Health and Healthcare

Are President Trump's COVID-19 Drugs the Real Winners in the Race?

Jon C. Ogg

Published: October 5, 2020 1:28 pm

Last Updated: October 6, 2020 8:41 am

Many health care products become much more popular because of endorsements and advertising efforts. It is a longstanding practice that has come under fire by both political parties in the United States. While those targeted efforts tend to be paid endorsements, guess what happens when the president of the United States receives medical treatments from drug companies.

After the announcement President Donald Trump and First Lady Melania Trump tested positive for COVID-19, the focus after his hospitalization quickly turned to which drugs were being used to treat the president. This story has implications far beyond the reaction of drug company stocks, but the moves are still rather interesting and there are some surprises as well.

Regeneron Pharmaceuticals Inc. (NASDAQ: REGN) is now being considered the first winner due to the president being treated with its experimental antibody cocktail. The drug is not yet approved and is still under development, but the move after recent positive study data and by the president’s medical team is already giving analysts an expectation that its treatment may be close to approval since this was chosen over other treatments that are also being evaluated in the war against SARS-CoV-2.

Gilead Science Inc. (NASDAQ: GILD) is being viewed as the secondary winner after the announcement that the president was being administered a five-day course of remdesivir. This is also still considered to be an investigational antiviral, but the FDA’s grant of emergency-use authorization in May of 2020 was granted because the drug had been shown to shorten the duration of hospital stays for some of the more seriously ill patients suffering from COVID-19.

Drug companies already have signed a pledge that any approvals should be based on science rather than any other reasons. That list of issues would include political pressure as well.

Also worth noting is that some drug companies have been suggesting that their drugs would likely take longer to get to market, even with expected FDA approvals, than what the president has been communicating. Does this new development change that scenario? And did it change the pecking order?

Oddly enough, some of the companies that have not even been noted in President Trump’s regimen have seen large bumps higher on Monday as well.

SVB Leerink has said that this more or less is now being seen as a “tacit endorsement” by the federal medical bureaucracy. The analyst now expects that there will be an emergency use authorization within days since the doctors chose to administer that cocktail to the president. The Regeneron treatment was even noted as having been tested on barely 1,000 people and the Phase 1 data were just released at the end of September.

The firm Cantor Fitzgerald also raised Regeneron to Overweight from Neutral and issued a $690 price target. Bac on September 29, BofA Securities maintained its Neutral rating after noting that the initial data from REGN-COV2 were difficult to interpret and that additional follow-up communications were needed to understand its clinical benefit.
Shares of Regeneron were last seen up over 7% at $605.50 on Monday. Its all-time high is $664.64 and its consensus analyst target price from Refinitiv was $674.79.

Gilead’s stock price was last seen trading up about 2.8% at $63.95 on Monday. Its 52-week high is $85.97, but the stock used to trade well above $100 in prior years. Gilead’s consensus target price is $78.96.

Other COVID-19 stocks are also trading higher because their candidates are deemed to be closer to full FDA approval than Regeneron.

Pfizer Inc. (NYSE: PFE) and BioNTech SE (NASDAQ: BNTX) are well into their Phase 3 study. They were in the news in September after an oddly communicated “nearly perfect” comments from the BioNTech CEO in a televised interview. BioNTech shares were up nearly 8% at $79.45 on Monday, and its all-time high has been $105.00. Shares of Pfizer were last seen up 1.3% at $36.85.

GlaxoSmithKline PLC (NYSE: GSK) and Sanofi (NYSE: SNY) are also in COVID-19 trials that have been in the news of late. The team already has pre-orders for up to 72 million doses of the adjuvanted COVID-19 vaccine from Canada. GSK shares were last seen up 0.8% at $37.54 in New York trading, followed by a 0.9% gain to $50.95 for Sanofi shares.

Moderna Inc. (NASDAQ: MRNA) was the company that recently suggested its COVID-19 treatment might not be approvable and able to be distributed as fast as President Trump had telegraphed. Still, Moderna shares were also up over 35 at $70.95.

Novavax Inc. (NASDAQ: NVAX) was last seen trading up 5.9% at $109.67 on Monday. Its all-time high is $189.40 and the consensus target price is $227.60.

Johnson & Johnson (NYSE: JNJ) recently entered its expanded studies for a potential coronavirus vaccine. While it is the largest of all of the other companies by far, its stock was also up 0.7% at $147.30 on Monday.

This is one of those instances where even an unintended presidential endorsement is driving the entire class of COVID-19 stocks higher. The race for the COVID-19 vaccines and the other drugs being targeted for treatments is a race that is not yet over. It also appears that there may be multiple winners in this race, and Wall Street seems as though it is offering up some participation trophies before the race is even over.