On your mark, get set, go! The race is on to find an effective vaccine against COVID-19, the novel coronavirus that has spread to 471,000 people around the world and claimed more than 21,000 lives.
According to the Coalition for Epidemic Preparedness Innovations (CEPI) chief executive Dr. Richard Hatchett, the current pandemic rivals the deadly 1918 Spanish flu, and thus finding a defense against the virus is of utmost importance. “There is a real sense of urgency…because the threat we are facing is unprecedented in the last 100 years in terms of its speed and potential severity,” he commented.
As Hatchett estimates that the advancement of a vaccine at the necessary speed will cost $2 billion over the next 12-18 months, it’s no wonder Wall Street is watching the names taking on this formidable foe. Bearing this in mind, we turned to TipRanks’ database to get all the data on three biotech stocks racing to develop a COVID-19 vaccine. The platform showed Wall Street pros believe that among these names, some appear more poised to emerge as a long-term winner. Here’s what we found out.
Dynavax Technologies Corporation (DVAX)
Using Toll-like Receptor (TLR) biology to modulate the immune system, Dynavax develops innovative vaccines for a number of diseases, with one vaccine against hepatitis B already on the market, Heplisav-B. Since entering the COVID-19 vaccine race, the analyst community has been buzzing about this biotech.
DVAX told investors on March 24 that it agreed to a research collaboration with private China-based company, Clover Biopharmaceuticals, to develop an experimental vaccine to prevent COVID-19. As per the terms of the agreement, DVAX will offer the technology used in Heplisav-B, toll-like receptor 9 agonist adjuvant CpG 1018, in order to advance Clover’s vaccine candidate in preclinical studies. Clover’s vaccine is a protein-based coronavirus vaccine (COVID-19 S-Trimer) and uses its proprietary Trimer-Tag technology.
If that wasn’t enough, DVAX already stated on March 2 that it will collaborate with the University of Queensland and the CEPI to develop a vaccine candidate for COVID-19. Like its development efforts with Clover, the company will provide its CpG 1018 technology, with a clinical trial set to start in mid-2020.
While H.C. Wainwright analyst Edward White doesn’t factor these collaborations into his model, he noted, “…we view them as an upside option on the recent COVID-19 outbreak.” Expounding on his valuation, the five-star analyst added, “We use the net present value of our revenue forecast through 2028, a discount rate of 20%, and a 2x price/sales multiple. Our P/S multiple of 2x is in-line with Dynavax’s peers at approximately 2-5x. We estimate Heplisav-B sales of $57 million in 2020 and $236 million in 2028.”
To this end, White maintained both a Buy recommendation and $12 price target. Should the target be met, shares stand to gain 263% in the next twelve months. (To watch White’s track record, click here)
What does the rest of the Street think about DVAX’s prospects? It turns out that other pros agree with the H.C. Wainwright analyst. Receiving 100% Street support, this biotech earns a Strong Buy consensus rating. At $16, the average price target comes in above White’s forecast and suggests 356% upside potential. (See Dynavax price targets and analyst ratings on TipRanks)Inovio Pharmaceuticals (INO)
Biotech Inovio Pharmaceuticals has already been in the race to develop a vaccine against COVID-19, with it claiming that it had designed its candidate, INO-4800, only three hours after Chinese researchers published the SARS-CoV-2 genetic sequence on January 10. It also received a $5 million grant from the Bill and Melinda Gates Foundation. Now, it’s grabbing headlines for another collaboration, and Wall Street is taking notice.
On March 24, Inovio announced that the U.S. Department of Defense (DOD) had given privately-held contract development manufacturing organization (CDMO), Ology Bioservices, an $11.9 million contract to partner with INO on a COVID-19 vaccine candidate. Ology will work with the biotech on DNA technology transfer in order to manufacture INO-4800 as well as quickly deliver the vaccine to the DOD for clinical trials or even emergency use. This development is a significant step forward as INO is gearing up for a Phase 1 trial in the U.S. next month.
According to H.C. Wainwright’s Raghuram Selvaraju, “…this partnership would scale up Inovio’s manufacturing capacity and provide sufficient vaccines in a timely fashion to protect the nation’s military personnel against current and future outbreaks.”
Selvaraju points out that there are a few advantages of DNA vaccines that could give INO an edge over its peers. Unlike other players in the race, its vaccines can be stored at room temperature for one year or at 37°C for one week, eliminating the need for cold chain logistics. In addition, INO’s injection device is battery-operated and highly portable, making the candidate easy to transport and deploy in any place around the world. The analyst noted, “Accordingly, we believe INO-4800 could be ready for a Phase 2 trial and available for emergency use as of end-2020.”
Even though this race features many strong competitors Selvaraju believes, “…the Moderna, BioNTech and Inovio vaccine programs are the furthest along and anticipate that their testing shall be prioritized by regulators and government agencies in order to attempt to effectively combat the crisis.”
Taking this into consideration, Selvaraju reiterated a Buy rating and $13 price target. This conveys his confidence in INO’s ability to soar 95% in the next year. (To watch Selvaraju’s track record, click here)
Looking at the consensus breakdown, 4 Buys and 2 Holds issued in the last three months coalesce into a Moderate Buy consensus rating. With a $10 average price target, the upside potential lands at 45%. (See Inovio stock analysis on TipRanks)
Vir Biotechnology (VIR)
With the help of its antibody platform, Vir Biotechnology was able to select a lead clinical vaccine candidate for COVID-19. As a result, it has climbed 62% higher in the last month, attracting significant attention from members of the Street.
The company’s lead candidate was designed using an antibody-based approach that binds a conserved epitope on SARS-CoV-2 (COVID-19), which is shared with SARS-CoV-1, the most closely related coronavirus to COVID-19. This could allow it to be effective even as the strains mutate. After it identified the experimental vaccine candidate, VIR transferred it to WuXi Biologics and Biogen in an attempt to expedite development, with a clinical trial slated to begin in 3-5 months.
Adding to the good news, Cowen analyst Phil Nadeau points out that “Vir modified the Fc region of the candidate to potentially expand the half-life of the compound and also made a vaccinal modification to allow for the generation of CD8+ memory T cells to the virus to potentially provide long-term immunity.”
Explaining the implications of these changes, the analyst wrote, “This modification would allow the therapy to function both as a therapeutic for those infected and also a prophylactic vaccine... Vir envisions that its clinical program will explore use of antibodies (1) In the prevention of disease; (2) The prevention of progression to severe disease; (3) The treatment of severe disease, and (4) the development of vaccines.”
As the biotech has successfully identified other antibodies from patients that have recovered from SARS-CoV-2 and SARS-CoV-1 and is using its RNAi platform as well as its innate immunity platform to identify other potential candidates, Nadeau has high hopes for VIR. “We are encouraged that Vir is making rapid progress toward clinical testing of candidates for the treatment of COVID-19… Moreover, as Vir is targeting a region conserved between SARS-CoV-2 and SARS-CoV-1, the candidate could have implications for not only the current pandemic, but may have utility in the future both as a vaccine, and a therapeutic should other coronaviruses emerge,” he commented.
Based on all of the above, Nadeau stayed with the bulls. While he reiterated an Outperform rating, he declined to set a specific price target. (To watch Nadeau’s track record, click here)
When it comes to the rest of the Street, other analysts take more of a cautious approach. 2 Buys, 1 Hold and 2 Sells add up to a Hold analyst consensus. It should also be noted that the $29.33 average price target implies 5% downside potential. (See Vir Biotechnology stock analysis on TipRanks)