Proprietary Data Insights
Financial Pros Biotech Searches This Month
Biotech Stocks Roller Coaster Year
Investing in biotech companies isn’t easy.
It requires a lot of research and government approvals. But when a winner hits, they hit big.
Most investors tend to go with a basket ETF like the S&P Biotech XBI.
But don’t think that because it’s an ETF it’s less volatile.
In the last two years, the XBI:
Covid changed the way we look at biotechnology. While it wasn’t exactly an afterthought the prior decade, the sector didn’t have the pizzaz of the boom in the ‘90s.
Now, funding for startups occurs more often and for more money.
With Covid becoming endemic, the need for research and development will continue for years to come.
And we think this could be the start of another biotechnology boom cycle.
Treat Covid From The Comfort of Your Home
In the quest to vanquish Covid, pharma brought a new weapon to the table – a pill.
Stay At Home Treatment
Merck (MRK) received emergency authorization from the FDA for its Covid treatment drug Molnupiravir shortly after Pfizer (PFE) got its approval for Paxlovid.
The drugs come on the heels of hospitals filling up in some states as Omicron sweeps the nation.
Patients take the pills once they’ve been diagnosed with Covid. Studies show Merck’s drug reduced the risk of hospitalization or death among adults with mild to moderate disease by 30%, though the company claims it’s closer to 50%.
Pfizer’s drug was said to be 89% effective based on its final clinical trials.
Thankfully, both companies expect the drug to work against the new Omicron variant.
Moving quickly, the US purchased 10 million courses of Pfizer’s treatment for $5 billion and 3 million of Merck’s for $2 billion.
Unlike current monoclonal treatments which require a visit to a hospital
Where We Stand
Recent data from South Africa said that although more transmissible, the Omicron variant has an 80% lower risk of hospitalization.
Canada’s Prime Minister Justin Treadue struck a worrisome tone, telling Canadians to prepare for a difficult winter.
In contrast, President Biden said that vaccinated individuals should still take precautions, but can travel and enjoy the holidays.
Omicron’s rise created uncertainty. Markets saw excess volatility leading into Christmas while airlines slashed forecasts, unsure what their final demand would look like.
The Bottom Line: At home drugs are a key step to fighting Covid.
Interestingly, while Pfizer’s stock is near all-time highs, Merck’s is down more than 17% from the November highs.
What is more appealing, from a value standpoint, is the SPDR Biotech ETF XBI, which is off more than 32% from the highs it set earlier this year.