COVID Treatments – Meet The New Stocks, Same As The Old Stocks

Date: 01/11/2022
Author: Mr. X

This is written during an especially grim time of the COVID-19 pandemic. In some areas, cases are higher than ever. The Wall Street Journal ran an op-ed arguing that there is “no evidence so far that vaccines are reducing infections from the fast-spreading [omicron] variant” of COVID-19. That’s the kind of thing that would have gotten you banned from Twitter not long ago, but now it is becoming accepted wisdom.

Pfizer CEO Albert Bouria recently stated that an omicron vaccine will be ready in March. Moderna is also reportedly working on a booster that will target the omicron strain.

Of course, by the time these new boosters are ready, we may be dealing with a new strain. Currently, there’s a debate over whether a combination of the delta stain and the omicron strain (“deltacron”) is really a new threat or just a mistake made by a scientist in Cyrpus. Only time will tell.

Investors should already be looking ahead to potential treatments. In retrospect, politicians and health officials should have called the “vaccines” therapeutics all along. The constantly moving goalposts we are getting from health authorities is one of the main drivers of vaccine hesitancy.

When it comes to oral treatments, the top two contenders are Pfizer and Merck. Pfizer has Paxlovid while Merck is offering molnupiravir. Data from Pfizer found that Paxlovid was 89% effective in preventing high-risk patients from being hospitalized or dying from the disease. Merck’s molnupiravir is reportedly less effective. Of course, clinical data may be a moot point – supplies are low and countries around the world are trying to order what they can. In most health systems, you’ll take what’s available.

There’s also Novartis AG (NVS) and its drug ensovibep. In a test with 407 people, the drug reduced the viral load over the course of eight days. An intravenous treatment is obviously less convenient and attractive than an oral treatment, yet with supplies scarce, people have few options.

Gilead Sciences (GILD) and remdesivir (Velurky) have been at the forefront of COVID-19 treatment thus far. It prevents COVID-19 from replicating and for some time has been the only FDA approved treatment for the disease. It was part of the regimen that successfully cured then-President Donald Trump (who might be back in 2024).

That said, the treatment must be used early for it to be most effective. GILD has not been a strong performer, but that may change as the increased case load will lead more patients to use Velurky.

Monoclonal antibodies have been used successfully for many patients. However, they don’t work for every variant. The federal government may be sending treatments that don’t work against what we are facing now.

It has also become something of a political issue. The misinformation and propaganda surrounding the treatment is intensifying as Republican governors like Florida’s Ron DeSantis clash with President Biden. I’m not taking a side here. Investors must simply be aware that Narratives are being pushed from both conservatives and progressives that are designed to hurt political opponents, not provide useful information.

In short, containment has failed and while there are treatment options, supplies are low. Interestingly, there’s been a significant shift in media coverage surrounding the pandemic. Suddenly, journalists are discussing the differences between dying of COVID-19 and with COVID-19. That’s something else that would have gotten you kicked off social media not long ago.

The Democrats are also not going to try another lockdown order. Clearly, they have been looking at the polls. Even Dr. Anthony Fauci’s sterling reputation may not last much longer if the pandemic continues to rage out of control.

The problem for the Biden Administration is twofold. First, those whom the Biden Administration can reach aren’t going to be able to handle a sudden change in media messaging. The educational campaign needed to get people to take the vaccine – what an uncharitable person might call a scare campaign – may have worked too well. Those who have their views heavily influenced by mainstream media sources will find it hard to reconcile trusted sources telling them a totally different Narrative.

Already, there are controversies about keeping public schools open in Chicago, Illinois and Oakland, California. The omicron variant may be “milder” compared to previous strains, but it is still horrifically painful and draining even if you can overcome it without treatment. Workers at the one unionized Starbucks (SBUX) in Buffalo, New York recently staged a walkout, claiming that demands from management are simply too much. A third of the staff, they claimed, is sick.

With more than 4 million workers quitting their jobs in November – especially in the hotel and restaurant industries – “The Great Resignation” is well underway. Many workers simply won’t endanger themselves for the sake of the economy.

The second problem the Biden Administration faces are those who have already checked out from what the government and the press are telling them. They will take the current chaos as confirmation for their views. It remains a fact that President Joe Biden and many others claimed that vaccination would prevent people from getting COVID-19. As many vaccinated and boosted people continue to get the disease (the latest being progressive lawmaker Alexandria Ocasio-Cortez), public anger will build. They did what they were “supposed to,” and still got sick. It’s also very hard to blame the “unvaccinated” minority for a new strain that dodges existing vaccine and emerged from Africa.

Polls suggest that Americans are now considering inflation a bigger problem than the pandemic. The Federal Reserve is preparing a ferocious counter-offensive against inflation, with as many as many as four interest rate hikes predicted this year. That will suppress the stock market, particularly tech stocks.

On paper, the economy is growing and President Biden should be reaping the rewards in the midterms. In reality, inflation is up, workers are dissatisfied, and Americans don’t believe President Biden has successfully handled the pandemic. Furthermore, while the Federal Reserve has said that supply chain shortages will ease, investors should be skeptical. These are the same people who said inflation would be “transitory,” which has now become a punchline.

Who will benefit? Politically, Republicans. Economically, the same companies that have been benefitting already, especially Pfizer. That may seem unfair or even outrageous, but it remains the reality. Pfizer is ideally placed to be the company that both provides vaccines (which should really be considered a therapeutic now) and an additional, convenient treatment.

There’s one other contender that investors should consider. This is Novavax (NVAX), which fell behind in the vaccine race. However, considering that the vaccine race is now less of a “race” and more of a never ending relay as new strains continuously develop, Novavax may have its best days ahead of it. It rose more than 6% after it made progress towards approval in South Africa – where the omicron variant of COVID-19 first developed.

In the Rogue Investing Daily Model Portfolio, I’m going to tell subscribers to consider Novartis AG (NVS). BioNTech SE (BNTX), one of the original “Coronavirus Kings” that developed a COVID-19 vaccine with Pfizer, is another stock to keep an eye on.

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The unfortunate truth is that we are living in the new normal. While President Joe Biden and the Democrats are suffering at the polls because of this environment, the truth is that President Donald Trump probably wouldn’t have fared any better. If anything, the press would have been far harder on him. Even if the GOP was running the government right now, I expect we’d be in more or less the same position. Some sources in DC quietly agree with me.

The COVID-19 pandemic will not end until there is an easily available treatment, and supply shortages mean that will not happen for some time. Pharmaceutical companies will continue to profit from the pandemic – especially as some governments will be requiring that people be vaccinated and boosted for the indefinite future.

If there’s one assumption investors should dismiss, it’s that there will be a return to the pre-pandemic way of life. Paradoxically, that also means that investors should take a second look at some of the pharmaceutical companies that have been there since this started. The profits they have made thus far are just the beginning – as this virus is going to be with us forever.

Mr. X is an investment analyst working in the Washington DC area who specializes in the intersection of business and public policy. After fifteen years working in politics, he writes on a classified basis for to bring you news on what those with power are debating, planning, and doing.

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