- One of these companies is developing a tablet form vaccine, and the first human data may be available in a few weeks.
- The second company has an antibody treatment in phase 3, and interim data is expected in January.
- The biggest risk for both companies is failure of their investigational coronavirus products in human trials.
When we think of coronavirus stocks, the usual suspects come to mind: companies such as Moderna (MRNA 0.79%) or Novavax (NVAX 1.70%) that have brought potential products into phase 3 studies. Those stocks, which have already jumped more than 650% and 3,290% respectively this year, may continue to climb. But it's unlikely they can replicate that initial surge -- especially over a similarly short period of time.
Which companies do have the biggest potential for gains? Those with promising earlier-stage coronavirus treatment or prevention programs. These players are ultra-risky, but if they become winners of the next phase of the coronavirus vaccine and treatment races, their shares could soar. In that vein, here are two biotech companies to consider.
Vaxart (VXRT -1.31%) is developing a coronavirus vaccine that's administered by way of an oral tablet. The company began its first human trial for the vaccine candidate in October and completed enrollment in early November. The vaccine is given in two doses, 28 days apart. Based on that timeframe, final dosing for all trial participants should be completed in the coming days. When Vaxart announced the start of the trial, it said it expected initial data "in the next few weeks." So, it's possible the company may generate some results before the end of the year.
Although bigger rivals such as Moderna or Novavax closer to market, investors might wonder if there will be any market share left for others a year down the road. I think that there will be, for a couple of reasons: First, worldwide demand means we need several players. And second, there's always the possibility that later-to-market vaccines may be more efficacious or offer an advantage that an early player doesn't.
Vaxart has two big advantages -- and they both have to do with the vaccine candidate's tablet form. Injections aren't involved, and a room temperature stable tablet is easier and cheaper to ship and store. So, if data are positive, Vaxart could be a winner thanks to logistical reasons in the long term.
2. Vir Biotechnology
Vir Biotechnology (VIR 0.97%) has five coronavirus product candidates -- spanning treatment and prevention -- in its pipeline. An antibody for early treatment is farthest along the development pathway. That candidate, VIR-7831, entered phase 3 trials in September. Enrollment continues, and the company expects interim data possibly in January. Vir plans to move its second antibody candidate into human trials in the first quarter of next year. Both VIR-7831 and this candidate work by neutralizing the virus.
The company's other candidates remain in preclinical studies. They include antibodies for prevention and treatment, as well as an siRNA candidate meant to reduce viral replication.
If Vir's antibodies make it successfully through trials and are eventually approved, they face competition. The U.S. Food and Drug Administration (FDA) recently offered Emergency Use Authorization to Eli Lilly's (LLY 0.03%) and Regeneron Pharmaceuticals' (REGN 2.01%) antibody treatments. The risk here is whether Vir's antibodies will be too late to grab a share of the market. Vir has one way of beating rivals, though. That is by demonstrating superior efficacy. The company's CEO is confident, but only time and data will truly tell. A more efficacious product than rivals surely would be a big win for this company and its shareholders.
Should you buy?
Wall Street is bullish on both Vaxart and Vir. According to the average 12-month price forecast, Vaxart may climb 176%, and Vir might jump 93%. That could very well happen -- if both companies' coronavirus programs progress smoothly through clinical trials. And a product approval could push the shares even higher in the long term.
An important point to remember before buying Vaxart or Vir stock: Shares of clinical stage biotech companies have been particularly sensitive to coronavirus news. Rewards for making a bet on one of them can be great. But if their programs disappoint, losses can be devastating. That's because they don't have other commercialized drugs, so their near-term revenue prospects depend on bringing coronavirus products to market. The biggest risk for Vaxart and Vir these days is failure of their coronavirus candidates. So, even though share potential may look tempting, investment in these stocks right now is best left to investors with a high tolerance for risk.