We all know that the pandemic is not over yet. But that does not mean that it is too early to start thinking about which vaccine stocks will increase when the crisis is over.
“Vaccine stock?” you can ask. “Isn’t the demand for vaccine over then?” Probably not.
Experts predict that the coronavirus – and new strains – will be around in the future. And that means that countries will need to buy doses of vaccines in addition to the pandemic.
It also means that many companies can benefit – not just those that put the vaccine on the market first. Currently, 82 candidate vaccines are in clinical development and 182 are in preclinical development, according to the World Health Organization.
The following three companies are dealing with worrying new variants – strains that are more transmissible or more dangerous than the original coronavirus. And that work can make them winners in the future.
Image source: Getty Images.
1. Novavax
Novavax (NASDAQ: NVAX) recently released positive data from a phase 3 study in the UK and a phase 2 study in South Africa for its experimental vaccine. The company reported 96% effectiveness against the original coronavirus, 86.3% effectiveness against the UK strain and 55.4% effectiveness against the South African variant. The company then expects to generate data from its phase 3 test in the U.S. and complete an application for Emergency Use Authorization in the second quarter.
These results show that Novavax can handle current variants to a certain degree. But Novavax is taking things a step further. The company is also investigating specific candidates for strains. Possibilities include a specific strain boost or a combined vaccine. Novavax plans to launch a clinical trial in the middle of the year.
The advantage of Novavax is that its original candidate vaccine against coronavirus is close to the market. This can generate revenue in the coming months – and a possible new product can generate revenue later.
2. Grain stone
Gritstone Oncology (NASDAQ: GRTS) is at an earlier stage. The advantage here is that it is starting with a focus on treating new varieties. The company signed a clinical trial agreement with the National Institute of Allergy and Infectious Diseases earlier this year. Together, they plan to start a phase 1 study.
Here’s what’s intriguing about Gritstone’s approach: the company’s experimental vaccine includes the peak coronavirus protein and parts of other viral genes. The idea is that the body’s T cells can identify and fight the virus – even if it has undergone a major mutation.
Today’s vaccines focus on the peak, which is the protein used to infect. The challenge is that if too many mutations alter the peak protein, the vaccine’s effectiveness will decrease.
Preclinical research has shown that the Gritstone candidate stimulated the neutralizing antibody and the T cell response against the peak and the T cell response against many other viral genes. If clinical tests confirm this, the Gritstone vaccine could be a formidable arm against strains of today and those of the future.
3. Innovation
Inovio Pharmaceuticals (NASDAQ: INO) was one of the first to enter the vaccine race. But the road has been rough. The U.S. Food and Drug Administration (FDA) partially suspended the company’s 2/3 phase study in the second half of last year. And it slowed things down. The FDA had questions about the trial and the smart device used to deliver the candidate vaccine.
Since then, the FDA has suspended control of the phase 2 part. And Inovio has completed enrollment in that part of the test. But the wait continues in phase 3, pending questions about the delivery device.
So far, Inovio has reported only data from the phase 1 study. The candidate produced neutralizing antibodies in most participants.
This is encouraging. But as the coronavirus strains gained ground, it will be important to see the test data at a later stage. This, and the fact that Inovio has lagged behind the others, makes me suspicious about the prospects of the vaccine candidate to gain market share.
But here’s what illuminates the image. Inovio has started to work on a new “pan-COVID” vaccine to better deal with the variants. The company is using its gene optimization algorithm to observe the sequences of the current varieties. The idea is then to create a synthetic spike protein to cover the variants of today and those of the future.
This type of vaccine can change the game. That’s because it can protect against possible variants even before they have a chance to develop.
Investing in Novavax, Gritstone and Inovio only because your new line projects are at high risk now because research is at an early stage. The companies have not yet started clinical trials with these candidates. But if the first test results are positive, the story can change quickly. And that is why, for investors hoping to get into the vaccines of the future, these three are biotech companies to watch out for.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even our own – helps all of us to think critically about investing and making decisions that help us become smarter, happier and wealthier.