In this article, we discuss the 10 stocks to buy before the next pandemic. If you wish to skip our comprehensive review of the biotech firms well-positioned to fight the next pandemic, go directly to 5 Stocks to Buy Before the Next Pandemic.
The Covid-19 pandemic tested the world’s readiness to deal with a global health catastrophe. It also brought about a lot of ‘firsts’ for the global biopharma industry. Advances in genome sequencing, and a worldwide rush to collaborate instead of compete, allowed researchers to uncover the viral sequence of the Covid virus, SARS-CoV-2, in January 2020, merely 10 days after China first reported cases of a mysterious pneumonia in Wuhan. Although vaccine development takes a number of years from research, trials to approval, the United States Food and Drug Administration (FDA) granted emergency use authorization to the Pfizer-BioNTech vaccine in December 2020, one year after the virus started spreading. This was possible because resources of private and public entities around the world were pooled in to expedite the race for the vaccine. The United States government launched Operation Warp Speed (OWS), to manufacture millions of vaccine doses in collaboration with the Centers for Disease Control and Prevention (CDC), and National Institutes of Health (NIH). Dr Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases (NIAID) and Chief Medical Advisor to the US president, became a household name and the feature of every news headlines, as the pandemic shut down the globe and scientists clamored towards finding the Covid vaccine.
Now, 6.3 million deaths and 12 billion administered vaccine doses later, the world stands uniquely prepared to fight the next pandemic. According to Bloomberg, 153 vaccine doses have been administered for every 100 individuals around the world, in what is the largest vaccination campaign in history. With the virus now settled and pre-pandemic normalcy returning to many parts of the globe, The Wall Street Journal reports that vaccine sales are now seeing a plateau, as supplies become readily available and low levels of illness reduce pressure on demand. Major players like Merck & Co., Inc. (NYSE:MRK) and Johnson & Johnson (NYSE:JNJ) have cut back their sales expectations for pandemic products this year, and the golden period of windfall profits enjoyed by vaccine-makers like Pfizer Inc. (NYSE:PFE) and Moderna, Inc. (NASDAQ:MRNA) stands finished.
Preparing for the Next Pandemic
Experts have warned for years, even before Covid-19, that the next pandemic could bring devastating consequences for the global population if pre-emptive measures were not taken. Bill Gates, billionaire and philanthropist, has been a vocal proponent of the dire need to prepare plans to deal with future pandemics, and in his recently released book “How to Prevent the Next Pandemic”, Gates sets out to explain his vision for efforts needed on the diplomatic, technological and social fronts to ready the globe to tackle the next pandemic when it arrives.
In April, German biotech firm BioNTech SE (NASDAQ:BNTX), which is behind the popular Pfizer-BioNTech Covid vaccine, announced that the Federal Republic of Germany had granted it with a pandemic preparedness contract, which includes the manufacturing and supply of mRNA vaccines in Germany during emergency situations. The firm will also be required to prop up and maintain manufacturing capabilities to produce millions of mRNA-based vaccine doses per year.
Two exciting methods used to deliver groundbreaking therapies through vaccines are mRNA and RNAi technologies. Instead of delivering a muted part of the infectious pathogen into the human body in order to make antibodies, Messenger RNA (mRNA) vaccines deliver the genetic instructions for our cells to make the viral antibodies themselves. Vaccines by Pfizer and Moderna were the first mRNA vaccines in the world to be authorized for public use. RNAi therapeutics, pioneered by Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), use RNA interference to suppress or “silence” certain disease-causing genes in the human body. The discovery of this technique was awarded the The Nobel Prize in Physiology or Medicine in 2006, and carries immense potential to change how scientists understand and resolve complex diseases.
In May, the World Health Organization reported cases of Monkeypox in 12 countries where the virus usually isn’t found. More cases have been reported from around the world since, putting many into a panic reminiscent of the early Covid days. The virus is not as transmissible as the Covid virus, since it only spreads through close, physical contact. Its symptoms are similar to the ones brought about by the smallpox virus, but are clinically less severe. The vaccine for smallpox can also be used to treat monkeypox, and the US government has so far delivered 1,200 two-dose Jynneos vaccines to help curtail the spread of the virus. Swiss biopharmaceutical giant Roche Holding AG (OTC:RHHBY) in late May announced the development of three unique PCR test kits to detect the monkeypox virus.
The next pandemic might not be far off, and for those who wish to prepare their financial portfolios in anticipation, we’ve compiled a list of the best stocks to buy before the next pandemic.
Our Methodology
We looked at the biotech/biopharmaceutical space and picked 10 industry leaders with expansive portfolios of vaccine and drug therapies. We also considered companies which are working on next-gen drug treatments, and have the best R&D (research and development) capabilities to meet the healthcare challenges of the next era. To give our readers context regarding the popularity of each stock among hedge funds, we’ve provided hedge fund sentiment which has been calculated using Insider Monkey’s database of 900+ elite hedge funds.
