Affect of coronavirus vaccine analysis on a biotech inventory

In 2020 the Biotech sector stood out compared to oil, real estate, but also the tech sector. With the vaccine race, the course of each industry now depends on what is happening in the biotech industry. the pandemic will come to an end at some point, but what is certain is that biotech stocks will never be the same again.

Coronavirus biotech news has catapulted the entire stock market. Some of the most significant swings in stock markets have revolved around coronavirus and biotech companies. Since May 18, when US biotech Moderna announced some positive data on coronavirus treatment, Biotech stocks sharpen further.

Hoping to benefit from the first cure for Covid-19, investments in young, innovative biotechnology companies have grown significantly in recent months. But be careful of scrapping, the biotechnology market is one of the riskiest.

The race for the Covid-19 vaccine drives the price for biotechs

Biotech companies have experienced a real boom on the financial markets in recent months. The Covid-19 pandemic is causing many investors to bet on start-up companies that are likely to find a cure for the virus.

American biotechs have raised more than 9 billion US dollars on the stock exchange in the past few months, compared to “only” 6.5 billion US dollars in the whole of 2018, according to data from Dealogic. As of May 18, when Moderna posted positive results, the Nasdaq rose 2.4% and the S&P 500 rose 3.2%.

This blind race for the drug or miracle vaccine risks leaving individual investors behind as biotech is one of the most volatile markets. Biotech companies often have only one or two product candidates for treatment in stock and often none on the market.

They therefore have to finance their research and development without still having an appreciable income. Even as a specialist, you need a very fine diversification and risk assessment approach.

Wave of IPOs

From the Bio World report, we could see that there were 495 experimental treatments for Coronavirus As of July 23, 2020, with 158 potential vaccines under development. Moderna’s innovative technology is one of them. The American biotech’s share price rose from nearly $ 19 in January 2020 to nearly $ 70 at the end of August, with a valuation of more than $ 26 billion.

These numbers correlate with Operation Warp Speed. It was initiated by the Department of Health and Human Services with the goal of delivering 300 million doses of vaccine by January 2021.

But the promises made by its biotech companies are too good not to attract investors looking to make a quick profit. It is evident that there is a positive correlation between the daily Covid cases and the Nasdaq Biotech Industry Index. Young companies benefit from this.

The number of young biotechs going public has increased; the prices of each of the new entrants have risen. Such is the case with the German CureVac, which launched on Wall Street on August 14 and has a market capitalization of around $ 10 billion.

States are also participating in the struggle. The US government has signed a $ 1.3 billion deal with Moderna to buy one million cans. His contender for the vaccine is one of the most advanced in the world.

It is in the Phase 3 clinical trial, as is the case with the alliances between the University of Oxford and AstraZeneca or Pfizer BioNTech. But the inflow of money through states does not reduce the risk.

Finally

The stock market, which is causing young biotech prices to skyrocket, increases the risk of a small financial bubble bursting.

Biotechs that fail before they hit the market – that is, most of them – will lose value dramatically. Such risk generally remains under control for a professional financial operator as it is diluted with other values.

So, if you want to be a biotech investor, the most important skill is to look beyond the headlines and risk management.