Wall Street Sees Vir Biotechnology Bouncing Hard

Less than a month ago, shares of Vir Biotechnology (NASDAQ: VIR) were sitting pretty at their highest levels since March following a 100% run since May. But then two weeks of double digit percentage drops brought investors back to earth and shares back to the lows of Q2.

This is all part of the game though for companies at the forefront of the race to get a COVID-19 vaccine to market. The San Francisco based $3 billion biotech emerged from relative obscurity at the start of this year when their shares popped 350% in just a few days. The coronavirus was making landfall in Europe and the US at the time and as investors dumped most of their equities, the only ones catching bids at the time were potential vaccine makers.

Summer Updates

Understandably, the hype quickly dissipated as investors bunkered down for the clinical research and trial process which would take months if not years to complete. It consolidated nicely over the summer and ran up into August when the company released their Q2 results and general updates. Though EPS was in the red, albeit not nearly as much as expected, revenue jumped an astounding 3,200% year on year. It might still have come in under $70 million total, but that’s a nice annual number to show investors.

Most important though were the clinical updates from management. CEO George Scangos spoke confidently to these; “we plan to enter the clinic with VIR-7831 in August and have prepared for success by putting in place multiple manufacturing, development, and commercialization agreements to rapidly provide access if approved. In addition, we have continued to execute on our other pipeline priorities, starting two new hepatitis B trials and preparing to start new influenza A and HIV trials. We also further strengthened our balance sheet through a successful follow-on offering.”

Data on the company’s VIR-2218 treatment for Hepatitis B was presented on August 20th and though for the most part positive, seems to have precipitated the recent drop. Biotech stocks are fickle beasts and this looks to have been little more than ‘buy the rumor, sell the news’ kind of action.

For investors who’ve had Vir on their watchlist for sometime or who are looking to get exposure to a coronavirus vaccine, shares are attractive at current levels. On top of this, there are plenty of catalysts to look forward to.

Bullish Sentiment

VIR-7831 antibody is the headliner grabber and is being developed as a treatment for early stage COVID-19 patients, with a goal of helping them to avoid hospitalization. On the last day of August, the company reported that they had dosed their first patient in a 1,300 person Phase 2/3 trial and are aiming for initial results by the end of the year. Phase 2 of their VIR-7832 treatment will start later this year as will pre-clinical studies of VIR-2703.

Wall Street hasn’t been slow about picking up on the opportunity at hand. Last Friday, JPMorgran upgraded the stock to Neutral, with a positive focus on the company’s upcoming catalysts. Then on Monday, Goldman Sachs were out with an upgrade to the stock, moving it to Buy from Neutral. They gave it a fresh price target of $54 which implies a move of about 75% to the upside from Tuesday’s closing price.

Goldman analyst Paul Choi is bullish on the company’s two most advanced COVID treatments, VIR-7831 and VIR-7832, in particular their advantages over some of the competition. In tandem to this, he believes the recent bout of selling has been overdone and at current prices, shares are a fantastic buy.

They’ve found solid support at the $30 level throughout this year and have shown that they’re well able to move. The risk / reward profile is very attractive at current levels and the upside is enormous if Vir can keep doing what it’s been doing.