Stocks to Buy Before the Next Pandemic
10. Roche Holding AG (OTC:RHHBY)
Number of Hedge Fund Holders: 2
Roche Holding AG (OTC:RHHBY) starts off our list of the 10 stocks to buy before the next pandemic. It is a Swiss biopharmaceutical giant which has manufactured many groundbreaking therapies throughout its 126 year history, and stands as a world leader in cancer treatments. It pioneered the mass production of synthetic vitamin C in 1934, under the brand name Redoxon. In 1957, the company introduced the benzodiazepines tranquilizers and is also responsible for developing initial screening tests for HIV. Roche Holding AG (OTC:RHHBY) is the only drug company in the world authorized to manufacture Oseltamivir, an antiviral drug that combats bird flue. Roche also has a collaboration with Gilead Sciences, Inc. (NASDAQ:GILD) to research and enhance Covid-19 treatments.
On May 25, Roche Holding AG (OTC:RHHBY) and its subsidiary TIB Molbiol announced that they had developed unique PCR test kits to detect the monkeypox virus, after multiple non-endemic countries reported cases of the disease.
In 2021, Roche Holding AG (OTC:RHHBY) posted annual revenue of $72.05 billion, showing a 11.94% increase from the 2020 revenue of $64.4 billion. On May 19, Credit Suisse analyst Trung Huynh lowered the firm’s price target on Roche Holding AG (OTC:RHHBY) to CHF 350 from CHF 370 and maintained a Neutral rating on the company shares.
Harding Loevner, an investment management firm, talked about Roche Holding AG (OTC:RHHBY) in its Q4 2021 investor letter. Here’s what they said:
“Health Care boosted relative performance as our holdings benefitted from the pandemic both coming and going. Roche and Lonza saw heightened interest in treatment, testing, and vaccination activities to battle the waves of newer COVID-19 variants.
Just like Pfizer Inc. (NYSE:PFE), Moderna, Inc. (NASDAQ:MRNA), and Merck & Co., Inc. (NYSE:MRK), Roche Holding AG (OTC:RHHBY) is one of the best stocks to buy before the next pandemic.
9. Novavax, Inc. (NASDAQ:NVAX)
Number of Hedge Fund Holders: 27
Novavax, Inc. (NASDAQ:NVAX) is a Maryland-based biotech firm which develops vaccines to treat infectious diseases. It has developed experimental vaccines to treat influenza, Ebola, respiratory syncytial virus (RSV) and other infectious diseases. The company developed a vaccine for Covid-19 called Nuvaxovid, which was the fifth vaccine after Moderna, Pfizer, AstraZeneca, and JnJ/Janssen’s doses. It is approved in the EU and Canada.
On May 11, B. Riley analyst Mayank Mamtani maintained a ‘Buy’ rating on Novavax, Inc. (NASDAQ:NVAX) shares, and lowered the price target to $181 from $203. The analyst noted that the company posted its first profitable quarter as a commercial stage company, and reaffirmed 2022 revenue guidance of $4-5 billion. On June 3, Cantor Fitzgerald analyst Charles Duncan lowered the firm’s price target on Novavax, Inc. (NASDAQ:NVAX) to $146 from $189 and reiterated an ‘Overweight’ rating on the company shares, after FDA expressed concern over cases of myocarditis when discussing the company’s Covid vaccine data. Shares were down 17% in a single day as the news broke, which the company dismissed citing ‘insufficient evidence’ of a causal relationship between its vaccine and cases of myocarditis. The analyst lowered his view on the likelihood of success for the Novavax vaccine from 80% to 60%. Even though he considers this news a setback for the company in the United States, Duncan believes shares are oversold at current levels.
For the first quarter, Novavax, Inc. (NASDAQ:NVAX) reported EPS of $2.56, exceeding analysts’ expectations by $0.07.
27 hedge funds were long Novavax, Inc. (NASDAQ:NVAX) at the end of March, as compared to 30 hedge funds in the previous quarter. Coatue Management initiated a $65.06 million position in the biotech firm during the first quarter, making it the firm’s largest shareholder.
8. BioNTech SE (NASDAQ:BNTX)
Number of Hedge Fund Holders: 29
BioNTech SE (NASDAQ:BNTX) is a biotech firm based in Mainz, Germany, which develops immunotherapies for cancer treatments and vaccines for various infectious diseases using messenger ribonucleic acid (mRNA) technology. It partnered with Pfizer in 2020 to develop a Covid-19 vaccine called Pfizer-BioNTech, which has been approved by all major regulatory bodies around the world and boasts a 91% efficacy rate.
