Last year, the COVID-19 pandemic and the ensuing stay-at-home orders brought severe economic troubles upon us -- the effects of which are still very much present. And although the economy, and our everyday lives, aren't fully back to pre-COVID norms yet, there are good reasons to be optimistic. Most notably, efforts to vaccinate much of the world's population against the disease are ongoing.
Thanks to these efforts, life will continue to crawl toward something resembling pre-COVID normalcy. This, of course, bodes well for the stock market, which is forward-looking. While President Joe Biden took office amid an unprecedented crisis, the eventual reopening of the economy could lead to a bull market under his watch. Two stocks that could ride this wave are Novavax (NVAX -0.95%) and Eli Lilly (LLY -1.81%). Read on to find out why both of these healthcare stocks are worth buying.
1. Novavax
Is it too late to buy shares of Novavax? On the one hand, the company's stock is up by 1,230% in the past 12 months, largely thanks to its efforts to develop a coronavirus vaccine. One could argue that Novavax's perceived success in this space is already baked into its stock price. However, there are both short-term and long-term catalysts investors can count on to push the biotech even higher.
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Novavax recently announced that its COVID-19 vaccine, NVX-CoV2373, proved highly effective against the original strain and the U.K. variant of the SARS-CoV-2 virus that causes the disease. And while its efficacy against the variant that originated in South Africa wasn't as impressive, NVX-CoV2373 was 100% effective at preventing severe cases of COVID-19, hospitalization, and death.
Novavax looks likely to earn emergency use authorization for NVX-CoV2373 in the U.S. and elsewhere, and while there are several competitors in this field whose products are already on the market, Novavax can still make a dent in it. The biotech has already secured agreements with the governments of Canada, Australia, New Zealand, and the U.K. to supply them with several million doses of its vaccine.
Analysts think Novavax will generate $4.26 billion in revenue this year, which is very impressive for a company that had no products on the market last year. The company's long-term prospects rest in part on NanoFlu, a potential vaccine for the flu. This disease continues to cause thousands of deaths every year, especially among adults aged 65 and older.
In a pivotal phase 3 clinical trial, NanoFlu showed non-inferior immunogenicity (the ability to trigger an immune response in the body) compared to Sanofi's Fluzone, one of the leading flu vaccines on the market. In my view, NanoFlu also has blockbuster potential.
And thanks to the combined opportunity from Novavax's two leading programs, as well as its other pipeline candidates, this biotech stock is well-positioned to continue delivering market-beating returns this year and beyond.
2. Eli Lilly
Pharma giant Eli Lilly boasts a deep lineup of life-saving drugs. In the coronavirus market, the company's bamlanivimab, a monoclonal antibody treatment for the disease, earned emergency use authorization from the U.S. Food and Drug Administration (FDA) in November, and the product is already contributing meaningfully to the drugmaker's top line.
During its Q4 2020 ending Dec. 31, bamlanivimab racked up $871 million in revenue. There will be less of a need for COVID-19 treatments as vaccines become mainstream, but investors can't ignore the short-term boost bamlanivimab is providing to Eli Lilly.
That said, the company's long-term opportunities rest on such products as Trulicity, a diabetes treatment that generated $5.1 billion in revenue in 2020, 23% higher than the prior year. Cancer medicine Alimta is another blockbuster, having recorded sales of $2.3 billion last year, a 10% year-over-year jump.
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Other notable products in Eli Lilly's lineup include plaque psoriasis treatment Taltz and diabetes drug Jardiance. Sales of the former came in at $1.8 billion last year, climbing by 31% compared to the fiscal year 2019. Jardiance's revenue clocked in at $1.2 billion, a 22% year-over-year jump.
Eli Lilly also has several promising pipeline candidates. One of the company's promising programs that has been making noise lately is donanemab, a potential treatment for Alzheimer's disease (AD). The quest to develop a medicine for AD has been going on for a while, and if Eli Lilly is successful, the company will reap immense financial benefits. However, investors should keep a few things in mind.
First, even though the pharma giant recently reported positive results from a phase 2 clinical trial for donanemab, these results weren't all they were made out to be. Other potential AD drugs are also being developed. Most notably, Biogen's aducanumab is currently being evaluated by the FDA. Even with these caveats, donanemab is by no means Eli Lilly's only pipeline program: The company is currently running several dozen clinical trials, including more than 12 phase 3 studies.
These should lead to at least half a dozen new products (or additional indications for existing products), thereby boosting its revenue. Thanks to its rich lineup and pipeline -- as well as its strong financial results -- Eli Lilly looks well positioned to ride the wave of a bull market under the current administration.
