President Trump announced yesterday an emergency authorization for Blood Plasma as Treatment for COVID. Below we discuss into more details this surprising announcement and the stocks which are likely to benefit from it.
Donald Trump announced over the weekend that a coronavirus treatment that involves blood plasma from people who’ve recovered from the disease will be expanded to many more sick Americans after the FDA approved use of the therapy. “This is a powerful therapy,” Trump said during a White House press conference moments before futures opened. “Today’s action will dramatically expand access to this treatment.”
Trump said the FDA had concluded the treatment is "safe" and "very effective" although the therapy has yet to undergo the full set of clinical trials usually required of drugs seeking FDA approval.
As Bloomberg notes, the U.S. Food and Drug Administration confirmed Sunday, just ahead of Trump’s news conference, that it had cleared what’s known as convalescent plasma for use with certain patients. The move would make it easier for patients to get the product, which Trump has promoted even though its effectiveness remains unproven.
"Convalescent plasma has been a tried-and-true therapeutic treatment in prior outbreaks,” Health and Human Services Secretary Alex Azar said at the news conference, while FDA Commissioner Stephen Hahn said researchers had seen a 35% improvement in patients treated with the convalescent plasma.
Stocks which are likely to benefit from this development
The announcement on Sunday that the FDA would authorize the use of convalescent plasma to treat hospitalized Covid-19 patients is lifting treatment hopes and is spurring bets of a quicker economic recovery. As such, risk assets are rallying on the news.
The announcement is boosting in particular the shares of a handful of smaller companies directly exposed to this specific treatment – for instance:
• Adma Biologics (ticker: ADMA) is a small cap with a $265 million market cap. The company is an end-to-end commercial biopharmaceutical company committed to manufacturing, marketing and developing specialty plasma-derived products for the prevention and treatment of infectious diseases in the immune compromised and other patients at risk for infection. The stock is up around 15% on the news;
• Liminal Bio Sciences (LMNL) is a Canadian company which is also trading on the Nasdaq. It is a global biotechnology company that specialises in discovering, developing and commercializing novel small molecule compounds for respiratory, liver and renal diseases. The company develops plasma-based therapies and has a market cap of $400 million. The stock is up around 20% on the news;
• Kamada (KMDA) is an Israeli company which is also trading on the Nasdaq. The Market Cap is around $500 million. Kamada has a product line of specialty plasma- derived pharmaceuticals and is leading in research and development of alpha-1 antitrypsin and specific immunoglobulins. The stock was up around 15% on the news.
The Japanese pharmaceutical giant Takeda Pharmaceutical (TAK) is not a pure play on this theme but also benefited from the announcement with a gain of more than 2% at the time of our writing.
Liminal, Adma and Takeda are all members of the Covid-19 Plasma Alliance, which has collaborated to develop convalescent plasma treatments for the virus.
Note that the emergency-use authorization issued by the FDA isn’t limited to a single company’s product, but rather allows plasma from patients who have recovered from Covid-19 infections to be collected by registered blood establishments, tested using certain authorized methods, and administered to hospitalized Covid-19 patients.
Initially seen as a promising stopgap treatment to be used as scientists seek more-effective drugs, recent data has been inconclusive, and drug companies including Regeneron Pharmaceuticals (ticker: REGN) are racing forward with monoclonal antibodies that would notionally take the place of convalescent plasma as a treatment.
The New York Times reported last week that government health officials had held up an FDA emergency-use authorization for convalescent plasma over concerns that the available data wasn’t strong enough to support action. Key data on the treatment’s efficacy comes from an open-label study published by the Mayo Clinic. The study wasn’t randomized and had no control group.
Yet the authorization went ahead on Sunday, even without evidence from a randomized, controlled trial. At a White House news conference on Saturday, Health and Human Services Secretary Alex Azar said patients on convalescent plasma had reduced mortality in Covid-19 patients by 35%, based on data from the Mayo study.
Experts criticized the 35% mortality reduction figure cited by the officials, calling it misleading.
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