As the world holds its breath in wait for a COVID-19 vaccine, other potential anti-viral treatment haven't garnered the same amount of press. But they should be: It will likely take multiple types and combinations of therapeutic approaches in order to put a stop to the pandemic. Luckily, there are over 300 coronavirus treatment candidates currently in various stages of preclinical and clinical studies. Many of these are antibody-based therapies.
The immune system produces antibodies to help a person resist a particular illness. Antibodies, a type of blood protein, are distinctive to the virus they are associated with. Once someone contracts an illness, the antibodies generated by their immune system can help the person convalesce and avoid future infection. If successful antibody therapeutics could be developed to treat and prevent SARS-CoV-2 infections, they could be game-changers in the fight against the disease that's caused worldwide economic shutdowns and killed almost 200,000 people in the U.S. alone. One significant question, however, is exactly how long COVID-19 antibodies can remain in the body and what kind of immunity they provide. It's also unclear what impacts the longevity and strength of the antibodies, such as a person's age and the severity of their prior COVID-19 illness.
GlaxoSmithKline (GSK -0.83%) and Regeneron (REGN -0.80%) are two companies leading the way in developing prospective antibody treatments for COVID-19. These large-cap stocks also boast robust balance sheets and strong drug portfolios, making both companies solid investments, even if their antibody treatment candidates don't make it to market.
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GlaxoSmithKline
On April 6, GlaxoSmithKline announced that it was partnering with Vir Biotechnology (VIR -3.52%) to develop various antibody treatments targeting coronaviruses, with COVID-19 therapeutics among them. The collaboration leverages Vir's established monoclonal antibody platform and GlaxoSmithKline's prowess in the field of genomics.
A phase 2/3 study of VIR-7831, one of the companies' monoclonal antibody treatment candidates for COVID-19, began on Aug. 31. The study will involve 1,300 human subjects worldwide. The goal of the trial is to determine whether VIR-7831 is safe and effective in preventing the hospitalization of individuals who have mild or moderate cases of COVID-19 and are in the early stages of the disease.
Commenting on the initiation of the phase 2/3 study, GlaxoSmithKline's Chief Scientific Officer and President of Research and Development Dr. Hal Barron stated:
Monoclonal antibodies directed against the SARS-CoV-2 virus could provide an effective and immediate immune response to COVID-19, bypassing the need for our body to produce its own antibodies, which is particularly important in the absence of an effective vaccine. ... Pre-clinical studies with VIR-7831, which was identified through Vir's antibody platform, showed affinity for the SARS-CoV-2 spike protein and high potency in neutralizing SARS-CoV-2, suggesting a high barrier to resistance and an ability to recruit immune cells to kill already infected cells.
Management expects to release early data from the phase 2/3 study before the year is out, and full data in the first quarter of the new year. If VIR-7831 is successful in clinical trials, early doses could be available before the summer 2021. GlaxoSmithKline and Vir Biotechnologies are also developing a second potential antibody solution called VIR-7832 that could "function as a therapeutic and/or prophylactic T-cell vaccine" against SARS-CoV-2. A phase 2 human study of VIR-7832 is slated to begin before the end of the year.
GlaxoSmithKline has multiple stakes in the coronavirus treatment race. Apart from its partnership with Vir, the company is leveraging its pandemic adjuvant system to collaborate with Sanofi (SNY -1.56%), Medicago, and Clover Pharmaceuticals on three different COVID-19 vaccines. GlaxoSmithKline's vaccine candidate with Sanofi entered a phase 1/2 study on Sep. 3, while its separate candidates with Medicago and Clover Pharmaceuticals are in phase 1 clinical trials.
Although GlaxoSmithKline's sales were down 2% year over year in the second quarter, the strength of the company's core businesses still helped it achieve revenue of $9.7 billion during the three-month period. Sales in the company's respiratory division were up 17% in the quarter. GlaxoSmithKline's blockbuster HIV drug, Dolutegravir, snagged a sizable chunk of the company's revenue for the quarter, amassing about $1.42 billion in sales. Other key revenue drivers in Q2 included the chronic obstructive pulmonary disease (COPD) treatment Trelegy ($248.2 million), asthma treatment Nucala ($308.4 million), and HIV-1 drug Juluca ($144.6 million). The company closed the second quarter with approximately $2.5 billion in free cash flow. Despite the impact of the pandemic on the company's operations, total group sales across all divisions grew 8% in the first six months of 2020, totaling $21.4 billion.
GlaxoSmithKline's COVID-19 vaccines are still in early stage clinical trials, and the efficacy of its antibody therapies with Vir Biotechnology remain to be seen. The good news is, GlaxoSmithKline doesn't need these candidates to fuel future growth, and will fare just fine with or without success in the coronavirus race. The stock is also a great one for dividend investors, with a healthy and regular yield that pays 5.2%.
Regeneron
Regeneron stock has been on quite a few investors' watch lists this year, most notably because it has consistently outperformed the S&P 500 throughout 2020. Over the trailing 12 months, shares of the company have gained 92%, considerably surpassing the S&P 500's gains over the past year of around 14%.
Regeneron's COVID-19 treatment candidate is a dual antibody cocktail called REGN-COV2. The company has already signed a $450 million manufacturing and supply agreement to provide the U.S. government doses of REGN-COV2 if it is proven safe and effective.
On June 11, Regeneron announced that it had initiated its first clinical trial for REGN-COV2, which is being evaluated both as a preventative solution and as a treatment against COVID-19. Regeneron is studying the safety and efficacy of REGN-COV2 across several groups of participants: individuals who are not sick with COVID-19 but have been exposed to an infected person, at-risk workers like frontline medical professionals, individuals who have COVID-19 but haven't been hospitalized, and infected individuals who require hospitalization.
Regeneron announced it would be collaborating with Swiss pharmaceutical company Roche on the development and distribution of REGN-COV2 on Aug. 19. Management anticipates the partnership to more than triple the available doses of the dual antibody cocktail, which is now being assessed in a phase 3 clinical study and two phase 2/3 clinical studies.
The company recorded double-digit sales growth in both the first and second quarters of this year. Regeneron's revenue was up 33% year-over-year in the first three months of 2020. In the second quarter just ended, the company reported a 24% increase in quarterly revenue from the year-prior period.
During the second quarter and the height of the pandemic, the company's stellar balance sheet was fueled by sales of eczema drug Dupixent (which it developed with Sanofi), macular degeneration drug Eylea, immunotherapy treatment Libtayo, and cholesterol medication Praluent. These drugs achieved Q2 sales of $770 million, $1.1 billion, $63 million, and $47 million, respectively. Regeneron finished the three-month period with $943 million in net cash flow from operations, significantly up from the $188 million it reported in Q2 2019. The company's current debt sits at above that number at $1.5 billion.
Although the approval of its dual antibody cocktail would be a major win for Regeneron, its investors, and the public, the company has much more to offer in terms of its growth prospects. Regeneron's extremely profitable lineup of products and attractive cash position are just two compelling reasons why this stock is a buy to help recession-proof your portfolio for the next market crash.
