The year of biotech sector?

Of course 2020 will be remembered for the Covid-19 pandemic and its consequences. Amid the ongoing pandemic, with the names developing Covid-19 solutions being catapulted to remarkable highs, biotech stocks have taken center stage. But, after posting such huge gains, where do these stocks go from here?

Shares of some companies developing coronavirus vaccine candidates have witnessed gains on hopes that a successful development an distribution will likely lead to significant amount of revenues.

AstraZeneca AZN, +0.81% stock rose more than 2% on Monday(24/08/2020), following reports President Donald Trump is considering fast-tracking the drugmaker’s coronavirus vaccine candidate, in a bid to make it available to Americans before the November election.

The pharmaceutical giant quickly dismissed the claims its Covid-19 vaccine could be fast-tracked in the US. The company which oversees manufacturing and distribution of this vaccine, said it has not entered any talks about getting it an emergency use authorisation in the US. It added that it would be ‘premature to speculate on that possibility’.

AstraZeneca’s potential vaccine is being developed in partnership with the University of Oxford. The team of scientists reported the vaccine produced a “strong immune response” in Phase I/II trial results in July. The vaccine is now in large-scale Phase II/III trials, which includes a trial of 30,000 people in the U.S., a pediatric study and trials in low-to-middle income countries, such as Brazil and South Africa.

Guardian reported that the same company has started a clinical trial of a drug to help prevent and treat Covid-19, with the first volunteers already receiving doses. The drug, known as AZD7442, is a combination of two monoclonal antibodies.

According to Daniel Mahony, an investment manager specialising in healthcare at Polar Capital, AstraZeneca is not going to make a lot of money even in the best-case scenario.

I am still not convinced they are going to make a lot of money out of [a vaccine] or whether they even intend to. Say they provide 400 million doses to America and it is sold at $20 (£16) a dose, they would only be making $3 (£2.40) in profit per dose, if that,” -he said.

Yahoo Finance reported that 5 stocks have risen more than 100% this year so far, including Emergent Biosolutions Inc. EBS (Shares of the company have rallied 137.3% so far in 2020), Horizon Therapeutics HZNP (Shares of the company have rallied 108.1% so far), Novavax, Inc. NVAX (Shares of the company have rallied 3357.8% so far), Celldex Therapeutics, Inc. CLDX (Shares of the company have rallied 392.8%), Aileron Therapeutics, Inc. ALRN (Shares of the company have rallied 114.7% so far).

Companies like Moderna, Pfizer and AstraZeneca are the leading names involved in developing a vaccine. While Emergent Biosolutions is one of the companies leading the race of companies providing manufacturing services to vaccine makers. Pfizer, Sanofi and Glaxo have also collaborated with small biotechs in search of a vaccine, which boosted their stock prices.

The upside in biotech sector has been led by the small companies, primarily the ones mentioned above and closely related to the coronavirus vaccine. Biotechs developing a vaccine against COVID-19 are also attracting significant amount of funding from governments across the world and other public as well as private organizations to support development.  

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