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Vaccine Miracles: Does JNJ Kill the Profit Path for MRNA and NVAX?

Kevin Cook
·6-min read

Welcome back to Cook's Kitchen. I shot the attached video on Wednesday recommending buys of both Moderna MRNA and Novavax NVAX -- right before the correction in growth stocks got rolling downhill fast!

The good news is that Moderna held up like a beast! I was recommending buying it between $130 and $140 and shares barely tumbled into that range this week as many other high-fliers saw -30% wallopings.

But even Novavax remained worthy of being on your shopping list as the dip to $150 was a gift.

Here's what I wrote my TAZR Trader members on Tuesday night, after we had just gone to 60% cash in the active portfolio the week before...

The Vaccine Battlefront

There's no mistake we are in a bigger growth correction for stocks that got rolling last week with a 10-year yield spike to 1.5% and the Nasdaq 100 breaking down below 13,000.

It seems all the best economic news about vaccine distribution and business re-openings was all priced-in at higher levels in February.

And while this correction will offer good opportunities in many technology and software stocks on the rebound, I'm focused on a couple of vaccine stocks for what looks like an especially attractive risk/reward this month.

We might buy another vaccine stock soon. Because while the JNJ roll-out is being met with applause -- that I'm a little skeptical about -- other vaccine-maker stocks are getting hit and I think it's setting up another trading opportunity for us.

Like when we grabbed Moderna MRNA at $110 and rode it to $180 in January.

Or over in Healthcare Innovators when we snagged Novavax NVAX near $120 and rode it above $200.

What doesn't seem right about the applause for the Johnson & Johnson JNJ vaccine?

Well, call me cynical, but first off, it's JNJ -- the Disney of blue-chip big pharma. They have more lobbyists than all the defense contractors put together.

Secondly, people are fawning over the "one-dose" and "refrigeration only" and "zero subsequent hospitalizations" aspects as if they invented those possibilities.

When I look at the data, I'm not convinced there's anything special going on here. It could be a bit of clever and timely positioning and "marketing," with some help from Uncle FDA.

On the other hand, the messenger-RNA vaccines had a lot to prove. So they put themselves in the position of bringing conservative data with low-dose, multi-dose protocols.

(end of March 2 TAZR commentary excerpt)

I could very well be wrong. But I'm also trying to rely on as many vaccine experts across science and medicine as I can reasonably read in any given week.

One of my favorites is both a doctor and hedge fund captain. I've followed virologist Peter Kolchinsky of RA Capital in numerous Biotech investments and never felt he steered me wrong.

In Q4, Kolchinsky increased his position in NVAX by over 200% to nearly 3.8 million shares, becoming the third largest holder behind only behemoths Vanguard and BlackRock.

I featured RA Capital in my recent dive into the Q4 13Fs in this video and article...

Hedge Fund Diaries: Who's Been Buying Your Stocks?

Novavax's COVID-19 vaccine, named NVX-CoV-2373, displayed very positive Phase 3 data in the UK in late January -- between 89% and 96% efficacy depending on which angle of the data you focus on -- which is what launched shares above $200. But the FDA is still reviewing that data, and other ongoing clinical trials, to see if they can authorize it for emergency use in the US by May.

About NVX-CoV2373

NVX-CoV2373 is a protein-based vaccine candidate -- not a messenger-RNA protocol like Moderna's -- engineered from the genetic sequence of SARS-CoV-2, the virus that causes COVID-19 disease.

NVX-CoV2373 was created using Novavax’ recombinant nanoparticle technology to generate antigen derived from the coronavirus spike (S) protein and is adjuvanted with Novavax’ patented saponin-based Matrix-M™ to enhance the immune response and stimulate high levels of neutralizing antibodies. NVX-CoV2373 contains purified protein antigen and can neither replicate, nor can it cause COVID-19.

While new coronavirus variants are concerning public health officials, especially the more contagious strain first found in South Africa, Former FDA chief Scott Gottlieb said any tweaks to the vaccine formulation would hope to provide broad protection.

“What you want to do is not necessarily develop a vaccine that is particular against [B.1.351], the change that we saw in South Africa,” said Gottlieb in a CNBC interview. “What you want to do is develop a protein sequence that is sort of a consensus sequence and bakes in enough of the changes that we’ve seen across the world that you have a vaccine that is protective no matter what the virus manages to do against itself.”

Vaccine Efficacy is in the Details

To see a great compare/contrast between all the vaccines, go to Twitter and follow me @KevinBCook. You'll find I just posted a large Vaccine Efficacy table from RA Capital with all the key metrics (too large an image to post here). It's been one of my most popular scientific posts lately with hundreds of "likes" and re-tweets.

In particular, you'll notice that only the JNJ and NVAX entrants have data against the SA strain. And NVAX is on top at 60% efficacy vs. 57% for the giant. Plus, JNJ's overall efficacy against the original strain is much lower than NVAX.

Plus, while JNJ is being lauded for one-dose efficacy, what that doesn't tell you is it's also not approved for multiple doses as Moderna and NVAX entrants are.

Of course, RA Capital is biased with such a large investment in Novavax. But first and foremost, Kolchinsky is a virologist so he's staking not only his investors' money on this interpretation of the data, but also his scientific reputation.

As Gottlieb has also said, we want many safe and efficacious vaccines, from different scientific platforms and protocols, providing wide and diverse coverage as quickly as possible.

The success of NVX-CoV2373 against the South African variant is top of the heap right now. Hopefully, the FDA moves faster to approve it.

Disclosure: I own shares of MRNA and NVAX for the Zacks Healthcare Innovators portfolio.

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