At its worst on March 23rd, Dow Jones and the S&P declined by around 37% and 34%. At the time, those kinds of numbers represented a loss of a 3-year gain since Trump’s election in November of 2016. Measured by VIX, market volatility spiked by 43% in March, reaching levels that are comparable to the crashes in 1987 and 2008.
COVID-19 sharply impacts the stock market through changes in policy announcements and public news. For instance, the rise in U.S. index value following the declaration of the Trump administration’s recovery plan was only a façade. When the governor of New York Andrew Cuomo announced its highest one-day death toll from COVID-19, share value dropped. The market is ping-ponging as investors are scrambling to find a safe place for their money.
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Q1 2020 hedge fund letters, conferences and more
Companies in the health industry are showing different returns compared to the U.S. indexes. The reason is two-fold. First, there is an inherent demand for health services such as development of vaccines and treatments resulting in a rise in these companies’ share value. Second, factors such as competition, policy announcements, public news, and company progress reports can either drag these stocks down or further push them up. It is important to distinguish this pattern and the ping-ponging U.S. indexes, as many health companies are showing net positive returns after significant change. Here are some of those winners, at least so far, as of market close May 12th:
Teladoc Health
For most of the crisis, Teladoc Health Inc (NYSE:TDOC), one of the most well-known telehealth services, had their share value soar. TDOC peaked at a share value $194.89 on April 27th after reaching only $101.71 at the end of January. Interestingly enough, one of the peaks of TDOC ($167.44 on March 23rd) was met by the worst day for Dow Jones and the S&P. A drop in share value experienced in early April can be attributed to competitor VitalTech partnering with AT&T to offer free telehealth services for sixty days. The recent spike in TDOC can be due to a strong first quarter revenue as well as expansion to mental health treatment. As of market close May 12th, TDOC stands at $184.15, showing net positive return since the end of January of $82.44. Also to be noted is the rise in TDOC stock value after its acquisition of InTouch Health in January 2020.
Health Companies Focused on Vaccine Development (MRNA, BNTX, IFRX, NVAX)
The hope that Moderna Inc (NASDAQ:MRNA) could create a vaccine saw its share value rise in the early phases of the crisis. However, in March, after the FDA commissioner Stephen Hahn said that it would be a year until Moderna’s vaccines would be available, their share value declined. Despite this, efforts and trials for vaccine development has recently caused MRNA to sharply rise. Moderna announced that the FDA granted ‘fast track’ status to their vaccine which concomitantly saw its share value increase. MRNA, now $62.35, has shown net positive return of over $40 since the end of January ($20.51).
In early April, after BioNTech SE (NASDAQ:BNTX) announced it would have its first human testing in weeks while Inflarx NV (NASDAQ:IFRX) already conducted their first trial, shares of BNTX plummeted and shares of IFRX sharply rose. BNTX peaked at $92 on March 18th after reaching only $29 at the end of January and it now stands at $49.33. Although returns of BNTX were chaotic, investors still sit on over a $20 net positive gain per share. This is similar to IFRX, which has gained almost $5 per share since January 31st (from $3.23 to $8.00 today).
Novavax, Inc. (NASDAQ:NVAX) is a smaller biotech company which saw early rises in valuation after it announced it would begin human testing in mid-May. Additional rises in Novavax were seen after receiving $4 million in funding for vaccine development in early March from the Coalition for Epidemic Preparedness Innovations (CEPI) and having partnered with Emergent BioSolutions (EBS). However, when the CEPI announced that it would boost Novavax’s finding to $384 million, NVAX skyrocketed. Trades on May 12th saw NVAX rise 62.53% to $39.82. Since the end of January, NVAX has shown net positive return of over $30 a share.
See Appendix for more companies focused on vaccine development including Regeneron Pharmaceuticals, Inc. (REGN), Vaxart, Inc. (VXRT) and Emergent BioSolutions (EBS).
Gilead Sciences
One of the most widely-accepted drug currently used to treat at least mild to moderate coronavirus is Remdesivir. Developed by Gilead Sciences, Inc. (NASDAQ:GILD), the drug entered phase III clinical trials in early March with shares of GILD peaking at that time at $80.22. However, comments on the drug’s timeline and efficacy, such as those made by Stephen Hahn in March, have caused GILD’s shares to drop. Remdesivir still leads many in the race to treat the virus, and after announcing the results of its phase III trials at the end of April, there is promise for GILD to soar. Today, GILD stands at $77.95, which is well above its value at the end of January ($63.20) showing net positive return.
See Appendix for AbbVie (ABBV) Emergent BioSolutions (EBS), Regeneron Pharmaceuticals, Inc. (REGN), and Vir Biotechnology, Inc. (VIR) for additional companies offering and developing treatment options for COVID-19.
