The COVID-19 pandemic has translated into staggering gains for some biotech stocksthis year, rendering valuations unattractive even after the positive financial impact of the viral outbreak is taken into consideration.
Valuation Bubble In Play: It's a no-brainer that some biotechs that are working on coronavirus vaccines or treatments are making heady gains.
Data Source: Yahoo Finance and YCharts
Novavax Gets Fresh Lease of Life: Novavax on the brink early in 2019 after its respiratory syncytial virus vaccine candidate flunked a late-stage study.
The company effected a 1-for-20 reverse split in May 2019 to give a decent look to the stock, which had entered penny stock territory in the wake of the adverse readout.
After ending 2019 at $3.98, the stock has run up strongly and is now trading around $140.
From a $128.76-million market cap at the end of 2019, the stock's valuation has catapulted to $8.245 billion, based on Friday's closing price. This represents an increase of over 6,300%.
Ironically, while some of the other contenders have reported preliminary early- and mid-stage readouts, Novavax has yet to report any kind of clinical data.
It is expected to issue an interim Phase 1/2 readout later this month.
The company has also managed to line up funding for its vaccine program from the likes of CEPI and the federal government's Operation Warp Speed, reflecting confidence in its vaccine program coming to fruition.
Moderna Goes From Obscurity To Spotlight: Moderna's rise to prominence in the coronavirus vaccine race comes as a surprise to some.
This Cambridge, Massachusetts-based biotech was the first among the U.S. companies to enter the clinic with an unproven vaccine technology and is on the cusp of starting a Phase 3 trial.
Moderna was also part of the initial list of five vaccine makers endorsed by Operation Warp Speed.
Despite the stretched valuation, the sell-side is upbeat on Moderna.
Following publication of detailed Phase 1 data in the New England Journal of Medicine, Needham analyst Alan Carr said he expects revenue to flow in from Moderna's coronavirus vaccine — mRNA-1273 — from 2021 onward.
"We acknowledge the stock has performed well lately, but believe there is still upside opportunity for investors with a long-term perspective," he said in a note.
After a positive start, the company has fallen behind and has had distractions including litigation with its South Korean CDMO.
Notwithstanding the skepticism and controversies, Inovio has seen its market cap rise by over 12 times compared to over five times for Moderna.
Teledoc Capitalizes On Remote Health Care: Telehealth has been a big beneficiary of social distancing, and the interest in this avenue is evident from CMS and endorsements from private providers. Teledoc, being the leader in telehealth services, has cashed in on this opportunity.
Zoom's COVID-19 Windfall: Zoom has become the go-to-app that enables remote working. The company has executed well, working on security issues that cropped up earlier this year.
The valuation, which has more than trebled, seems justified, given the strong growth in subscriber numbers and revenues.
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