The race for a novel coronavirus vaccine has lit a fuse under biotech and pharmaceutical companies. 2020 will surely be remembered as the year of COVID-19 and an unprecedented boom for these industries. During good times, pharma stocks are attractive because of their steady cash flow, high-profit margins, research and development innovations, and exclusivity of drug patents. But during a global pandemic, they become even more attractive because they are now essential to our future. They are now the superheroes who will protect the world against COVID-19. This also makes them recession-proof.
Pfizer Inc. (NYSE:PFE) has been a longtime favorite among investors due to its dividend. Despite being kicked off Dow Jones as it was replaced by the biotech company Amgen, Inc. (NASDAQ:AMGN), it is still one of the best bets when it comes to the COVID-19 vaccine. Yet, latest news reports that COVID-19 vaccine candidates being developed by Moderna Inc (NASDAQ:MRNA) and BioNTech SE (NASDAQ:BNTX) and Pfizer itself will require stringent standards for refrigeration. This factor could hamper how they are distributed. Unsurprisingly, stocks tumbled. On the other hand, there are about half a dozen COVID-19 vaccine candidates in clinical trials in the U.S but not all of them are mRNA vaccines. The vaccine being developed by AstraZeneca plc (NYSE:AZN) and the University of Oxford is a recombinant viral vector vaccine whereas the Inovio Pharmaceutical Inc's (NASDAQ:INO) candidate is DNA-based. Competitive positioning will be greatly influenced by storage and delivery conditions. But Pfizer has its background and precious experiences in vaccines which greatly increase its odds of success.
Regeneron Pharmaceuticals Inc (NASDAQ:REGN) is a large-cap, but one that is still growing in virtually all directions. During its second-quarter, its widely popular eye injection, Eylea, is seeing demand approaching pre-pandemic levels. Meanwhile, the rest of the company's portfolio is expanding. Sales of Dupixent, an anti-inflammatory drug that treats allergies, increased by 70% year-over-year to nearly $1 billion during the quarter.
The company's skin cancer therapy, Libtayo, is under consideration to expand its range to treat various types of lung cancer as it is three more effective than existing drugs. If approved, this is a $25 billion market opportunity. Currently, Regeneron is in a superb financial position with $5.7 billion in cash and $1.5 billion in debt. This is how it was able to recently buy out Sanofi SA's (NASDAQ:SNY) entire stake for $5 billion, providing more future net income for its shareholders. Considering the company reinvests more than $2 billion annually into R&D efforts, there is no reason to doubt its growth prospects.
GW Pharmaceuticals PLC (NASDAQ:GWPH) has the first FDA-approved drug that derives its active pharmaceutical ingredient from marijuana. It is revolutionizing the way seizures are treated but it also received a regulatory nod to treat tuberous sclerosis, a disease-causing tumor that affects 50,000 patients in the U.S. alone. Potentially, it could be also used to treat multiple sclerosis and post-traumatic stress disorder. Considering that it is now approved in Europe as well, the drug generated $121.3 million in revenue in the first quarter, marking a 68.4% year-over-year growth compared to the previous year.
Sales are growing, net loss is narrowing and the company is free of debt while having over $477 million in cash on its balance sheet. If we add the fact that the majority of its patents are valid for 15 more years, there is so much growth potential ahead. Epidiolex can become a blockbuster brand as more and more U.S. states legalize medical marijuana.
Speaking of cannabis, there is another high yield marijuana stock that ranks as a "dividend lover's dream," Innovative Industrial Properties Inc (NYSE:IIPR) is the first and only real estate company on the New York Stock Exchange that is focused on the regulated U.S. cannabis industry. The company just announced it closed on the acquisition of a property in Michigan and it is growing fast.
The bottom line is that we are still learning about this coronavirus that turned the whole world upside down. But there are many other deadly diseases to be fought as well as the antibiotics resistance crisis to think about. Whether we like it or not, our new normal depends greatly on pharma. The more inventive these companies are, the better off the world will be.
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