Healthcare picks for the pandemic

While the economic shutdown weighs on businesses, investors are closely watching the companies racing to develop treatments for Covid-19.

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Companies are working on different modalities to vaccination, from DNA- or RNA-based, to more standard approaches using antigens, said Michal Marszal, senior equity analyst, healthcare, at CIBC Asset Management.

“There are currently dozens of vaccines in clinical development at various stages,” he said in an April 22 interview. “In late-stage clinical trials, we already have a number of candidates.”

Still, a vaccine is several months away, with potential approvals in 2021, said Marszal, who co-manages the CIBC Global Technology Fund and the Renaissance Global Science and Technology Fund.

Large-cap players working in the space include Brentford, U.K.–based GlaxoSmithKline, Paris-based Sanofi and New York–based Pfizer.

Some smaller biotech companies are also approaching vaccination but using more speculative modalities, Marzsal said. These include Cambridge, Mass.–based Moderna, and German companies BioNTech and CureVac.

Moderna announced this week that its vaccine candidate could advance to the next phase of testing this quarter pending results from an initial study.

Potential treatments for Covid-19 also extend to antiviral drugs, including remdesivir, developed by Calif.-based Gilead Sciences. The company said Wednesday that the drug helped improve outcomes for patients with Covid-19 in a clinical trial.

Though Gilead would benefit from producing an effective treatment for Covid-19, “a lot of enthusiasm” for remdesivir’s potential — both clinically and economically — has already been priced in to the stock, Marszal said.

Hits to healthcare

Other areas of healthcare suffer as medical visits and elective surgeries get delayed because of quarantine measures. The subsequent drop in demand for associated healthcare products will “severely” impact non-essential healthcare-sector businesses in the near term, Marszal said.

Broad-based research has also dropped, he said, in “practically every major country that conducts high-intensity R&D in biopharmaceuticals, medical devices and other sectors in healthcare.”

Marszal also said healthcare services are changing as procedures shift to Covid-19-related medical management.

“That is clearly impacting all providers in major economies, starting from hospitals and clinics, all the way to insurers and other stakeholders in that space,” Marszal said.

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