On April 8, BioNTech SE (NASDAQ:BNTX) announced that it had been granted a pandemic preparedness contract by the Federal Republic of Germany, which includes the manufacturing and supply of mRNA vaccines in Germany during emergency situations. Under this agreement, BioNTech SE (NASDAQ:BNTX) will establish and maintain manufacturing capabilities to produce a minimum of 80 million mRNA-based vaccine doses per year.
On April 4, Canaccord analyst Arlinda Lee lowered the firm’s price target on BioNTech SE (NASDAQ:BNTX) to $300 from $450 and maintained a ‘Buy’ rating on the company shares. The analyst noted that with substantial revenue from vaccine sales, the company continues to advance, expand and diversify its immunotherapy pipeline. Lee remains bullish on the company’s future prospects.
BioNTech SE (NASDAQ:BNTX), for the first quarter, posted an EPS of $15.03, outperforming estimates by $5.37. Revenue of $6.73 billion for the quarter beat consensus estimates by $1.99 billion, and signalled year-on-year growth of 170.6%.
Of the 900+ hedge funds tracked by Insider Monkey, 29 reported ownership of positions in BioNTech SE (NASDAQ:BNTX) at the close of the first quarter, with a collective price tag of $409 million. In contrast, 27 hedge funds owned stakes in the biotech firm a quarter ago.
Baron Funds, an investment management firm, mentioned the prospects of BioNTech SE (NASDAQ:BNTX) in its Q3 2021 investor letter. Here’s what it said:
“BioNTech SE is a leader in the emerging field of mRNA drugs, with additional programs in engineered cell therapies, antibodies, and immunomodulators. Shares performed well for the quarter. The COVID-19 vaccine rollout continues with the addition of a booster shot, and we believe the pandemic has been a strong proof point of the speed and efficacy of the mRNA platform. Beyond vaccines, we think BioNTech has potential to disrupt the biopharmaceutical space with a pipeline spanning oncology, infectious diseases, and rare diseases.”
7. GlaxoSmithKline plc (NYSE:GSK)
Number of Hedge Fund Holders: 33
GlaxoSmithKline plc (NYSE:GSK) is one of the largest biopharmaceutical companies in the world, with a market cap of more than $109 billion. The London-based company develops a range of medicines, vaccines and consumer health products. It is responsible for developing a vaccine to treat Malaria, and produces more than 2 million doses every day to treat people in more than 160 countries. These include vaccine treatments for hepatitis, tetanus, meningitis and influenza, among others.
On April 28, JPMorgan analyst James Gordon gave GlaxoSmithKline plc (NYSE:GSK) an unchanged rating of ‘Neutral’, and raised the price target to 1,900 GBp from 1,740 GBp. At the start of June, the company announced that it was acquiring Affinivax, a clinical-stage biopharmaceutical company based in Cambridge, Massachusetts, in a $3.3 billion deal, which includes a $2.1 billion upfront payment and up to $1.2 billion in potential development milestones. The Boston firm is developing a novel class of vaccines, which includes next-generation pneumococcal vaccines.
33 hedge funds from the Q1 database of Insider Monkey reported bullish bets on GlaxoSmithKline plc (NYSE:GSK), with combined positions worth $2.31 billion. With 18.96 million shares valued at $826.2 million, Fisher Asset Management was the top shareholder of GlaxoSmithKline plc (NYSE:GSK) at the end of the first quarter of 2022.
For Q1 2022, GlaxoSmithKline plc (NYSE:GSK) reported revenue of $12.27 billion, above estimates by $617.8 million and growing 18.6% in comparison to the same period over last year. EPS was recorded at $0.83, also beating consensus estimates by $0.06.
6. Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY)
Number of Hedge Fund Holders: 38
Next up on the list of the best stocks to buy before the next pandemic is Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), a biopharmaceutical firm which develops novel therapeutics based on ribonucleic acid interference (RNAi) to treat cardio-metabolic, infectious, and central nervous system (CNS) diseases. RNAi technology is used to “silence” or switch off specific disease-causing genes in the human body, and Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) is the industry leader in the space.
On May 2, H.C. Wainwright analyst Patrick Trucchio reiterated a ‘Buy’ rating on Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) shares, and bumped the price target to $430 from $400. He sees the recent selloff creating a “compelling” buying opportunity, and believes the firm’s hepatitis B virus program is emerging as best-in-class.
Out of the 900+ hedge funds in the database of Insider Monkey, 38 owned positions in Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) at the end of the first quarter with a combined value of $1 billion. With a $212.3 million stake, VenBio Select Advisor was the leading shareholder of Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) in the first quarter of 2022.
Along with Pfizer Inc. (NYSE:PFE), Moderna, Inc. (NASDAQ:MRNA), and Merck & Co., Inc. (NYSE:MRK), Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) is a biotech firm well-positioned to meet the challenges of the next pandemic.
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