2 Winning Stocks to Buy in the Coronavirus Panic
While the spread of COVID-19 has destroyed billions of dollars of market value
, stocks in healthcare companies that are fighting the virus continue to advance.
Working on a COVID-19 vaccine
When vaccine specialist Novavax
) announced it was working on a preventative drug for COVID-19, the stock shot up
dramatically. At one point, shares quadrupled
in value to $16. Since then the stock has been sliced down to $8.93 on Tuesday. Double-digit moves seem to happen almost every day with this small-cap biotech
Novavax is unprofitable and has no approved drugs yet, so it's a risky stock. But it's also in a sweet spot right now as people are really starting to focus on preventing deaths from infectious diseases. Novavax's major drug is NanoFlu, a vaccine for the flu that is finishing up phase 3 trials this month. Novavax is expected to announce its test results in a few weeks
Novavax bulls are excited about this flu drug because NanoFlu has been outperforming
the market-leading flu vaccines from Sanofi
) in all the trials so far. And this is big news because the flu kills hundreds of thousands of people worldwide every year, making flu vaccines a $5 billion market opportunity. Novavax's valuation is still tiny ($563 million) compared with that opportunity.
Still, what's been driving the stock this year is not the flu, but rather the panic over COVID-19. It's a new disease, and yet Novavax was able to introduce a vaccine candidate very quickly
. Phase 1 trials are expected to start this spring. Normally it takes drug companies eight to 10 years for vaccine development. As we saw with NanoFlu, that timeline can be escalated. Novavax started testing NanoFlu in ferrets in 2017
and two and a half years later, the drug is finishing its phase 3 trial in humans.
Novavax would like to move its COVID-19 drug through clinical trials at an even faster rate. Certainly, the government would like to get a vaccine to market as soon as possible. Tony Fauci, the head of the National Institute of Allergy and Infectious Diseases (NIAID), believes we might see COVID-19 drugs available to the public in a year to 18 months. Greg Glenn, the president of research and development at Novavax, said that schedule was "aggressive but possible."