The Next Covid Challenge Is Also A Cash Cow For These Stocks

Vaccines rapidly changed the Covid pandemic in the U.S., but the delta variant’s grip on the country means hundreds of people are still dying every day. It’s a stark picture — and a gargantuan challenge for Covid stocks working on desperately needed treatments such as monoclonal antibodies and antiviral medicines.


Monoclonal antibodies are essentially drugs designed by nature. Four are now on the market in the U.S., with Regeneron Pharmaceuticals (REGN) and Eli Lilly (LLY) among the biggest names. Regeneron could see a new authorization for its Covid treatment as early as April. The Food and Drug Administration will now consider its drug as a preventive measure for people exposed to Covid.

But new promise lies in antiviral drugs. On Oct. 11, Merck (MRK) asked the FDA for emergency authorization for the first one. These pills from Merck, Pfizer (PFE) and others could treat Covid patients at home without invasive infusions or shots. The opportunity for Covid stocks testing out treatments is easily in the billions of dollars.

It doesn’t stop there. There are hundreds of coronaviruses in animals. Some of those could hop from animals to humans, jump-starting the inevitable next pandemic. Experts say seven of those viruses — including the virus that causes Covid — have already done just that. Four cause common colds. But others are more severe. Illnesses called SARS and MERS also came from coronaviruses.

“To think the third (outbreak) will be the last one is not realistic,” Vir Biotechnology (VIR) Chief Executive George Scangos told Investor’s Business Daily. Vir makes a Covid-fighting monoclonal antibody.

“They’ve proven their ability to jump species and into the human population,” he said. “So, I think there will be another (pandemic) at some point. The chances of that are very high. We don’t know when. But we really want to be prepared.”

Covid Stocks Scramble To Tackle Virus

The early days of the pandemic left health care professionals scrambling.

“All we had was supportive care,” said Nicholas Kartsonis, Merck’s senior vice president of clinical research for infectious diseases and vaccines. “We were trying to keep people out of the hospital by social distancing and quarantining.”

A different picture has emerged in the treatment of those infected with Covid. (Kateryna Kon/

Today, it’s a different picture for Covid patients in the U.S. as use of monoclonal antibodies grows and the promise of antiviral medicines looms.

Gilead Sciences‘ (GILD) remdesivir was the first Covid treatment to gain U.S. authorization. Gilead resurrected remdesivir. It was initially designed to treat Ebola, but had failed to treat that disease.

The FDA allowed it to be used in hospitalized Covid patients beginning in May 2020. It later gained full approval in October 2020 and began selling under the name Veklury.

The armament of Covid treatments later expanded to include convalescent plasma and Lilly’s anti-inflammatory drug, Olumiant.

Antibody Drugs Offer Unique Promise

But investors in Covid stocks celebrated when Regeneron’s monoclonal antibody cocktail gained authorization in late November 2020.

The Next Covid Challenge Is Also A Cash Cow For These StocksMost people who contract Covid develop antibodies to fight it off in the future. But not all people. This is why monoclonal antibodies offer such a unique proposition in Covid treatment.

In theory, they can treat an infection or prevent one.

Still, nothing in medicine is that simple.

“It took awhile for physicians to realize the impact the antibodies could have,” Vir CEO Scangos said. Vir sells one of those monoclonal antibodies.

Daniel Chancellor, a director at analysis firm Informa Pharma Intelligence, said the early stages of the pandemic focused more on vaccine development and distribution.

“But delta has certainly changed the equation,” he told IBD in an email. “With delta squashing hopes of protection via herd immunity, everyone will get exposed at some point, meaning additional waves of infection requiring Covid-19 treatments.”

Infusing Antibodies Directly Into People

More than 1 million people have received Regeneron’s monoclonal antibody cocktail since December, company spokeswoman Alexandra Bowie told IBD in an email. That’s out of more than 240 million Covid cases worldwide and 45.5 million in the U.S., as of Oct. 14.

Monoclonal antibodies from Lilly and AbCellera (ABCL), and partners Vir and GlaxoSmithKline (GSK), were added to the toolbox in February and May, respectively.

Lilly and AbCellera sell an antibody called bamlanivimab that now pairs with another, etesevimab. Vir and GlaxoSmithKline make a single antibody drug called sotrovimab.

Officials authorized all three drugs to treat the disease in non-hospitalized patients. The FDA also authorized the cocktails from Regeneron and Lilly to prevent Covid in people exposed to the virus and at risk of developing severe disease. Now, the agency says it will consider fully approving the Regeneron cocktail as a post-exposure medicine to prevent Covid for at-risk people.

