Biotech companies in clinical stage that include Modern (NASDAQ: MRNA) and Inovio Pharmaceuticals (NASDAQ: INO) They have been making huge profits as investors bet on their COVID-19 vaccine candidates. The shares of these companies have shot up by 228% and 717%, respectively, in the first half of 2020. The idea of buying this type of performance is tempting, but the great risk is the following: companies in the clinical stage are still they have no products on the market, so if their efforts with COVID-19 fail, there is no other immediate possibility of income.
Fortunately, for those of us who want to minimize risk, there are still opportunities to invest in a COVID-19 vaccine manufacturer. In fact, you can invest in one of the leaders. I’m talking about AstraZeneca (NYSE: AZN), a company with $ 23.6 billion in annual product sales and more than $ 24 billion in total revenue.
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Association with Oxford
AstraZeneca did not enter the field of play from the beginning. It jumped more than a month after the Moderna vaccine candidate began human trials. However, at this point, the two companies are competing in the race. How did that happen?
In a smart move, AstraZeneca partnered with the University of Oxford in April for the development and distribution of its researchers’ promising candidate. The vaccine entered phase 2/3 studies in May. However, that doesn’t exactly put AstraZeneca ahead of Moderna. AstraZeneca’s trial design, which combines phase 2 and 3 studies, is different from Moderna’s. Moderna recently said it will begin testing Phase 3 on July 27.
Both companies are close when it comes to the timeline. Now the actual test will be the study data. (And that applies to all companies that develop COVID-19 vaccines.) AstraZeneca has not disclosed many details, but Andrew Pollard, the study’s chief investigator, said “clinical studies are progressing very well.” We can also be optimistic based on the experience of the team. The researchers involved participated in the development of a vaccine against the Middle East Respiratory Syndrome (MERS), which showed encouraging results in the first clinical trials. This work on MERS, another coronavirus, gave them an advantage in COVID-19 research.
Will AstraZeneca win the vaccine race, or even be second or third to produce a safe and effective vaccine? It is impossible to guarantee success with trials still ongoing. But the research team’s experience, feedback on progress and speed of development are reasons to be optimistic.
What happens if the program fails?
Everything is possible during clinical trials. So what happens if the AstraZeneca program fails? If you have invested in AstraZeneca, you have invested not only in the COVID-19 program, but also in a healthy portfolio of cancer drugs; cardiovascular, kidney and metabolic diseases; and respiratory conditions. Add to that a portfolio of 167 projects in various stages of development.
Oncology generates 40% of product sales, led by the blockbuster Tagrisso, a treatment for metastatic non-small cell lung cancer. In the last quarter, Tagrisso recorded a 58% increase in revenue to $ 982 million, making it the company’s best-selling drug. Seven of the company’s top 10 best-selling drugs reported double-digit sales growth in the quarter.
AstraZeneca returned to annual growth in total revenue last year after some difficult years. Generic competition weighed on sales of the successful cholesterol drug Crestor, which at its peak generated $ 6.6 billion in annual sales, and AstraZeneca reoriented its portfolio in the most promising therapeutic areas. AstraZeneca is yet to return to the level of more than $ 33 billion in annual revenue it recorded in 2011, but with so many medications boosting revenue, things look bright. Another advantage is the company’s presence in emerging markets. That market represents 36% of sales, and in the last quarter, sales there rose 16%.
Shares of AstraZeneca have not increased in triple digits this year, including in the announcement of the collaboration of the company’s COVID-19 vaccine with Oxford. But the action has been a reliable winner, 16% more.
AZN data by YCharts
If AstraZeneca wins the vaccine race, we can expect a huge boost to the stock. However, if you lose, I don’t expect a disastrous fall. AstraZeneca investors know that they can expect strong returns from other programs. And that is exactly why this pharmaceutical company is the coronavirus stock that it would buy right now.
