The Race To Fight COVID-19

Big Pharma is on the hunt to find a possible cure for COVID-19. In the near term, the hope is for a successful clinical trial for a drug as opposed to a vaccine, which can take 12-18 months to be administered. Even in a Post-Covid world, these companies have an excellent pipeline for years to come. Not to mention, they are well capitalized enough to weather a looming recession on the horizon; positioning themselves best to continue investing heavily in R&D and generate value for their shareholders over the long term. Here are the big Pharma that are on the forefront of COVID drug development and their fast facts:

Gilead Sciences

  • Drug: Remdesivir
    • Status: Unapproved to date – pending late phase trials. Four phase 3 studies have been initiated to prove the efficacy of the drug. Clinical trial results expected end of April
    • Ebola drug that prevents infected cells from producing copies of a virus
    • Currently utilized for compassionate use – this is where the drug is given to a select group of patients for emergency access free of charge.

Regeneron & Sanofi:

  • Drug: Kevzara (in partnership with Sanofi)
    • Status: Unapproved to date. Phase II & Phase III trials have been initiated in Europe.
    • Used to calm an overactive immune response against the lungs as a result of being diagnosed with COVID-19.
    • Independently, Regeneron is developing a “cocktail therapy” in the form of their antibody program.
    • Cocktail therapy?
      • The company isolated antibodies from mice that were then genetically modified to have the same immune system as humans. Next, Regeneron took antibodies from patients that recovered from COVID-19.
      • The plan is to replicate small quantities of the top two antibodies to be evaluated for a Phase I trial.

Top 3 Health Care companies to watch in 2020:

  • Pfizer
    • Cash on hand: $9 Billion
    • Dividend yield: 4.6%
    • Revenue: $51 Billon
  • AbbVie
    • Cash on hand: $39 Billion
    • Dividend yield: 6.2%
    • Revenue: $33 Billion
  • Gilead Sciences
    • Cash on hand: $24 Billion
    • Dividend yield: 3.6%
    • Revenue: $22 Billion

If you have the time, its essential to go beyond the above metrics when investing in any company (i.e. such as reading a company’s financial statement notes). Fundamentals don’t matter when broader markets are collapsing. However, indiscriminate selling has created a lot of good value in this market. And lets be real – good yields are hard to find when the federal reserve has set near zero interest rates. In terms of health care, I’m motivated now more than ever to invest in blue chips for the long term. A strong pipeline & proven track record gives the above companies a safe position (generally, speaking) to thrive for decades to come.

I encourage you to look at companies with a strong cash balance, consistent revenue growth & profitability, and sound leadership at the top. Why? Literally every big business in America is fighting to stay alive right now. The economy has come to a screeching halt with the airline & hospitality sector in particular, seeing an unforeseeable decline in demand. Companies are having to tap into their line of credit due to lack of sufficient funds to pay employees and run day to day operations. Historically, in times of distress, cash preservation has proven to be essential and now more than ever, cash has proven to be king.

Lastly, as we think about the fear, uncertainty & distress all around us due to the pandemic, know that it is not here to stay and it will most certainly pass. Believing that this too shall pass is the best way to keep up an upbeat mentality on a day to day basis. I fully applaud the efforts & dedication of our health care professionals to keep us safe. Hope is the last thing to die – stay safe.

This blog and the information contained herein is not a platform for guaranteed success on investments. The companies I mention in my posts are NOT recommendations for investments. The views expressed are my own and I strongly suggest to do your own research prior to making any decisions. Because the information on this blog is based on my personal opinion, research, and experience, it should not be considered professional financial advice. The blog is a discussion forum and not a website for access to financial data. I have no access to material non-public information nor any discrete information on publicly traded companies.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s