Should AstraZeneca be your next coronavirus purchase?


With no end in sight for the coronavirus pandemic, the world is seeing a frantic effort to develop a vaccine for the deadly virus. SARS-CoV-2, the coronavirus responsible for the COVID-19 disease, has claimed nearly 833,000 lives worldwide. Worldwide recorded cases stand at 24 million, with 5.8 million – and more than 180,000 COVID-related deaths – in the United States alone.

AstraZeneca (NYSE: AZN), based in Cambridge, UK, is working with the University of Oxford to develop its vaccine candidate, AZD1222, which is one of the top five COVID-19 phase 3 vaccine candidates. In July, the company announced favorable interim results from its ongoing phase 1/2 clinical study of the investigational vaccine.

AstraZeneca shares are up 12.5% ​​so far this year, while the market, followed by the ETF SPDR S&P 500, gained 8.2%. But in addition to its vaccine development, this $ 146 billion mega-company offers plenty of other reasons to invest.

AZN data by YCharts

Progress of AstraZeneca vaccine

AstraZeneca and the University of Oxford’s adenovirus vector-based COVID-19 vaccine candidate are in phase 3 testing in Brazil, the UK, the US and South Africa. Advanced-stage study may soon start in the United States

On July 20, the company published interim results of the phase 1/2 trial in the medical journal The Lancet. The results showed that all participants evaluated tolerated AZD1222 and exhibited a good immune response against the SARS-CoV-2 virus.

It’s good news that most of the participants displayed neutralizing antibodies, which are small proteins that recognize certain components of a pathogen and prevent it from invading healthy cells. All participants also exhibited a T-cell response. A good T-cell response involves the immune system recognizing cells infected with the virus and can cause these cells to self-destruct.

The company has secured significant funding for its vaccine candidate and intends to deliver more than 2 billion doses worldwide. This funding includes approximately $ 1.2 billion from the US government; $ 750 million from the Coalition for Epidemic Preparedness Innovations (CEPI) and Gavi, “Vaccine Alliance”; $ 86.6 million from the UK government; $ 127 million from Brazil; and $ 890 million from four European countries. Additionally, the Serum Institute of India has ordered 1 billion doses (no price was disclosed) and the company is still in talks with Japan.

On August 24, AstraZeneca announced that it had reached an agreement with Catalent Cell and Gene Therapy to supply drug manufacturing to the latter’s plant in Harmans, Md., where it plans to facilitate “multiple production trains to run in parallel” to produce doses of the potential vaccine. The company plans to start production at the end of the third quarter of this year. Earlier in June, Catalent also offered its facility in Anagni, Italy, to provide large-scale filling and packaging of the potential vaccine.

Image source: Getty Images.

What about the other drugs in its catalog?

AstraZeneca management has said it does not intend to profit from a coronavirus vaccine and will support easy access to it. The company has entered into agreements with global partners to ensure more production lines and smooth delivery of its potential vaccine. While any company in the vaccine race could take advantage of this opportunity, AstraZeneca could choose not to do so without hurting its business, thanks to its strong portfolio of existing drugs.

During the first half of 2020, ended June 30, the company recorded a 12% increase in total revenue to $ 12.6 million. His new drugs contributed $ 2 billion, and his cancer drugs alone accounted for about 42% of that $ 2 billion. Three cancer drugs – Tagrisso, Imfinzi, and Lynparza – added a combined $ 3.7 million, and AstraZeneca’s respiratory and immunological drugs are also gaining ground. Symbicort, used to treat asthma and chronic obstructive pulmonary disease, contributed $ 1.4 million to total sales in the first half of the year. The company also has 166 projects in its pipeline.

AZN chart

AZN data by YCharts

Is AstraZeneca a good coronavirus buy?

AstraZeneca has tough competition in the vaccine race. Chinese drug makers Groupe Sinopharm and Sinovac Biotech, American biotechnology companies Modern and Pfizerand based in Germany BioNTech all have phase 3 vaccine candidates.

Even if AstraZeneca succeeds in becoming the first with an effective vaccine, a more effective vaccine by any other company could replace it. The good news is that AstraZeneca is a good stock, with or without the COVID-19 vaccine. The stable business of the company, growing revenues and profits, and the strong drug catalog are a strong buying argument. AstraZeneca shares rose 31.2% last year, which is higher than the market growth of 29%.

AZN Dividend Yield Chart

AZN Dividend Yield Data by YCharts

The icing on the cake is that this is a dividend-paying stock that has paid consistent dividends for 10 years. Its average dividend yield of 2.5% is better than the S&P 500average dividend yield of 1.6% over the same period. All of these reasons make this biotech stock a good buy for coronavirus today.


Please enter your comment!
Please enter your name here