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Apr 27, 2020

How Biotech and Big Pharma are Racing to Find a Cure

By Team Stash

Healthcare and pharmaceutical companies are developing tests, vaccines, and treatments for Covid-19.

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Behind the scenes of overwhelmed hospitals dealing with the coronavirus pandemic, workers from both small biotech companies and huge pharmaceutical companies are also fighting the virus.

While patients suffering from Covid-19 continue to flood hospitals, companies including Gilead Sciences, Moderna, and Sanofi, are racing to find solutions to three of the biggest issues at the center of the pandemic: inadequate testing, vaccines, and treatments. The coronavirus has infected more than 3 million people and caused more than 200,000 deaths worldwide

In addition to the health crisis caused by the virus, more than 26 million Americans have lost their jobs as companies have closed their doors in response to state and local stay-at-home orders. Markets have also experienced volatility in response to the virus’ spread since the end of February, 2020. 

Some experts predict small businesses such as restaurants to close permanently because of the financial losses they’re currently experiencing.

Included in the essential services that continue to operate are the people developing the science and technology to help stop the spread of the virus. Despite the turmoil in many industries, biotech and pharmaceutical companies have a unique opportunity to help find ways to slow the spread of the virus and treat patients.

Testing for the virus

Hospitals face a lack of adequate supplies of tests for the coronavirus. The Food and Drug Administration (FDA), a government agency that oversees the safety and efficacy of food and drugs, approved an at-home test kit from diagnostics company LabCorp on April 21, 2020. This kit would allow people to self-administer a nasal swab and send it to the lab for testing, without having to leave their homes. While LabCorp is initially offering the testing kits to first responders, the company intends to make the tests available to consumers for $119 soon.

In addition to tests for the actual virus, some companies are developing tests for the coronavirus antibody, which could identify people who had the virus but didn’t show severe symptoms.  A positive test for the antibody could indicate that a person is immune to the virus, at least for a period of time.

U.S. companies Biomerica Inc. and Chembio Diagnostics Inc., and South Korean company Sugentech Inc. started selling their own antibody tests outside of the U.S. Meanwhile, Roche AG, a Swiss pharmaceutical company, built testing kits for both the virus and for the antibody. 

When will a vaccine be ready?

Biotech and pharmaceutical companies all around the world are rushing to develop a vaccine for Covid-19. Development, testing, and production of vaccines typically lasts two to three years, according to Bloomberg. 

Researchers must test vaccines in the lab, on animals, and eventually on people. Because of how many rounds of testing vaccines need, it can still take 12 to 18 to get a vaccine on the market. Here are some of the companies–large and small–developing vaccines: 

  • Biotech company Moderna is working with the National Institute of Allergy and Infectious Diseases on a vaccine. The company began its first phase of human trials in March, 2020 and expects to kick off its second phase of human trials later in the spring of 2020. Moderna received $483 million in funding from the U.S. government to continue its work on the vaccine.
  • Big pharma company Johnson & Johnson reportedly plans to start clinical trials of a coronavirus vaccine. The U.S. Department of Health and Human Services allocated $500 million in funding to Johnson & Johnson’s vaccine production. 
  • Biotech company Inovio Pharmaceuticals started its first phase of human trials, testing on 40 people with its vaccine.
  • Biotech Novavax anticipates starting human trials of its vaccine in mid-May 2020. 

Treatments for the virus

Biotech and big drug companies are also hoping to develop effective treatments for Covid-19. Although the Trump administration has promoted a drug used to treat arthritis and malaria called hydroxychloroquine as a possible treatment for the virus, evidence seemingly doesn’t support that claim yet. 

Gilead Sciences entered the third phase of clinical trials of its antivrial drug called remdesivir on people who’ve contracted the virus. The company currently tests the drug on patients with moderate and severe cases of the virus but results of the tests are reportedly inconclusive.

Regeneron Pharmaceuticals and Sanofi to test a treatment for the virus called Kevzara, which was previously developed to treat rheumatoid arthritis. The companies started the next round of clinical trials of the drug on March 16, 2020. Roche Holding AG is also testing a rheumatoid arthritis drug for the treatment of the virus and is in the third phase of trials.

Other companies working on treatment testing include Amgen Inc, Adaptive Biotechnologies Corp, and CalciMedica Inc.

More on the biotech industry

The biotech industry has experienced a surge in mergers in recent years. New tax laws that have encouraged large pharmaceutical companies to “repatriate” cash overseas has given large companies the funds to buy small startups with promising new treatments, according to reports

Similarly, big pharma companies, many of which have lost patent rights for blockbusters like the statin Lipitor, the erectile dysfunction drug Viagra, and the pain relief medication Lyrica, may be looking to acquire smaller biotech firms with promising new drugs. 

Here are some examples: 

  • Bristol-Myers Squibb acquired cancer drug developer Celgene in 2019 for $74 billion. (Celegene acquired Juno Therapeutics for $9 billion in 2018.)
  • French company Sanofi said it would purchase U.S. drugmaker Bioverativ for $11.6 billion in 2018.
  • F. Hoffmann-La Roche announced plans to acquire a gene therapy company called Spark Therapeutics for $4.8 billion in June, 2019. 

The healthcare industry is massive in the U.S., employing more people than any other. In 2017, the number of people working in health care surpassed the next two largest industries, manufacturing and retail.

In 2018, Americans spent $3.65 trillion on healthcare, more than in any other developed country in the world, according to Fortune.  And that spending is likely to increase 5.5% per year until 2027.

Keep in mind that investing in any industry comes with risk and that the biotech industry has historically been a volatile one.

Investing in biotech and healthcare

You can invest in the healthcare and biotech industries on Stash. Stash offers healthcare and biotech ETFs. Stash also offers single stocks in healthcare and biotech companies. 

Remember that diversifying your portfolio of investments is an important part of the Stash Way. And as markets continue to react to the outbreak of Covid-19, investing for the long term is the way to go.

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