If you thought COVID-19 was over, think again because the latest relaxation of pandemic measures by the CDC was dropped yesterday. The elimination of masks, social distancing, and quarantining is gone, meaning the “let ‘er rip” strategy is in full force and effect now. The COVID stocks could come back in favor, but this time the therapeutics are likely to dominate instead of vaccine makers like Pfizer (NYSE: PFE), BioNTech (NASDAQ: BNTX), and Moderna (NASDAQ: MRNA).
The bottom line for investors is that #COVIDISNOTOVER and drug makers like Veru Inc (NASDAQ: VERU), Todos Medical (OTCMKTS: TOMDF), and CytoDyn (OTCMKTS: CYDY) are sitting in the catbird seat. COVID deaths are starting to climb again, with 800 reported yesterday. USA Today health reporter Karen Weintraub said the US is in a horrible plateau of COVID-19 deaths. The death rate might be low, but the positivity rates are climbing. In Massachusetts, it rose from .08% to 8.05% in just one week. This rising positivity rate and the relaxation of all pandemic measures to curb community spread translates into a massive fall outbreak that investors should be positioning for now.
Epic Testing Failure
The FDA recently issued guidance recommending repeat antigen testing at home due to false negatives. This guidance holds for whether the person has COVID or not. The bottom line is that this is the FDA’s tell admitting, without telling people the tests are useless, that these antigen tests are very inaccurate and hold low diagnostic value. In fact, when Omicron came around, there was FDA guidance cautioning against reliance on the low diagnostic value of the antigen tests, and some reports suggested sensitivity in catching positive cases was just 60%. The reason antigen tests are so inaccurate is two-fold. First, the antigen proteins are not amplified before being mixed with a solution made to attach these antigens to antibodies on a strip, which changes the color of the testing strip. With PCR tests, the RNA or DNA sequences are amplified in the testing process, making them more accurate. Second, antigens may not show up much in the early or later stages of infection if antibodies are already mopping up these antigens in the person’s body. So the window for antigen tests is low, and the signal strength is poor.
The other takeaway is that there’s a collapse of adequate testing infrastructure in America. The guidance to take multiple inaccurate tests while at home will only confuse patients and reduce their confidence in their tests. These tests need accurate therapeutics to inform treatment and avoid long-COVID, which the CDC estimates affect 20% of those infected with COVID.
There is an underreporting of COVID deaths. While some talking heads claim that COVID-19 deaths are inflated due to any hospital-related deaths with patients testing positive for COVID marked down as COVID for the primary cause, there is a significant amount of indirect mortality caused by COVID. The World Health Organization reported that there are 3.23 more million deaths in the Americas estimated than previously reported due to these “deaths indirectly associated with COVID-19, due to other causes and diseases, resulting from the wider impact of the pandemic on health systems and society.”
Top Therapeutic Stocks
The beneficiaries of the fall wave should be the therapeutics because vaccines have lost their appeal after so many quadruple-vaxxed people ended up with COVID-19 anyway. The next vaccine booster, designed to neutralize the BA.1 virus, is scheduled to be released in the fall. Many people just want treatment when they get sick instead of getting endless boosters that people don’t feel they need.
Veru, Inc (NASDAQ: VERU)
In the top therapeutics slot is Veru, Inc., with their drug sabizabulin. What many may not realize is that sabizabulin is also a gout treatment—a treatment for a certain form of arthritis where uric acid builds up in the joints. In COVID-19, the drug is supposed to reduce the transport of viral particles into the cytoplasm. VERU reported excellent Phase 3 results in June 2022 and demonstrated a 55.2% reduction in mortality of moderate-severe hospitalized COVI-19 patients over the control. It also performed well on its secondary endpoints and reduced days in the ICU, days on mechanical ventilation, and days in the hospital. VERU submitted its EUA in the United States, went for expedited review in the United Kingdom, and approached the EU. On their earnings conference call, they ratified that sabiazbulin “will receive an expedited review in the UK and that they were preparing for the drug’s commercial launch. Many think the drug has a good shot at approval, but some critics point to a messy study design that contributed to an abnormally high mortality rate in the placebo group, which experienced a 45.1% mortality rate in stark contrast to other published data.
Other studies have reported the death rate in hospitalized COVID-19 patients to be much lower than 45%, especially for those yet on a ventilator but in severe condition. Humanigen’s (NASDAQ: HGEN) phase 3 results showed a 22.1% mortality rate or progression to mechanical ventilation in a patient population similar to Veru’s. In other words, not even 22.1% of patients died. Some of them simply got worse before getting better. In a much larger study that Gilead (NASDAQ: GILD) conducted with the same Ordinal Scale enrollment criterion that Veru used, patients showed 29-day mortality rates of 4.8%, 12.7%, and 20.4% across the Ordinal Scale. Even the worst patients had less than half of the VERU study’s placebo mortality rate. So why were these placebo rates off by so much?
It likely has to do with the clinical trial sites and varying standards of care. VERU’s study had 60 clinical trial sites active in the United States, Brazil, Mexico, Argentina, Bulgaria, and Columbia, but only 50 placebo patients.