Livongo Health
The digital health startup Livongo offers at-home diagnostic and therapeutic services and has unsurprisingly seen a sharp rise a share valuation. On March 26th after Livongo Health Inc (NASDAQ:LVGO) was announced as the first marketplace partner for the Health Transformation Alliance (HTA) and Welltok, LVGO spiked. Moreover, after the company revised its projected first quarter revenue to reach between $65.5-66.5 million, there was a second surge in stock value on April 7th, reaching $33.16. LVGO did not stop there, as it has continued to rise sitting today at $57.85. Recent rises can be attributed to the stock being featured on CNBC’s Mad Money. Starting at $24.16 on January 31st, the company has shown net positive return of over $30 a share.
See Appendix for information on additional health tech companies including Cerner Corporation (CERN) and Allscripts Healthcare Solutions, Inc. (MDRX).
Co-Diagnostics
The value Co-Diagnostics Inc (NASDAQ:CODX) was $3.26 on January 31st and it peaked at $17.81 on March 2nd, showing upward return in the past couple months. The rise can be attributed to a variety of reasons. For example, there was a rise in share value after an order of 37,500 PCR test kits was bought from Co-Diagnostics by PreCheck Health Services, Inc exclusively for testing in Ecuador in early March. There was a rise in April of CODX after its Logix Smart Test was granted FDA Emergency Use Authorization (EUA). Additionally, there was a rise in CODX after both its Logix Smart Test and its Saragene COVID-19 test were announced to be ready for sale in Mexico and India, respectively. Today, CODX is at $16.99 showing net positive returns of almost $14 per share.
The Big Picture
The stock market continues to be vulnerable and sensitive to changes in the policy announcements and public news. Many health companies have shown net positive returns following surges in stock valuations and subsequent declines. Consequently, as the U.S. indexes bounce between gains and losses, many should consider investing in health companies that show promise and potential for return now and after the pandemic.
Arham Siddiqui is a MD/MBA student at Texas Tech University Health Science Center (TTUHSC).
Disclosure: I have no positions in any companies mentioned
Appendix
Regeneron Pharmaceuticals Inc (NASDAQ:REGN) – Although one of the leading developers in biotech for a COVID-19 vaccine, Regeneron has also focused on antibody treatment with trials expected in June. REGN is up over $200 since the end of January, now sitting at $557.54.
Vaxart Inc (NASDAQ:VXRT) – Shares have been up since announcing it would be working together with Emergent BioSolutions Inc. (EBS) to develop a vaccine in the form of a tablet. Positive pre-clinical data from the oral vaccine program has been reported.
Vir Biotechnology Inc (NASDAQ:VIR) – There was promise shown in VIR in early April after receiving a $250 million investment from GlaxoSmithKline, soon reaching phase II clinical trials for antibody treatment. Recently, they partnered with Alnylam to focus development of a RNAi treatment.
AbbVie Inc (NYSE:ABBV) – Share value increased initially as its drug Kaletra (lopinavir/ritonavir) showed promise to treat the disease. However, after studies showed the anti-HIV drug to be ineffective for patient treatment, ABBV share value plummeted. After its acquisition of Allergan, share value has continued to rise.
Emergent Biosolutions Inc (NYSE:EBS) – EBS has focused on plasma therapies for treating the disease, receiving $14.5 million in early April from the U.S. Department of Health and Human Services. EBS was also featured on CNBC’s Mad Money in early May, which may be attributed to EBS’s rise in share value in the past couple weeks.
Cerner Corporation (NASDAQ:CERN) – Cerner offers a platform service for electronic medical records (EMRs) and showed steady decline until March 23rd, similar to U.S. Indexes. After announcing it will enhance support to clients, introduce new technology, and offer assistance globally, shares have increased. Today, CERN is at $66.22, which is down from the value at the end of January ($71.83).
Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) – Allscripts is another platform for EMRs but has not shown trends similar to Cerner. MDRX dropped from $8.58 at the end of January to $6.18 today, having its worst valuation on March 17th at $5.02.
Zoom Video Communications Inc (NASDAQ:ZM) – Although not in the health industry, ZM is a stock showing high trade volume amidst the pandemic. It has seen its shares soar after initial usage following social distancing and fall after privacy issues. The concern of video conference hijacking saw the company lose share value at the end of March. After an investigation by the Washington Post showed that personal Zoom videos would be left on the web, share value continued to fall. However, as Zoom continues to be used the share value has been up. It is interesting to note that ZM had a peak on March 23rd at $159.56, the same time when the U.S. indexes were at their worst. From its value of $76.30 on January 31st, ZM has still shown net positive return of over $80. Today ZM sits at $161.04.
