AstraZeneca: the new potential healing druid

The pharma giant AstraZeneca is working on a new vaccine for Covid-19 and could be well on its way to success.

A few words about the company

AstraZeneca PLC was founded in 1999, through the merger of Sweden's Astra AB and the British Zeneca Group. The company’s headquarters are situated in Cambridge, and its R&D operations have labs in Cambridge, Mölndal (Sweden), Maryland and Toronto. The company is among the world’s largest pharmaceutical companies and acquired many others smaller firms such as Cambridge Antibody Technology, MedImmune, Spirogen and Definiens.

Today, AstraZeneca produces and markets medicines used by millions of patients throughout the world. Although they tackle many diseases, their main focus remains Type 2 diabetes, cancer and respiratory issues.

AstraZeneca coming up with solutions

Times of crisis are also times of opportunity for those who keep their eyes open. As you can imagine, AstraZeneca knows this and is putting a lot of effort into the development of a medical solution. In partnership with Oxford University, they are developing a vaccine targeting SARS-CoV-2, the virus responsible for Covid-19.

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As of September 15, it was reported that the pandemic caused 29 million infections, a million of which were lethal. Governments are therefore eager to see the advent of a vaccine. AstraZeneca released very strong Q2 results in July, well over expectations. They already have a solid platform of drugs, with an offer that addresses cardiovascular diseases, diabetes, oncology, infection, inflammation, gastrointestinal problems and respiratory issues, and many other sicknesses. If they’re successful in coming up with a solution for the Covid-19, the price of the stock could take the elevator.

Late-stage trials for the vaccine are under way in various countries, such as in the UK, but also in Brazil, in South Africa and in the US. The tests were paused for an unknown issue – potentially unwanted side effect – after recently resuming in the UK, once the UK’s Medicines Health Regulatory Authority gave the green light.

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About the stock

The stock is up about 11% on a year-to-date comparison, a strong return for a large pharma company that in normal circumstances are typically less volatile. This performance is carried by AstraZeneca’s strong drug pipeline, in addition to its progress on the Covid-19 vaccine. The UK-listed share reached a 10,120 peak in July – sitting at around 8.065 today – and the US-listed share reached $64.94 – currently at around $55.

AstraZeneca stock over the last year (Source: Investing.com)

Earlier this year, the leader of the FTSE 100 index (largest component) was Royal Dutch Shell, but AstraZeneca got to first place earlier this Spring, before settling down in second position behind Unilever Group, with a £112 billion market capitalization. Quite impressive when you know that Royal Dutch Shell now sits at £82 billion.

What are the other pharmas doing ?

AstraZeneca is not the only player in the field. Governments and investors are all on the lookout for who could be the next biotech and/or pharma company that has a chance of getting their vaccine officially approved and distributed.

On the FTSE 100 specifically, AZN was followed by GlaxoSmithKline, another healthcare and vaccine leader. In July, they had announced a partnership with CureVac, developing what they call a “strategic messenger ribonucleic acid – short version is mRNA – that would transmit instructions to the body to produce proteins against the disease. However, where AZN took 11% in valuation last year, GSK lost 15%.

There are many more companies working to develop a new solution, among which are: Amgen, Biontech, Gilead, Ibio, Inovio Pharmaceuticals, Moderna, Novanax, Pfizer, Sanofi and Sorrento. All those firm's shares have unsurprisingly become very sensitive to news and updates on vaccines, as investors are eager to be part of the next big winner.

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Concluding remarks

The race for the development of a vaccine has become one of the centers of attention for the media. AstraZeneca remains one of the most respected players in the field, with a solid track record in various areas.

However, there are some chances that the stock is overpriced and faces risks of declining in the coming weeks. Nevertheless, if they do succeed in developing a vaccine, you can imagine that the stock has a chance to reach an all time high. Investors should also note a dividend yield at 2.59%.

In the end, it is still uncertain as to whom has the best chance to be the first to propose a vaccine on the market, but AstraZeneca might be a good bet. Pfizer and Moderna also made interesting progresses and should be kept an eye on.

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