Unlike vaccines, which cause the body to make antibodies, these drugs infuse disease-fighting antibodies directly into a person. But it’s still unknown how long those antibodies persist.

A Mutating Virus

The Lilly/AbCellera monoclonal antibody offers a case study in why it’s challenging to use antibodies to target a virus that mutates.

The FDA revoked bamlanivimab’s authorization in April after it became ineffective against variants. Later, the agency allowed use of the monoclonal antibody in combination with etesevimab. This summer, the FDA stopped shipments of the antibody cocktail when it stopped working against Covid strains gamma and beta.

Covid Treatment
Companies are using drugs to infuse Covid-fighting antibodies directly into infected patients. (©Halfpoint —

Lilly noted in its second-quarter release that preclinical data suggests that the antibody pair can fight off alpha and delta variants.

The Office of the Assistant Secretary for Preparedness and Response, alongside the FDA, resumed the shipment and distribution of the combination in early September. Soon after, the U.S. government ordered an additional 388,000 etesevimab doses to complement previously purchased bamlanivimab doses. The news sent Covid stock Lilly fractionally higher.

Lilly expects that agreement to bring in $330 million in sales in the second half of 2021.

Other Covid treatment makers say their monoclonal antibodies have retained protection against coronavirus variants. In its second-quarter release, Vir noted its antibody can fend off every variant of concern. Regeneron says its cocktail still fights Covid related to delta, gamma, beta and mu mutations.

Covid Stocks Look For What’s Next

Vir’s monoclonal antibody differs in two key ways. First, it’s a single antibody while Regeneron’s and Lilly’s pack a two-antibody punch. Second, researchers derived the antibody from someone who fought off SARS. Regeneron’s and Lilly’s cocktail approaches come from people who fell ill with Covid. For them, the idea is that if one antibody fails, the other is there to play backup.

George Scangos, CEO
Vir Biotechnology CEO George Scangos says the company hoped to find an antibody that can block all coronaviruses. (REUTERS/Newscom)

Vir CEO Scangos says the company was looking to find the optimal monoclonal antibody. Despite that, the Covid stock has largely trended sideways in 2021.

“Our reasoning was any antibody targeted against SARS but also active against Covid recognizes a part of the virus that hasn’t changed when all the viruses have evolved separately,” he said. “It’s likely to be a region that would continue to provide protection against the variants.”

The latter part is important in the case of future pandemics. No one knows how their monoclonal antibodies will stack up in a year or two with the likely continued evolution of variants. Vir hopes to find an antibody that can block all coronaviruses in the event of another pandemic.

“Being prepared means having antibodies like ours that have the potential to be active in the next pandemic,” he said.

Regeneron Pulls In Billions In Sales

Regeneron’s Bowie says it’s impossible to predict whether the company’s monoclonal antibody cocktail could block another coronavirus. Still the Covid stock has benefited richly from its cocktail. In the second quarter, its drug — called REGEN-COV — brought in $2.59 billion in sales.

“We could, however, apply our same rapid response technologies to new emerging infectious diseases in the future, hopefully with similar success,” she said in an email. “In fact, we have already used these same technologies to create virus-specific neutralizing monoclonal antibodies for MERS and Ebola.”

Regeneron recently inked a deal with the U.S. government for 1.4 million more doses of its Covid monoclonal antibody cocktail. The transaction values the drug at $2,100 per dose. In total, Regeneron will soon have supplied the U.S. with nearly 3 million doses of its antibody cocktail.

Lilly’s combination brought in $148.9 million in second-quarter sales before the FDA halted shipments in June. Meanwhile, GlaxoSmithKline reported roughly $21.9 million in sotrovimab sales. Under terms of the deal with Vir, GSK records sotrovimab sales, while Vir shares profits.

Roche (RHHBY) also has a monoclonal antibody treatment, called Actemra. The FDA authorized Actemra in June for hospitalized patients. Unlike the other antibodies, Actemra wasn’t developed with Covid in mind. It’s actually a treatment for inflammatory conditions like rheumatoid arthritis.

Antivirals: A Big Opportunity For Covid Stocks

The much bigger opportunity could materialize before year’s end.

Covid stocks Merck, Pfizer and partners Roche and Atea Pharmaceuticals (AVIR) are working on oral antiviral drugs that aim to stop the virus from replicating inside the body. Merck, in fact, has already asked the FDA to authorize its Ridgeback Biotherapeutics-partnered pill, molnupiravir, for emergency use. In early October, Merck said the pill cut down on the risk of hospitalization and death by 50% for people with mild-to-moderate Covid.

