The first trading session of December started off strong as stocks looked to recoup some of yesterday’s losses. Investor sentiment suffered yesterday when Fed Chair Jerome Powell said the central bank is planning to discuss speeding up the taper of its $120 billion a month bond-buying program that has been in effect since March 2020. The news shook markets, which were already fragile from the emergence of the new, threatening variant spreading globally.
Some biotech stocks will likely benefit as drugmakers race for a solution to the new threat. Our team has spotted one company that we think will assume a leadership position as the emergence of new variants increases the post-infection antiviral market.
The new strain of the COVID-19 virus, Omicron, initially discovered in South Africa last week, has sparked alarm among epidemiologists worried the mutations could make the variant more transmissible. One name we will be watching as new developments around Omicron arise is Vir Biotechnology (VIR). The commercial-stage immunology company focused on combining immunologic insights with cutting-edge technologies to treat and prevent infectious diseases. Its current development pipeline consists of product candidates targeting COVID-19, hepatitis B, influenza, and human immunodeficiency virus.
The company’s partnership with GlaxoSmithKline (GSK) on Sotrovimab, a dual-action antibody, is helping increase the drug’s reach. The FDA granted Sotrovimab emergency authorization in May after it was shown to reduce the risk of hospitalization or death by 79% in adults with mild-to-moderate Covid-19 at high risk of progressing to severe disease. Earlier this month, the U.S. increased its order, bringing its total contract to $1 billion. Binding agreements have already been received for the sale of more than 720,000 doses of Sotrovimab worldwide. Plus, the treatment is still undergoing review in several nations, which means plenty of untapped potentials.
Recent updates suggest that Vir and its collaborative partner GlaxoSmithKline (GSK) are likely to maintain a top-tier Covid antiviral franchise. In a research note published yesterday, H.C. Wainwright analyst Patrick Trucchio reiterated his bullish stance, citing the emergence of new Covid variants as a tailwind for Vir, thanks to a potentially larger post-infection antiviral market. The analyst expects a “robust” Covid-19 antiviral market, with Vir as a leader. Trucchio also touched on the firm’s differentiated approach to VIR and GSK, stating that VIR shares “should increase substantially.”
There’s much more to Vir’s pipeline than just their COVID antibody. Along with some established collaborators, the company has made headway in some of the most profitable infectious diseases. For instance, their stage 2 collaboration with Anyalam on siRNA (small interfering RNA) and antibody treatments for hepatitis B has produced VIR-2218; a treatment experts have touted as the potential best-in-class siRNA and a “backbone” of hepatitis B therapy.
Vir also has exciting prospects in HIV and influenza. Their collaboration with the Bill & Melinda Gates Foundation on a T-cell treatment for HIV is rounding the corner into the second phase. If all goes according to plan, Vir investors could have a huge victory on the horizon.
JPMorgan analyst Anupam Rama recently upgraded Vir, saying that the company’s broader pipeline (beyond COVID) should come into increasing focus in the next 12 months. The analyst said he will be looking for the broader non-Covid channel to “emerge as a larger component value driver.”
The current consensus among 8 polled analysts is to Buy VIR. There are 5 Buy ratings and 3 Hold ratings. There are no Sell ratings for the stock. A median 12-month price target of $77 represents a 74% increase from the last price.
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