For Investors, ’Tis the Season to be Grateful

In the month of November, the biotech sector had its biggest run up since the Spring. Perhaps optimism for a COVID-19 vaccine, a shining example of our industry’s innovative prowess and critical importance of its contributions. In the last 25 years, there have been seven novel vaccines developed; four of these came from Merck, and the fastest development time was four years, also a Merck accomplishment. Both Pfizer/BioNTech and Moderna have submitted applications for approvals of their vaccines, which are more than 90% effective, to the FDA. These vaccines have been developed in less than one year, an absolutely mind-blowing sprint to the finish, and one without any precedence. Already, to no surprise, the political pressures are in full swing to accelerate a review process that is appropriately thorough and absolutely must be, in order to ensure that the vaccines are safe for use in millions of people and that the benefits in preventing COVID outweigh any potential risks or side effects.Without that, confidence in getting the vaccine and, hence, its adoption will be low, and the heroic task will fall short of its goals to accelerate the destruction of the spread of COVID-19 and getting back to a semblance of normalcy in our everyday lives and the global economy. Please, let’s get back to hugging!

No doubt, the vaccines offer a light at the end of this long, difficult and scary tunnel, and we can be optimistic about a better, hopefully much better, 2021.

Can our reputation finally undergo a deserved surge?

Barbara Ryan

While we innovate and hold the keys to a recovery to normal, the world is paying attention with eyes peeled to our innovations and the critical good we do. This is awesome and leaders have stepped up to the stage to educate. I believe the silver lining of COVID-19 is an increased awareness of the good we do, how very hard and risk-riddled drug development is, and how it literally changes lives and fuels GDP. My personal hope is that we have passed a critical inflection point on the path to improving the reputation of our great industry. I for one, am so proud as it has pained me greatly over my nearly 40-year career that our industry, which does so much good for so many, has suffered such a poor reputation. Let’s enjoy our moment in the sun and be committed to making “hay” while its shines.

The political outlook appears benign in the next few years

Clarity on a benign political environment following the presidential election no doubt is also fueling a solid underpinning on the biotech sector. Investors are gaining confidence that the likely outcome of this election is a divided federal government, which suggests that no radical changes for biopharmaceutical pricing or reimbursement are likely in the next couple of years.

A steady flurry of stock-moving data has also been coming out of a busy Fall season of medical meetings, which the specialist biotech investors have been anxiously consuming. They are keenly engaged , bullish, and anxious to play any event possible in an attempt to sprint to year-end bonuses. Many specialists can taste the rewards as the NBI is up over 20% year to date and the XBI a staggering 40+%.

What about the generalists?

After peaking in the second quarter, it has recently been trending up likely due to sentiment about the political environment and reduced likelihood of pricing and reimbursement headwinds. On the other hand, expectations for a broader recovery in the economy in 2021 could lead to better risk-adjusted returns in other economically sensitive sectors. That said, generalists are certainly playing the “hot” biotech IPO market.

Wishing you and your loved ones the happiest of Holidays!

Barbara Ryan is Founder, Barbara Ryan Advisors, and a member of Pharm Exec’s Editorial Advisory Board