A coronavirus vaccine would arguably save countless lives and help economies around the world recover from a recession through herd immunity. As a result, everyone in the investment world is talking about biotechs that are scrambling to develop a vaccine against SARS-CoV-2, the coronavirus that causes COVID-19.
One advantage emerging coronavirus stocks have over established players is their market cap. While coronavirus vaccine companies such as Moderna, AstraZeneca, and Pfizer have market caps amounting to tens of billions of dollars, small- to mid-cap coronavirus stocks can potentially be multi-baggers, albeit with higher risks. Let's look at the four rising stars in the coronavirus vaccine race, and why investing $3,000 in any combination of them is a good idea.
1. Sorrento Therapeutics
Sorrento Therapeutics (SRNE 6.05%) is a biotech that aims to tackle all aspects of the COVID-19 pandemic. As of now, the company plans to seek Emergency Use Authorization from the U.S. Food and Drug Administration (FDA) for its COVI-TRACE COVID-19 saliva diagnostic test. Columbia University developed the test, which can produce results in as little as 30 minutes.
The biotech has already submitted for FDA Emergency Use Authorization for its COVID-19 antibody test, which determines whether or not a person has had a previous COVID-19 infection. What's more, the company also has two different categories of COVID-19 antibodies, a decoy protein that can potentially inhibit a SARS-CoV-2 infection, and one experimental vaccine in preclinical studies.
The most advanced of the company's COVID-19 portfolio is abivertinib. This enzyme inhibitor can potentially treat patients with moderate to severe COVID-19 who are experiencing an overreaction of the body's immune system due to the disease.
As of Sept. 3, the company's market cap stands at $1.82 billion. The biotech has a cash balance of $24.4 million, versus a loss of $82.2 million in Q2 2020. Hence, investors should be cautious as a stock offering may be on the table in the short term.
2. Dynavax Technologies
As part of the fight against COVID-19, Dynavax Technologies (DVAX -2.10%) is developing an adjuvant vaccine, an auxiliary biological compound that combines with conventional vaccines to boost their immunization properties. The adjuvant, called CpG-1018, is awaiting preclinical testing results with coronavirus vaccine candidates that will conclude in the fourth quarter of 2020. If successful, then investors should expect CpG-1018 to enter clinical trials in conjunction with cornavirus vaccines in development.
Dynavax is well prepared in the event that coronavirus candidates that use its adjuvant pass advanced clinical testing.Medicago, the company's research and development partner, can produce up to 100 million doses of its vaccine candidate that uses Dynavax's adjuvant by late 2021 and scale this number to 1 billion by the end of 2023.
That's not all; Dynavax has also developed an improved version of Heplisav-B, its hepatitis B vaccine that received regulatory approval last year. Ryan Spencer, the company's CEO, said he estimates the market demand for immunization against hepatitis B is about $500 million per year in the U.S.
That is quite an opportunity, considering Dynavax only has a market cap of $581 million. The company also has a solid cash position: As of June 30, the combined total of the company's cash and investments stood at more than $200 million.
Unlike all other biotechs in the coronavirus vaccine race, Vaxart (VXRT 2.21%) is developing an oral tablet that can potentially provide immunity against the coronavirus. If successful, this type of vaccine would have significant logistical advantages over injectable vaccines, notably, the ability to have it delivered at home.
Operation Warp Speed is currently organizing and funding the company's experimental vaccine in preclinical studies. To date, Vaxart has secured partnerships with multiple manufacturers to ensure mass production of its vaccine should it advance in clinical trials. Aside from battling the coronavirus, the company also has an influenza vaccine program in its pipeline along with several other vaccine candidates.
Vaxart has no debt and over $44 million in cash on its balance sheet. Its market cap currently stands at close to $580 million.
Last but not least, CureVac (CVAC 0.67%) is developing a messenger RNA vaccine against SARS-CoV-2. The vaccine candidate, called CVnCoV, is currently in phase 1 clinical trials, with results expected by the end of the year. CureVac expects it will be able to push its experimental vaccine into phase 2/3 clinical trials in Q4 2020.
CureVac's market cap of more than $10 billion is the biggest out of all companies discussed so far. However, the company's valuation is mostly the result of investors' confidence in its science. Currently, the German government is in advanced talks with CureVac to secure up to 225 million doses of CVnCOV, with the option to obtain an additional 180 million doses.
Even if CureVac charges as little as 20 euros per dose, that still means the company can recognize up to 8 billion euros of revenue within the next two years. That's not bad for a company that only recently conducted an IPO. Before CureVac went public, it had about 790 million euros in cash and investments and only 132 million euros in total liabilities.