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by Julia Gro, Euro on Sunday
Vfrom zero to more than 170 vaccine candidates within six months has never been seen in the pharmaceutical industry. Certainly not if it is a disease that was unknown until just over half a year ago. Never before have diagnostic capacities for millions of tests been made available so quickly, and the sector has never before received such generous funding – the US government agency BARDA alone has donated over two billion dollars in recent weeks.
“The industry is currently experiencing a tremendous change in image: from the scapegoat for expensive healthcare to a rescuer in need,” says Christian Lach, portfolio manager at Bellevue Asset Management. Quite rightly so: The arsenal of funds that will be available in the foreseeable future against the corona virus is impressive. Depending on the effectiveness of the product and the size of the manufacturer, considerable growth in sales can emerge from some companies. In addition: Young companies, for which the marketing of their own products was still a long way away, go through a turbo development leap through the corona pandemic, from which they also benefit in the long term if their Covid 19 projects fail. In the vaccine sector, the switch to faster, less expensive production methods that had been expected for many years could also take place, which would make the area more attractive.
Three strategies promise success
With increasing knowledge of the pathogen and the course of the disease, it becomes clear that three strategies have a chance of success. The development of a vaccine that provides immunity to the virus or prevents serious illnesses. From the time of infection, drugs are required that block the multiplication of the virus in the body. If there is a severe course of the disease, the excessive immune response of the body comes to the fore. Bringing them under control saves lives, as a study with the cortisone drug dexamethasone, which has been known for decades, showed: the drug reduced the death rate by a third in ventilated patients.
Immunomodulating drugs that are otherwise used for autoimmune diseases or cancer are therefore being intensively tested on Covid patients with a severe course. Many large pharmaceutical companies are active here, such as Roche with Actemra, Eli Lilly with Olumiant or Sanofi with Kevzara – so far without clear results.
Only Remdesivir is currently prominently represented in direct virus protection. So far, Gilead is giving away the product. Studies are currently underway to check the effect in earlier phases of the disease. Experience with antiviral agents means that the effect is greatest when given as early as possible. If this is confirmed for Remdesivir, it would be used much more widely. “Gilead, in particular, will not call up ridiculous prices for this after the company’s expensive hepatitis medication caused a huge media hype a few years ago,” says Christian Lach. “It will be more interesting commercially if governments want to add remdesivir stocks for several years.” Then a low single-digit billion dollar turnover could flow to Gilead, which, however, is not a huge growth driver with total revenues of over $ 22 billion.
Experts have high hopes for antibody drugs that neutralize the virus. Regeneron and Eli Lilly have started clinical studies, Astrazeneca and Vir are about to do so. Results should be available in the fourth quarter. The corona pandemic looks like a turbo, especially for companies like the Vir from San Francisco, which was only founded in 2016. Suddenly, they are pounding clinical development teams off the ground, building up production capacities and being in close contact with regulatory authorities. Companies will benefit from this far beyond Corona.
An example of this from Germany is Immunic, which was able to raise around $ 40 million from investors as part of its corona development program. The stock listed on Nasdaq has just been added to the American Russell 3000 Index. “We are now financed until 2022 and expect a strong news flow in the current year, even beyond the Covid program,” says CEO Daniel Vitt. Immunics molecule IMU-838 blocks the delivery of RNA building blocks that the coronavirus needs for reproduction and activates a part of the immune system that is muted by SARS-CoV-2. Immunic is also investigating the compound in multiple sclerosis and inflammatory bowel diseases.
Covid research could prove to be a lifeline for French Abivax. The company is examining its product candidate ABX464 as one of the first active ingredients in high-risk patients immediately after a positive test. The company’s survival is guaranteed with funding commitments of 41 million euros until early 2021 and the promising study with ABX464 against colitis ulcerosa can be completed.
A breakthrough in SARS-CoV-2 in vaccine development could also mean a quantum leap for companies like Moderna and Biontech as well as the field itself. “Many of the vaccine candidates are based on mRNA or DNA. Many experts are still skeptical about this approach,” explains Christian Lach. “But if it works, this technology is established in one fell swoop.”
Potential corona winners
Whether and how much a company earns with Corona products depends on many variables. So far, concrete income has flowed almost exclusively at the diagnostic level. However, this is mainly used by large corporations like Roche or Thermo Fisher dominates, where the additional sales are hardly noticeable in the overall result. With vaccines and therapeutic agents, on the one hand, there is a great risk that the development will fail. On the other hand, if successful, pricing depends on numerous factors. Last but not least, there is enormous social pressure that a drug or vaccination must be affordable.
Individual titles have considerable upside potential if their Corona candidate is successful. The smaller and less diversified the company, the greater the leverage and the risk. Abivax and Immunic fall into this category. Biontech and Moderna have much broader product pipelines. However, there is also a lot at stake with them: if their corona vaccines are successful, investors will rate the entire technology portfolio higher.
Surname ISIN market capitalization *
Abivax FR0012333284 268.0
Biontech US09075V1026 10 703.0
Immunic US4525EP1011 195.0
Moderna US60770K1079 21 702.0
* in millions; Source: Bloomberg; As at: 06/24/20
The entire sector benefits from exposure to the corona virus if the image of the “bad” Pharmaceutical industry“The share of the holding company BB Biotech from the Swiss Bellevue Asset Management company has stood out among the sector investments in the health sector for years. The management team explicitly does not rely on Corona winners, but on companies that promise above-average growth in the long term Moderna is part of the portfolio.
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