out on.
