The rise of biotech stocks: How COVID-19 vaccine companies have heralded a new era of healthcare investment
Publicly traded biotech companies that have been closely involved in developing vaccines for the COVID-19 pandemic have seen significant spikes in their stock prices over the course of the past year, with many shares more than doubling since the beginning of the health crisis.
One notable biotech company, Novavax, managed to catapult its stocks by over 1,500% between March 2020 and March 2021, with share prices leaping to around $181 in the process. Likewise, BioNTech has benefited from strategic partnerships with major pharmaceutical companies like Pfizer and the successful rollout of their mRNA vaccine – leading to BioNTech shares rising by 224% over the course of the past year.
(Image: Visual Capitalist)
As the above chart shows, the development of biotech stocks related to companies that were close to the creation and distribution of vaccines has created some wealth for investors. Along with the aforementioned Novavax and BioNTech, Moderna shares have risen by more than 400% over the year that followed the initial pandemic breakout.
This meant that a $1,000 investment in top performing companies could’ve led to returns of as much as $16,491. However, as the distribution and adoption of vaccines speed up, there’s still plenty of room for growth among the industry’s top publicly traded biotech companies. With COVID-19 serving as a significant warning for the future, even more deadly pandemics, some investors believe that the emphasis on vaccine biotechs could lead to new frontiers in terms of stock market prices. With this in mind, let’s take a closer look at some of the COVID-19 vaccine companies that are publicly traded:
1. Novavax
Price on 28/02/2020: $16.00
Price on 31:03/2021: $185.82
Novavax could profit from a big winner with its COVID-19 vaccine, NVX-CoV2373. The US government recently signed a $1.6 billion agreement with Novavax to fund the late-stage development and manufacture of its vaccine, with the stipulation that the company supplies 100 million doses if the drug is successful in clinical testing. Novavax has also signed supply deals with Australia, Canada, the UK and India.
In 2019, Novavax stock shed almost 90% of its value when the company’s respiratory syncytial virus vaccine, ResVax, failed in late-stage clinical trials for the second time. But the stock’s price recovered well in 2020, and the company has reported positive results from a late-stage study of its experimental flu vaccine, NanoFlu.
The company is now intending to seek out FDA approval for the flu vaccine, with analysts projecting that approval may result in annual sales of as much as $1.7 billion.
2. Moderna
Price on 28/02/2020: $25.93
Price on 31:03/2021: $132.55
Moderna became a key player in the race to develop a COVID-19 vaccine, and its vaccine offers one of the most effective success rates based on clinical trial data, at 94.1%.
The biotech company was transparent with its vaccine development and the announcement in May 2020 that its vaccine in development was effective in neutralising antibodies in eight out of 45 tested participants sent shares in the company soaring on course for the rollout of the vaccine.
With $1,000 invested in March 2020 returning around 400% for investors, Moderna has comfortably grown into one of the best performing public COVID-19 vaccine companies. The attention of investors will be firmly on how the company uses its financial growth to sustain its enhanced industry reputation.
3. BioNTech
Price on 28/02/2020: $35.10
Price on 31:03/2021: $113.87
Germany’s leading vaccine developer, BioNTech is another example of a biotech COVID-19 vaccine company that’s gone from strength to strength following the arrival of the pandemic. Investors looking to buy into the stock in early 2020 will have trebled their initial investment in the space of a year.
BioNTech is benefiting from the effective COVID-19 vaccine it developed alongside Pfizer. The mRNA vaccine, BNT 162b2 demonstrated a 95% efficacy in clinical trials and has since been authorised for use in the US, UK and across Europe. The company’s stock leapt in recent weeks after BioNTech’s CEO announced plans to ramp up the manufacturing for the vaccine, with a projected 2 billion doses available by the end of 2021.
It may well be the case that BioNTech’s stock, as well as other leading vaccine manufacturers, could climb higher. According to Zhiqiang Shu, a leading biotech analyst at Berenberg Capital Markets, 2021 is set to be a ‘catalyst rich year’ for BioNTech, as brand new investor interest floods the market.
Investing in biotech COVID-19 vaccine companies
Healthcare investors will understand that their investments will now be long-term focused following the arrival and rollout of COVID-19 vaccines across the world. Although many biotech leaders have grown significantly, it can take years of research and development to create new products that deliver meaningful ROIs in this industry.
However, one of the biggest impacts that COVID-19 has had revolves around the rise of biotech stocks and huge volumes of investors looking to back healthcare markets.
Maxim Manturov, Head of Investment Research at Freedom Finance Europe, says that: “When the pandemic started, the market was mostly driven by biotech stocks, the so-called stay at home stocks. Currently, when the skies are mostly clear and most economies are winning the battle against the pandemic thanks to the vaccines, many sectors that experienced correction or suffered during the COVID lockdown started recovering. Tech companies can still give good trading opportunities, though, so a healthy mix of various industries is the best option for your investment portfolio.”
With this in mind, the rise of biotech companies could continue beyond the pandemic years and huge investments throughout 2020 and 2021 may provide a platform for the vaccine companies to become more responsive to the health crises of the future.
