Welcome back to Cook’s Kitchen where we love to talk and learn about Biotechnology companies! And it’s even better when we’re making money doing it.
In today’s video, I take a quick look at six stocks on my radar (or in my portfolios) and what has me so interested in them. Most of them are SARS-CoV-2 vaccine or testing companies.
But a couple are popping right now because they have encouraging data related to neurological diseases like Alzheimer’s. Those two are
Cassava Sciences
SAVA
and
Anavex Life Sciences
AVXL
.
Cassava launched 141% on Tuesday — from $23 to $55 — after releasing results of an interim analysis from an open-label study of simufilam, its lead drug candidate for the treatment of Alzheimer’s disease. Patients’ cognition and dementia-related behavior scores both improved following six months of simufilam treatment, with no safety issues, as adverse events were mild and transient.
This data paves the way to enter Phase 3 trials this year. SAVA is up another 45% today to $80 as I type this report, even as the bullish analyst from Cantor, Charles Duncan, says the data is “encouraging” but he would “interpret the observations with caution given they are from a non-controlled study.” Duncan maintained his $24 price target on SAVA shares.
My colleague Brian Bolan scooped SAVA near $7 for his Stocks Under $10 portfolio at Zacks!
And Anavex appears to be trading along for the ride as its shares are up over 60% in two days, from $6.50 to nearly $11. In the video, I explain why I bought AVXL last year near $4 for my
Healthcare Innovators
portfolio. It has a little something to do with
Axsome Therapeutics
AXSM
and a certain analyst’s research on CNS (central nervous system) companies.
Vaccine Vortex: Virus Variant Velocity
In the video, I also go over why I sold
Novavax
NVAX
after last week’s new Phase 3 data from clinical trials in the UK. Here’s what I told my followers in my Healthcare Innovators that day…
It was really a fantastic day for the company and investors — those who did the work and those who believed in them — and I applaud them both.
I took the gain because the stock may be getting ahead of the data. Let’s go over the specifics…
Key vaccine efficacy data for NVX-CoV2373:
1) 95.6% against the original COVID-19 strain (~50% of cases in the UK Phase 3 study).
2) 85.6% against the B.1.1.7 (“UK”) variant (~50% of cases in the UK Phase 3 study).
3) 49.4% against the B.1.351 (“SA”) variant (~90% of cases attributable to SA variant) overall in the South Africa Phase 2b.
4) 60.1% against the B.1.351 (“SA”) variant (n~90% of cases attributable to SA variant) in HIV negative patients in the S.A Ph2b.
The South African data is weak and the UK data doesn’t necessarily guarantee FDA approval in the US.
(end of excerpt from HCare Innovators commentary)
Of course I took the gain too early in hindsight. But that’s the nature of biotech. Buying right is more than half the battle that gives you the freedom to occasionally be wrong about when you sell.
On Friday, Charles Duncan from Cantor with another big win, boosted his PT on NVAX to $248 from $211.
Then on Monday, B. Riley Securities analyst Mayank Mamtani raised the firm’s price target on Novavax to $334 from $223. The analyst marveled at how “In less than a year, Novavax has now demonstrated overwhelming success meeting primary and key second endpoints in two Phase III registration-enabling trials, for NanoFlu in high-risk elderly population for prevention of influenza and now for NVX-CoV2373 in healthy adults for prevention of Covid-19.”
Mamtani also sees “significant competitive differentiation” for Novavax in gaining meaningful market share as a new entrant in “two fast-growing market segments within the global infectious disease market.”
My other vaccine play,
Moderna
MRNA
, traded higher in sympathy with the NVAX data. I also sold some but not all MRNA shares because I believe that the their messenger-RNA platform has significant runway for years to come. Here was a December profile I did where I just scratched the surface of the potential of mRNA…
Moderna Vaccine: The Power of mRNA Technology
Speaking of vaccine innovation excitement, I just bought a little company that may one day deliver the first oral vaccine for SARS-CoV-2,
Vaxart
VXRT
. The developmental-stage biotech released preliminary Phase 1 data from a clinical trial that showed the study reached primary and secondary endpoints of safety and immunogenicity, respectively.
Their candidate VXA-CoV2-1 induced potent CD8+ T-cell responses and was found “potentially” protective against new and emerging COVID-19 strains. As investors and medical professionals awaited a data presentation today at the New York Academy of Sciences Symposium “The Quest for a COVID-19 Vaccine,” the stock was extremely volatile, falling over 50% from a short-covering rally on Tuesday.
I told my group that “Understanding the risks of buying a company with only Phase 1 data that has not been fully evaluated by the scientific and medical communities, we could start new positions between $9 and $11.”
Their data may not impress scientists right now, but I’m betting they will still get funding to proceed with the next phases. And the potential is intriguing for at least two reasons besides the possibility of a COVID pill.
First, if successful, they will be targeting a unique opportunity as the only “mucosal” vaccine after Merck recently abandoned their attempts. According to some doctors, novel coronavirus is a pathogen of a mucosal organ, different than those viruses that attack systemic organs. Current vaccines are systemic, and can only reduce disease severity.
Secondly, if successful, a pill for COVID could be room-temperature stable and not require extensive cold-chain technologies.
Why own more than one vaccine stock?
Because the demand outstrips supply right now, plus countries want differentiated platforms and technology.
The Panther of Pandemic Preparedness
The same goes for the COVID-19 diagnostic companies. I own three different test-kit makers for the same reason, including
Meridian Bioscience
VIVO
and
Hologic
HOLX
.
In the video, I spend some time talking about the incredible “warp speed” of Hologic’s scientific teams to come up with one of the first SARS-CoV-2 test kits using their advanced genomic platform called Panther Fusion.
After another big beat-and-raise quarter reported last week, Hologic’s price target was raised to $95 from $90 at Wells Fargo. Analyst Dan Leonard believes the company’s growth opportunities in Diagnostics are “underappreciated” at current levels. In particular, he expects the Diagnostics business will emerge from the COVID pandemic structurally stronger.
This has been a persistent thesis of mine since last summer as the new rivers of cash flow will enable much more R&D for the diagnostic companies. So for those analysts and investors who say that the rivers will dry up in 2022, I say we should remember that the “warp speed” innovations which created 10 years worth of scientific advance in 10 months will be center stage for years to come as we fight new virus variants and mutations of zoonotic diseases.
Disclosure: I own MRNA, VIVO, HOLX, VXRT, and AVXL shares for the Zacks Healthcare Innovators portfolio.
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