Vaccine Dreams: Moderna, Sorrento and Novavax
Damn the Torpedoes!
The U.S. economy’s got something. We both know it, but we don’t talk too much about it.
Ain’t no real big secret all the same. Somehow, we get around it.
Listen, it don’t really matter to Wall Street. Investors believe what they want to believe.
And what Wall Street believes right now is that you don’t have to live like a refugee.
That’s right, dear reader: The cure is here. With the Dow surging more than 800 points, Wall Street doesn’t have a shadow of a doubt that the virus will be vanquished.
It’s once again “game on” for the economy, and even the losers stand to make big gains in the coming market boom.
Even President Trump was all “Damn the torpedoes!” this weekend, telling reporters at a Rose Garden event: “I just want to make something clear, it’s very important. Vaccine or no vaccine, we’re back.”
Now, I know that this seems real to you, but it’s one of those things you got to feel to be true.
Federal Reserve Chairman Jerome Powell certainly feels it. Powell projected a 20% to 30% contraction in U.S. economic growth … but said in an interview on CBS’s 60 Minutes that the economy would avoid a Depression-like event:
I think there’s a good chance that there’ll be positive growth in the third quarter. And I think it’s a reasonable expectation that there’ll be growth in the second half of the year.
I would say though we’re not going to get back to where we were quickly. We won’t get back to where we were by the end of the year. That’s unlikely to happen.
Given the state of the U.S. labor market, contracting retail sales and the overall economic malaise, Powell is right to inject some caution.
Despite today’s massive market rally, now is not the time to go all-in. It’s gonna take time … a whole lot of precious time. It’s gonna take patience and time to do it right. (Yeah, I jumped from Petty to Harrison, so what?)
The vaccine headlines are promising, and it’s tempting to relax your safe haven bets and go all-in on this market. However, until a cure is readily available for everyone, there will be a lack of consumer confidence. And that means more bad economic news and more market volatility.
That said … I know you Great Stuff readers are eager to dip a toe in the market, especially with today’s rip-roaring rally ratcheting up the FOMO (fear of missing out).
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Good: COVID-19 Cured?
We can all go home now; Sorrento Therapeutics Inc. (Nasdaq: SRNE) cured COVID-19. (Wait, we’re already home…)
The microcap biotech announced on Friday that its experimental treatment for COVID-19 cures the disease. In preclinical testing, Sorrento said that its coronavirus treatment provides “100% inhibition” of the virus within four days. The company claims that the drug will be the first to provide a “protective shield” against COVID-19.
It’s a bold strategy, Cotton. Let’s see if it pays off for ‘em.
Turns out that Sorrento has only tested its cure on cells in a lab — i.e., no real-world testing at all. The company still needs FDA approval for animal testing, which comes before phase 1 testing with humans.
In short, Sorrento’s claims of a COVID-19 cure seem premature at best. Furthermore, given the company’s progress on the drug, competitors such as Moderna are sure to beat Sorrento to market. But that hasn’t stopped the stock from skyrocketing on the news.
SRNE stock is very “buyer beware” right now. The company has a promising drug in development, but it’s far from living up to the “cure” status Sorrento is pushing in the media. Hype may drive the stock higher over the short term, but investors should get their gains and get out before reality sets in.
Better: Get Your Bases COVID
All anyone can talk about lately in the biotech sector is COVID-19. It’s understandable, but there is so much more out there worth investing it!
Novavax reported first-quarter revenue of $3.4 million and a loss of $0.58 per share. Both figures were stronger than Wall Street expected, pointing toward strong growth even before the coronavirus pandemic.
What’s more, even if Moderna beats Novavax to the punch on the COVID-19 vaccine, Novavax has another trick up its sleeve: its NanoFlu program.
NanoFlu is Novavax’s answer to the boring ol’ regular influenza. The flu vaccine is already in phase 3 testing and proved more effective at flu prevention than Sanofi S.A.’s (Nasdaq: SNY) Fluzone vaccine.
Given that nearly 49 million people in the U.S. still get the flu every year, Novavax has quite the market for its new flu vaccine. With NanoFlu and a COVID-19 vaccine in the works, it’s a one-two punch for NVAX investors that could pay off big down the road.
Best: Our Only Hope
Here’s how Wall Street apparently sees Moderna’s latest vaccine news:
Step 1: Humanity is saved.
Step 2: ???
Step 3: Profit.
Given the biotech’s phase 1 results, these steps may not be far off.
Moderna reported that all participants in its COVID-19 vaccine phase 1 study showed antibodies against the virus by day 15 — after receiving just one dose. Your body produces antibodies to fight off viruses, and it could indicate you’re immune to the disease.
Patients who received two doses of the vaccine showed antibody levels similar to patients who already recovered from COVID-19. Those who received three doses showed even higher antibody levels.
Moderna now heads into phase 2 trials to further determine effectiveness and dosing ranges. If you’re a biotech junkie looking for a company with the best COVID-19 vaccine potential, MRNA just jumped to the front of the line.
The stock is up more than 335% so far this year, and it’s likely heavily overvalued. However, if Moderna continues to release positive trial data, the stock’s vaccine-hype run is far from over.
Guys and gals, you’ll never guess what we have in store for you today…
I’m giddy with anticipation already. It’s simply incredible … and almost as unexpected as today’s broad-market rally.
Give it up for another week of the latest in earnings excitement! I can already hear your enthusiasm and cheering from here, so let’s dive in:
This week’s calendar comes courtesy of Earnings Whispers on Twitter. The first thing you’ll notice is a smattering of tech and e-commerce stocks reporting out of China: Baidu Inc. (Nasdaq: BIDU), Bilibili Inc. (Nasdaq: BILI), IQIYI Inc. (Nasdaq: IQ) and Alibaba Group Holding Ltd. (NYSE: BABA).
You’d need some steel hands to jump into the China waters nowadays … unless you’re a wild-eyed value hunter. Is anyone stateside invested in China at this point? (We’re genuinely curious: Tell us your take on Chinese stocks — tech or otherwise — at GreatStuffToday@BanyanHill.com.)
Aside from the China tech rundown, here’s what other earnings are up this week:
- Ross Stores Inc. (Nasdaq: ROST) and TJX Cos. Inc. (NYSE: TJX): Two retailers that might cling on a while longer. Discount stores? People are thrifty at the best of times, let alone a recession, depression and armageddon. (It’s the thrill of the bargain!)
- Walmart Inc. (NYSE: WMT) and Target Corp. (NYSE: TGT): Our two main barometers in consumer staples and retail. Not to mention, Target’s huge head start on the e-commerce game could come in clutch during the pandemic online shop-a-thon.
- Home Depot Inc. (NYSE: HD), Lowe’s Cos. Inc. (NYSE: LOW): Let’s see what the DIY-ers have been up to. I swear, some people are renovating their entire house … and I’m grateful for a chance to sweep. (More sleeping … less doing. That’s home improvement.)
And that’s a wrap for today, but you bet that we’ll keep you up to speed with everything exciting (or unexciting) in this week’s heaping helping of earnings.
Until next time, stay Great!
Editor, Great Stuff