Investors looking for stocks that could make them dirty rich would look no further than the biotechnology sector. Shares of these high-profile stocks can lead to enormous gains, but each has some important caveats to consider.
Here’s what investors want to know about CureVac (NASDAQ: CVAC) en Sorrento Therapeutics (NASDAQ: SRNE) before jumping headlong to the shallow end of the stock market.
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CureVac: New and shiny
On Friday, August 14, 2020, this clinical stage biotech share made its market debut in the US price at $ 16 per share, and then 249% vaulted to end its first day of trading at $ 56 per share. Unusual demand for a safe and effective coronavirus vaccine could drive shares of this brand new biotech stock even higher.
The development of CVnCoV, CureVac’s SARS-CoV-2 vaccine candidate, is partly funded by non-profit groups such as the Bill & Melinda Gates Foundation, and collaborative partnerships with biotech peers large and small. Since the start of operations 20 years ago, CureVac has been paid seven figures in advance to develop new drugs from Eli Lilly (NYSE: LLY), Boehringer Ingelheim, en Genmab. In July, GlaxoSmithKline (NYSE: GSK) agreed to pay the German biotech headquarters 120 million euros in advance to develop messenger RNA-based faxes that do not include CVnCoV.
Before you get excited about CureVac and its connections in the industry, it is important to realize that the entire pipeline of this company is built around a messenger RNA (mRNA) technology platform with a dubious track record. CureVac has developed mRNA-based drugs without a successful clinical trial. Currently, the company’s most advanced new drug candidate is CV8102, an experimental cancer vaccine that treats tumor shrinkage for only two of the 36 skin cancer patients treated in a phase 1 study.
CureVac’s SARS-CoV-2 vaccine program began a Phase 1 clinical trial in June that was expected to include 168 healthy adults. We are still waiting for signs of effectiveness that a larger, pivotal study may require.
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Sorrento Therapeutics: Way behind
This is another clinical-stage biotech that has received attention in response to advances with an experimental drug intended to address the coronavirus pandemic. Sorrento Therapeutics is developing STI-1499, a DNA-based COVID-19 research antibody that can inhibit SARS-CoV-2 and prevent the virus from entering host cells.
Shares of Sorrento could make investors wealthy if STI-1499 succeeds, but it’s important to understand how little we know about the company’s COVID-19 treatment candidate. Sorrento has reported encouraging results from animal models, but has not yet submitted a research application for new drugs (IND) to the Food and Drug Administration, which is required to begin testing a new drug candidate in humans.
Earlier this month, the National Institutes of Health (NIH) launched a Phase 3 clinical trial program that will test experimental COVID-19 treatments from various companies in head-to-head testing. Eli Lilly’s LY-CoV555 is the first COVID-19 treatment in the NIH’s head-to-head study, but a double-antibody cocktail of Regeneron (NASDAQ: RAIN) is probably not far behind. As one of the experimental treatments that these NIH studies are introducing, set a high bar for effectiveness that STI-1499 could not better than Sorrento shares to the south.
Tough odds
At recent prices, Sorrento Therapeutics has a market capitalization of $ 2.7 billion that could rise many times over if STI-1499 shows that it has what it takes to take potential COVID-19 vaccines already in late-stage testing. Given how little we know so far, the chances of that success are extremely slim. Roughly 10% of drugs that succeed in Phase 1 go through with FDA approval, and this company does not yet have candidates for coronavirus ready to begin a Phase 1 trial.
With CVnCoV in Phase 1 tears at the moment, CureVac is miles ahead of Sorrento – but so is the $ 9.9 billion market cap. Because we do not know if CVnCoV succeeded in Phase 1, we need to put its chances to finally earn approval below average. That makes CureVac an ultra-risky stock to avoid at the moment.
