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Janus Henderson portfolio manager on the biotech firms waging war

The recent rebound in financial markets suggests investors are optimistic about our ability to combat COVID-19.

Reaping the rewards are those healthcare companies that are working to develop therapies and diagnostic tests for the disease, with the sector outperforming the broader market.

Gilead Sciences’ [GILD] antiviral therapy, remdesivir, for example, is now in clinical trials, with results expected in May, while Abbott [ABT] has rolled out point-of-care diagnostic testing and lab-based antibody testing over the past month.

Firms such as Eli Lilly [LLY], that refill medicines by mail or provide life-sustaining treatments, including insulin, are also seeing steady demand.

Healthcare companies have many tools to resist and attack the virus, from repurposing existing antivirals to developing synthetic antibodies to fortify our immune systems.

Still, it takes time for clinical trials to test the efficacy and safety of these potential therapies. Even then, companies will have to expand manufacturing capabilities and distribute treatments broadly.

“Still, it takes time for clinical trials to test the efficacy and safety of these potential therapies. Even then, companies will have to expand manufacturing capabilities and distribute treatments broadly”

 

Aggressive testing and monitoring can help contain outbreaks as we wait but, so far, many countries are coming up short.

By 27 April, only 5.4 million tests had been conducted in the US, representing little more than 1% of the total population, according to the  COVID Tracking Project.

Healthcare companies are certainly not immune to the ravages of the pandemic. Social distancing is disrupting clinical trials and new drug launches, and could delay regulatory approvals.

The number of medical procedures performed is dropping substantially, weighing on the stocks of medical device makers.

For now, we think investors should brace for continued volatility until an approved vaccine, widespread testing, game-changing therapeutics – or a combination of all three – support the case for further optimism.

“For now, we think investors should brace for continued volatility until an approved vaccine, widespread testing, game-changing therapeutics – or a combination of all three – support the case for further optimism”

 

Andy Acker is a portfolio manager at Janus Henderson Investors, responsible for managing the Global Life Sciences and Biotechnology strategies. He joined Janus in 1999 as a research analyst, and has a degree in biochemical sciences from Harvard University.

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