Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
magazineBiotech shares given big boost by new variant
News of the fresh Omicron variant of Covid put a rocket under biotechnology shares which have pioneered novel mRNA vaccines.
Biotechnology firms Moderna and BioNTech surged 21% and 14% respectively when the news broke last Friday (26 Nov) while the share price movements in AstraZeneca (AZN), Pfizer and Johnson & Johnson were far more muted as the table shows.
The reason Moderna and BioNTech outperformed is because the technology underpinning their vaccines allows them to be tweaked faster and easier than the traditional vaccines produced by AstraZeneca, Pfizer and Johnson & Johnson.
The Moderna and BioNTech vaccines are based on mRNA technology which delivers genetic codes to the body in tiny bubbles of fat. The body then manufactures the protein that the immune system recognises to fight the virus.
This effectively cuts out the time-consuming job of manufacturing vaccines in laboratories, in contrast to the mRNA technology where defective bits of the code can be replaced.
BioNTech and Pfizer reckon they could ship initial batches within 100 days if their vaccine needed tweaking.
Another factor driving the out-performance of Moderna and BioNTech was their significant prior underperformance with the market values of both firms halving over the last six months, creating plenty of ‘catch-up’ potential.
Also, both company’s vaccines are used in the UK for booster jabs and at the weekend the government urged people to get their booster jabs sooner to provide extra protection.
The companies have reacted fast to the new threat with Moderna saying it was already testing a higher dose booster jab while it is also ‘rapidly’ exploring if the booster is effective against Omicron.
The company is also developing two ‘multi-valent’ booster candidates designed to anticipate mutations such as Omicron and future possible variants, a kind of catch-all booster vaccine.
Meanwhile BioNTech said they have created a pseudo-virus to investigate if their vaccine will be less effective against Omicron and Johnson & Johnson is already testing its vaccine against the new variant.
In addition to vaccine makers, companies that had fallen out of favour partly due of the emergence of vaccines also performed well
with diagnostics company Novacyt (NYCT:AIM) gaining 23%.
Companies developing Covid-19 treatments were also seen in a more positive light and respiratory drug development company Synairgen (SNG:AIM) gained 6%. It’s inhaled drug SNG001, currently in late stage trials has been shown to be effective against new variants.
Meanwhile, molecular diagnostics firm Genedrive (GDR:AIM) surged 80% on Monday (29 Nov) after it submitted a new rapid Covid-19 test for EU approval. The point of care test can identify the new variant and provide positive results in 7.5 minutes.
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
