When most of us think of successful coronavirus stocks, we think of vaccine makers. But treatment makers are gaining momentum these days -- and that movement may not be over. Why? Coronavirus cases have been climbing since July. Many cases strike unvaccinated individuals. But even some vaccinated people have experienced breakthrough infections.
As a result, demand has surged for a particular treatment that wasn't always so popular: monoclonal antibodies. And states hardest hit by the crisis, such as Florida, have raced to open new treatment centers. In July, the government shipped five times more antibody treatments to states than it did in the previous month. Now, this may be the big moment for two makers of monoclonal antibodies -- and it's likely to lead to more revenue in the future too. Let's take a closer look.
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Avoiding severe disease
So, which companies are we talking about? Regeneron (REGN 0.13%), the maker of antibody cocktail REGEN-COV, and smaller player Vir Biotechnology (VIR 3.79%). Last year, the U.S. Food and Drug Administration authorized Regeneron's treatment for mild to moderate COVID-19 cases where the risk of progression to severe disease is high. The FDA authorized Vir's treatment for the same patient population in May.
Initially, monoclonal antibody treatments weren't exactly flying off the shelves. The treatments are given by infusion at infusion centers. In some cases, healthcare systems didn't have the resources to set up these centers. And in other cases, potential patients didn't want to take the time to find a center and get the treatment.
In recent weeks, however, the headwinds facing antibody treatments have disappeared. The U.S. government sent 108,000 treatments around the country in July, according to the White House. Regeneron says it's currently seeing orders of more than 50,000 doses a week, and at this rate it expects the U.S. to use up its REGEN-COV doses by the end of the year.
Regeneron delivered the U.S.' full order of 1.25 million doses of its antibody cocktail in the second quarter. That represents revenue of $2.59 billion.
More than 70% reduction in hospitalization
Vir is newer to the market, but it may gain market share due to the strength of its data. Vir and partner GlaxoSmithKline's antibody treatment sotrovimab showed a 79% reduction in hospitalization and death compared to a placebo in trials. When given to outpatients in a clinical trial, REGEN-COV demonstrated a 70% reduction in hospitalization and death. Both sotrovimab and REGEN-COV are holding up against variants of concern -- that makes them key tools for fighting the current wave and potential waves ahead.
Regeneron says it doesn't expect significantly more REGEN-COV revenue this year unless case rates continue to rise rapidly. And clearly, the current antibody revenue is light years away from coronavirus vaccine revenue. Pfizer forecasts revenue this year from its coronavirus vaccine of more than $33 billion.
But that's OK. Antibody treatments still may deliver blockbuster levels of revenue for Regeneron and Vir into the future. Here's why. Right now, the federal and state governments are pushing for these treatments, and patients are going for them. We're hearing more and more stories about their lifesaving performance. Right now, antibody treatments are proving themselves.
A virus that's here to stay
At the same time, experts have said the coronavirus is here to stay. Even with high vaccination rates and strong vaccine efficacy, there are still breakthrough cases. And there are still individuals who refuse vaccination or who aren't able to mount an immune response after vaccination. So, antibody treatments are needed.
More and more people soon may be offered antibody treatments too. Label expansions allow for use in a broader audience. Most recently, the FDA authorized REGEN-COV as a preventative treatment in some people exposed to the coronavirus.
All of this means it's very likely governments will place new orders for antibody treatments next year and beyond. And that equals a steady source of revenue for Regeneron and Vir.
Shares of Regeneron and Vir are already climbing. They've jumped 40% and 86%, respectively, so far this year. But I don't think the gains are over. The points I mention above, such as increased use, label expansions, and additional orders for the treatments all are likely to push the shares higher. This isn't the very beginning of the antibody story. But there are still many chapters left to read. And that means there's time for investors to get in on this compelling story.
