What’s happening: US stocks have given investors a terrifying rollercoaster ride this month, amid the coronavirus outbreak and various government initiatives to calm the markets. The CBOE (Chicago Board Options Exchange) Volatility Index, a popular measure of stock market volatility, surged to a record high earlier in March with stocks plummeting deeper into a bear market.
Pharma stocks in focus: The Dow gained 3.19% yesterday to close trading at 22,327.48. The performance of this blue-chip index was driven by pharma stocks, with a spike in shares of Johnson & Johnson and Merck & Co.
While many companies have temporarily shut their businesses and withdrawn their outlook, the coronavirus crisis has thrown up opportunities for pharma stocks.
Details: Johnson & Johnson announced a vaccine candidate for coronavirus on Monday. The pharma giant has been working on the vaccine since January and has committed more than $1 billion through a partnership with the BARDA (Biomedical Advanced Research and Development Authority) to research, develop and test the vaccine.
J&J disclosed plans to expand its manufacturing capacity for the speedy development of the vaccine. The drug maker expects to begin human clinical trial by September and has plans to supply more than one billion doses globally.
The company’s unit Janssen also recently announced Health Canada’s approval of Cabenuva for the treatment of HIV.
On Saturday, Merck & Co. disclosed that its investigational drug, vericiguat, for chronic heart failure patients, has met the primary efficacy endpoint in its VICTORIA Phase 3 trial. The drug is being developed in collaboration with Bayer AG.
Earlier this month, Merck had also announced that the phase 3 trial of Keytruda, for the treatment of adult patients with relapsed or refractory classical Hodgkin lymphoma, had met one of its dual primary endpoints of progression-free survival.
This pharma major’s dividend yield is current at 3.4%, much higher than the average 2.4% yield of the S&P 500 to which it belongs.
How shares have performed: Shares of J&J spiked 8% yesterday, while Merck’s stock jumped 7.3%, strongly contributing to overall market gains.
J&J’s shares have climbed about 20% over the last five trading days and are down only 1% in the month, while shares of Merck have climbed around 16% in the last five trading days and have gained 1% in the month, despite markets witnessing heavy selling.