Back in May, the Trump administration initiated Operation Warp Speed, a public-private partnership organized to deliver 300 million doses of a safe and effective vaccine for the novel coronavirus by January 2021. That the White House was finally taking the crisis seriously was a major boost to biotechnology firms which specialize in solutions for infectious diseases.
Suddenly, companies such as Moderna (NASDAQ: MRNA) and Novavax (NASDAQ: NVAX) became household names. Once viewed as an exotic foreign problem, Covid-19 detonated into a raging pandemic. Today, the U.S. has the worst health outcome by far. With that dubious distinction arrived a series of social and economic disruptions that threatened to unseat Republicans from power.
Thus, it wasn’t too surprising that President Trump has strongly backed accelerated vaccine research and production. The theory is the economy cannot get back to normal without mass-scale vaccination. Unfortunately, according to the New York Times, “Our record for developing an entirely new vaccine is at least four years — more time than the public or the economy can tolerate social-distancing orders.”
Further clouding the vaccine narrative is that several vaccine plays have been tumbling in recent weeks. For many companies, the harsh realities of bringing a vaccine to market has severely impacted optimistic target dates.
But an impediment for one industry can create opportunities for another. In my view, this dynamic sets up a window of opportunity that Can-Fite BioPharma (NYSEAMERICAN: CANF) can potentially fill. Headquartered in Israel, Can-Fite BioPharma is a biopharmaceutical firm with “fully integrated pharmaceutical discovery and clinical development capabilities.”
To be fair, CANF stock has been a disappointment to say the least. Making its debut as a publicly traded entity in late 2012, Can-Fite shares have steadily tumbled into ignominy. In 2019, the stock slipped into single-digit price territory. At one point this year, shares barely closed above $1.
Despite historical troubles, Can-Fite is compelling for one main reason: this is a play on the treatment of Covid-19 rather than a preventative vaccine.
A Fortuitous Disaster
Before the pandemic, one of the flagship drugs under the Can-Fite pipeline was Piclidenoson. An orally administered drug, Piclidenoson is essentially a small-molecule inhibitor that targets enzymes that cause inflammation. Originally, the drug was engineered for the treatment of rheumatoid arthritis and was in Phase III clinical studies.
However, when the coronavirus began wreaking havoc in the U.S. and throughout the world, Can-Fite saw an opportunity. As an inhibitor, it potentially offers a critical defense against Covid-19. Theoretically, when the novel coronavirus’ enzyme “latches” onto Piclidenoson, the drug renders the virus ineffective.
This is a similar approach to remdesivir, the much-discussed drug under the Gilead Sciences (NASDAQ:GILD) portfolio. The key difference, though, is that remdesivir inserts itself in the enzyme replication process, where it mimics an RNA building block to stop the replication of the Covid-19 enzyme.
To be completely transparent, remdesivir may offer technical superiority because it can attack the coronavirus earlier by addressing the virus’ replication process. However, what has emboldened proponents of CANF stock is that Piclidenoson can be just as effective as remdesivir (if not possibly more so) if the drug can aggressively bind to the Covid-19 enzyme and inhibit it.
Ultimately, if Piclidenoson and remdesivir work to their full potential, the end result is the same: a healthy, recovered patient.
Potentially Superior to Vaccines
Now, some investors may question the viability of CANF stock if Piclidenoson is basically an alternative to remdesivir. Keep in mind that the U.S. government has every incentive to throw whatever it can at the coronavirus. In addition, this crisis has badly exposed our reliance to China regarding our drug supply chain.
Bottom line – we’ll need every biotech weapon in our arsenal. Competitive replication at this point is not the issue.
On a much more important note, treatments may offer a superior solution to the broader Covid-19 dilemma. Piclidenoson is a drug candidate for hospitalized subjects with “moderate” Covid-19 symptoms. Obviously, once you get infected with the disease, a vaccine – which is a preventative mechanism – won’t do you much good.
Also, Americans aren’t exactly clamoring to take a vaccine. According to a June Sciencemag.org article, just 50% are planning to get one. More recently, TheHill.com reported that one in three Americans will not get a coronavirus vaccine once it’s available. Thus, there is an information war in addition to the battle to develop a truly effective vaccine.
Of course, Piclidenoson has the advantage that its target audience – already sick people – won’t have much reservations. Further, as an oral drug, this is a palatable choice rather than an intramuscular injection.
Another factor tipping the scale toward treatments is the possible seasonality of Covid-19, or lack thereof. According to data from the Centers for Disease Control and Prevention, the flu season has a very pronounced infectiousness rate in the colder months of the year, between December through March. Historically, February is the worst month for the flu by far.
But with the coronavirus, there doesn’t appear to be a seasonality effect. To be sure, this is a fluid situation so no one can make hard assertions at this point.
However, the worst months for coronavirus infections in the U.S. were July and August, typically the hottest months of the year. Unfortunately, this repudiated the assumption that warmer weather would mitigate the pandemic – quite the opposite dynamic occurred. Therefore, we may need a treatment to promote better health outcomes rather than relying on seasonality to attack this pandemic.
Finally, the coronavirus has the possibility of mutating. From present research, the data suggests that mutations may make the virus weaker. However, if the virus ends up mutating to a more contagious form, a vaccine may be rendered ineffective. This would tip the scales firmly toward Piclidenoson and other treatments.
Technical Momentum Bolsters the Case for CANF Stock
Let me be clear – CANF stock is not an appropriate vehicle for conservative, risk-averse investors. As largely a play on this pandemic, Can-Fite may have a short lifespan. If you become highly profitable on its stock, you may want to consider taking some off the table.
That said, there are encouraging technical signs on its price chart. Since plummeting in February of this year, CANF stock has been steadily moving higher, charting a series of higher lows. So, that’s one positive signal.
The other is the formation of a pennant pattern that began on the weekly chart since early July. Here, the bulls and bears have consolidated their trades, funneling the price action into an apex point. Under the technical analysis discipline, most adherents would regard this as a continuation pattern – in this context, a bullish one.
Therefore, I would not be surprised to see CANF stock jump higher sometime in September. Adding to the optimism is the broader fundamentals. As I stated above, many vaccine specialists have fallen out of favor as the difficulties of accelerating such solutions become more apparent. Even if they were effective, many people just won’t take them.
However, treatments will never go out of style because they address problems that have already occurred. Further, because the coronavirus can evolve, the versatility and the relative palatability of Piclidenoson may give CANF stock the upper hand in our war against the coronavirus.
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