Sign up for our free daily newsletter


Get the latest news and some fun stuff
in your inbox every day

Amgen Working To Combat Covid-19

What about buying pharmaceutical stocks at a time like this? In the middle of a global pandemic of such major proportions, big money is being thrown at Covid-19 diagnostics, treatment, vaccines and immunity enhancers.

Research-based pharmaceutical companies might do well, depending on what they already have in the pipeline that might be useful to treat people with Covid-19. For example Gilead Sciences and its antiviral drug Remdesivir, which was originally designed to tackle Ebola by inhibiting an enzyme called RNA polymerase which is used by many viruses to replicate. In subsequent lab studies Remdesivir was also found to kill SARS and MERS, two earlier coronavirus outbreaks. Gilead is ramping up production in advance of full approval by the Food and Drug Administration (FDA).

There are at least 23 other Covid-19 treatments in development, and quite a few of them are drugs already approved for other conditions. That's an advantage, because they are already known to have limited or manageable side-effects, but they still need to be FDA approved for use here. Here's an example. Some patients infected with the novel coronavirus can develop uncontrolled immune response, leading to potentially life-threatening damage to lung tissue. As a result, tests are underway to explore whether drugs for rheumatoid arthritis, which inhibit immune responses, may be of use in the lungs. Amgen (another Vestact recommended holding) is a major player in this area, with one of the top selling drugs, Enbrel.

Johnson & Johnson (a Vestact recommended stock) has a very wide range of products in its pharma portfolio. Last week the company announced a new partnership with an arm of the US Department of Health and Human Services to continue development on a vaccine to prevent Covid-19. A team of researchers began development of possible vaccines in January, after coronavirus's genetic sequencing became available. The research was conducted in collaboration with a team at the Beth Israel Deaconess Medical Centre at Harvard University, and eventually yielded one lead candidate with a promising immune response and two backup candidates. They plan to spend $1 billion to expedite testing and manufacturing of the drug.

Following an 'accelerated" timeline, they anticipate the vaccine could begin Phase 1 clinical trials as early as September of this year. If those trials are successful, that time frame could allow an emergency deployment of the vaccine as early as January 2021 - a stunning turnaround for a vaccine. Johnson & Johnson is already beginning to ramp up production of the candidate vaccine with a stated goal of producing more than a billion doses.



Note that Johnson & Johnson is definitely not the only company working on a Covid-19 vaccine, there are at least 41 drugs in various stages of development. The other most advanced candidate is code named mRNA-1273 and is being developed by Nasdaq listed Moderna. It's a synthetic mRNA strand that elicits an immune response and produces antibodies against the SARS-CoV-2 which results in Covid-19.

One word of caution. Making and selling vaccines is not generally a very profitable business. Vaccines often require updating, because the damned viruses are always mutating and evolving, so they have a high research and development requirement. The margins on the vaccine sales are also not great, because they have to be cheap to be used widely. Having said that, the prestige accorded to the company that produces the cure will be significant.

Finally, Amgen is also working on Covid-19 antibody strategies, in a joint venture with Adaptive Biotech. They aim to assess the antibodies in the blood of recovered patients, and work out which ones combat the disease and how they can be replicated in those who are not yet infected. This approach could well be faster than the vaccine route.


Other recommended stocks     Other stories about AMGN