US drug maker Novavax Inc [NASDAQ:NVAX] has lit up local markets today.
Japan, Hong Kong, and Korea all saw a significant uptick in their respective markets. With the Nikkei up 2.2%, Hang Seng up 1.81%, and Kospi up 1.31% at time of writing.
The strong surge is due to ongoing development of Novavax’s vaccine for COVID-19. With the company confirming human testing is underway in both Melbourne and Brisbane.
It is a big development, one with a lot at stake. And if all goes to plan, it could be a crucial turning point for bringing an end to this pandemic.
For that reason, there is room for optimism.
But investors do also need to take these developments with a big grain of salt…
Going all-in on a cure
As we’ve seen in US markets recently, Novavax isn’t the only company moving markets.
Last week I discussed the incredible rise of Moderna Inc [NASDAQ:MRNA]. Another drug maker that has captured the attention of traders around the world.
Just like Novavax, they have some very early but nonetheless promising results. Data that could help in the race to find a cure for COVID-19.
However, as I wrote at the time, it may be prudent to keep your expectations level:
‘It would seem that investors are being swept up in the hype. Even those who aren’t directly invested in Moderna itself.
‘I’m not saying we shouldn’t celebrate a vaccine. Obviously, the sooner we can get our hands on one the sooner we can return to some sort of normalcy.
‘But, the realist in me knows that we’re a long way from getting to that point. You can’t rush a vaccine; it takes time and money to ensure it is safe and secure.
‘Not to mention, making sure it actually works…’
I’m as every bit as hopeful as the next person for a vaccine. In fact, I’ve no doubt we will get one eventually.
But as for when we will get it, well no one knows.
What I can tell you though, is that even if we find a cure today, it would take months to get it to everybody. That’s just the reality of drug discovery and testing.
Right now though, we’re still desperately searching for a cure. And with markets jumping at any sign of progress, they could be in for a rude shock if they fizzle.
For all investors, this is a risk that you need to be aware of. Biotechs are renowned for being some of the riskiest stocks out there. So, if they’re moving markets, watch out.
High stakes, high reward
Now, having said all that. That doesn’t mean you should ignore biotechs.
This pandemic has put the health sector firmly in the limelight. Money is pouring into all kinds of companies working on novel drugs and/or treatments.
Just look at the surge in the iShares Biotech ETF, for example:
Source: Trading View
The fund recently hit a new all-time high. Showcasing just how much interest there is in the sector of late.
However, not every biotech will be a winner. Quite contrary.
Finding a breakthrough or making an incredible new drug is a rarity. Something that few biotechs ever achieve.
But the ones that do can set early investors for life.
I’m talking triple or even quadruple digit gains.
Finding stocks that deliver these exceptional returns isn’t easy though. There is a lot of research, timing, and even luck involved.
As such, it is certainly not going to be the right strategy for everyone.
If it sounds like something that interests you though, well we can help you get started. We’ve created a ‘Coronavirus Portfolio’ filled with companies we call solution stocks. A way to give investors like yourself exposure to stocks that are pivotal to battling this pandemic. All the while making a tidy profit in doing so, might I add.
To learn more about this ‘Coronavirus Portfolio’ and our solution stocks, check out the full report. You can get a free copy, right now, right here.
For Money Morning