Covid pills
Some feel that oral antiviral medications are the “missing piece in the jigsaw puzzle” in battling Covid. (Towfiqu —

Informa Pharma’s Chancellor says effective oral antivirals are the “missing piece of the jigsaw” puzzle in treating Covid. Atea CEO Jean-Pierre Sommadossi says the opportunity for companies working on antivirals is huge.

Unlike monoclonal antibodies — which require administration by a professional — patients can take oral antivirals at home. They also stand a chance of treating milder Covid patients.

Sommadossi notes Covid has a high recovery rate.

“Safety is going to be paramount when you use this drug in millions of individuals,” he told IBD.

Atea continues to test its antiviral drug in non-hospitalized adults with mild or moderate Covid, and in hospitalized patients with moderate Covid. In June, the company said hospitalized patients showed an 80% average reduction in viral load after just two days of taking its antiviral medicine. The drug was also safe and well-tolerated. A Phase 3 study in non-hospitalized patients is ongoing.

Targeting All Coronaviruses

Oral antivirals will be important as Covid moves into its endemic phase. Experts disagree whether the world is there yet. Sommadossi says Covid is now an endemic disease, similar to the annual flu.

The Next Covid Challenge Is Also A Cash Cow For These Stocks

“We are going to have to live with (Covid),” he said. “It will continue to circulate for years to come.”

Sommadossi notes thousands of Covid variants remain in circulation, though only a handful are fit enough to spread broadly. He expects Atea’s antiviral to target all of them.

But will it work against other coronaviruses?

“We know it will,” he said.

The only exception is MERS. That’s due to the specific genetics of the virus that causes MERS. Sommadossi says Atea’s Covid antiviral blocks two pieces of the virus — meaning the virus is unlikely to develop in a way to elude the treatment.

U.S. Government Stocks Up

Similarly, Merck and Pfizer are working on antivirals to target Covid. Pfizer is testing intravenous and oral versions. Merck’s results in early October were so promising an independent committee said the company could stop recruiting patients for its study.

Even before that, Merck’s molnupiravir had already nabbed a hefty order. In June, the U.S. government bought 1.7 million doses of the antiviral.

Kartsonis, the Merck senior VP, says it’s unlikely the virus will mutate in a way that renders the company’s antiviral ineffective. The Merck and Ridgeback Bio drug creates mutations in the RNA of the virus, resulting in a process called “viral error catastrophe.” Essentially, it so riddles the virus with errors that it no longer can replicate.

Merck pills
Merck has asked the FDA to authorize its molnupiravir for emergency use in treating Covid. (

Some experts say the medicine could embed itself into the host’s genes. In theory, this could lead to cancer or birth defects in children born from molnupiravir recipients. But Merck says that side effect hasn’t occurred in animals or humans who’ve taken the antiviral in testing.

Kartsonis notes monoclonal antibodies have shown promise. But taking pills at home is likely to be the more popular choice. Notably, none of the molnupiravir patients died in Merck’s recent study. But eight patients in the placebo group did.

Similarly, Atea expects to have the results from its final-stage test in non-hospitalized patients this quarter.

“I think there would be huge demand” for an oral antiviral, Kartsonis told IBD. “I think people feel very comfortable taking pills. It’s an easy treatment course during the early signs of Covid. I can imagine it’s an additional tool in the toolbox.”

What About The Next Pandemic?

Both Merck and Pfizer are also studying their antivirals in post-exposure settings. Merck says its results from that test won’t be available until early 2022. In theory, the antivirals could prevent someone exposed to Covid from getting sick. Two of the monoclonal antibodies are also authorized for this use, with Regeneron now seeking a full approval for this use.

Kartsonis is also bullish about the chances for the antiviral to work against other coronavirus strains, including in the event of future pandemics. Pfizer spokeswoman Jerica Pitts said in an email that it’s too early to speculate whether Pfizer’s antiviral could work against other pandemic-potential viruses.

“When you look back over the last 100 years where the pandemics have come from — since the 1918 influenza — they’ve been RNA viruses,” Kartsonis said. “Wouldn’t it be great to have something that could potentially be on the shelf and available for any future pandemic that might come? It could potentially give us a head start against the next pandemic.”

He added that, “As you saw, no matter how wonderful our efforts are in terms of developing vaccines and monoclonal antibodies, you will need to start from scratch when the next pandemic comes.”

Follow Allison Gatlin on Twitter at @IBD_AGatlin.


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