If a number of placebo patients were from Mexico and Brazil with extreme mortality rates, this enrollment fumble could have completely thrown off the study with as few as 10 placebo patients from those sites. The study stratified by age, sex, WHO score, and variant, but when measuring mortality as a primary endpoint, the stratification may have ended with those variables and left out location, which is a major confounding variable. This trial design issue is a key reason investors must be very cautious regarding the clinical trial results until more details are disclosed on location stratification. According to clinicaltrials.gov, the location wasn’t part of the predefined statistical plan, so VERU might have accidentally enrolled too many patients in the placebo or active arms from one high mortality location over another. Experts such as Eric Topol have criticized the study results due to sample size as no other COVID therapeutic has been approved based on such small sample size. Typically 400 or more patients are needed, and Veru falls short by a long shot. Other companies such as CytoDyn had even better results, such as an 82% reduction in mortality in critically ill patients on day 14. This drug didn’t receive a EUA either, and further testing is ongoing, ready to recommence once the FDA’s clinical hold is lifted. The question remains whether the drug will even be reviewed by the FDA.
The bottom line is that the drug showed amazing results in its clinical trial, but there are key issues with the way the study was done, and betting on a EUA when investors’ expectations are high is a bet not without substantial risk. Investors in Veru should consider not putting all of their eggs in one basket, though Veru’s non-COVID pipeline also holds value.
CytoDyn, Inc. (OTCMKTS: CYDY)
In a recent article we highlighted the platform potential of CytoDyn’s drug leronlimab. This company has a very promising platform technology asset that has been tested in multiple studies for COVID-19 treatment. Leronlimab is a monoclonal antibody that is a CCR5 antagonist, and it’s designed to stop the trafficking of immune cells to the lungs, where the activated immune cells can overreact and destroy the lung’s integrity. CytoDyn must complete BLA and work on repairing their relationship with the FDA after being too promotional with their drug. Management has been changed over, and the old CEO, who was very promotional, is gone.
Leronlimab was first tested in mild-to-moderate COVID-19, where it showed a likely treatment benefit in symptom score, but the trial size just wasn’t big enough to show a discernable mortality or hospitalization benefit. Thus, as immune dysfunction becomes more of a problem in more severe COVID, the company shifted focus to severe and critical COVID—those that are hospitalized.
Leronlimab showed promising results in hospitalized patients as it reduced hospitalization days and mortality in a phase 3 study for severe-to-critical COVID when adjusted for age, and it also synergized with the standard of care dexamethasone. CytoDyn’s new phase 3 trial, conducted in Brazil, uses improved dosing, IV administration, and a 4-week dosing schedule instead of 2 weeks and then measures outcomes at 28 days. The CD12 trial they ran showed an 81% mortality benefit at 2 weeks at the end of the dosing period. Some investors expect that the FDA may take into account this phase 3’s data in addition to data generated in its prior severe/critical phase 3 trial conducted in the United States to supplement it since it had age stratification errors, and that’s the main sticking point that made the trial results not entirely clear.
So CytoDyn already showed great clinical results in severe COVID with the caveat of a clinical trial design error, and the question is, will Veru follow in its footsteps and need additional studies? Certainly, inventors shouldn’t be surprised if this is the case; however, if Veru’s drug is approved, this could signal a favorable regulatory environment for CytoDyn.
The comforting thing about CytoDyn is that it has multiple shots on goal with leronlimab, which is known to be safe. The company is expected to submit its (long-awaited) HIV BLA for approval in 2023, which would give it the green light to start generating revenue.
Leronlimab is also being tested for metastatic triple-negative breast cancer (mTNBC), and a basket trial for various solid tumors is underway. Big Pharma is especially interested in differentiated immunotherapy assets for oncology, and leronlimab is one of the few immune checkpoints that can target the tumor and the immune system, all with an incredible safety profile. Lastly, leronlimab showed promise in NASH recently whereby they released some early-stage clinical results at EASL, the premiere global annual liver conference. The study showed improvements in metabolic and inflammatory biomarkers, which are hallmarks of the disease, despite being a relatively short study duration. Notably, one of the leronlimab doses improves PDFF and cT1, which are gaining acceptance as noninvasive measurements for NASH disease as opposed to liver biopsy. Interestingly, NASH is also significant comorbidity for HIV patients, and other antiretroviral HIV drugs are notoriously bad for the liver so leronlimab could be the ideal one-size-fits-all therapy for some of these HIV patients.
We noted recent speculation that CytoDyn could be a good takeover target for GSK (NYSE: GSK). While this probably won’t happen while leronlimab is on clinical hold, once the hold is lifted, the company could get more eyeballs on it and be viewed as a less risky venture, and thus the stock could also see a lift. The bottom line here is that leronlimab has shown great results in COVID to date but needs more data, and leronlimab as a platform asset in COVID, oncology, and other conditions could eventually make CytoDyn a multi-billion dollar business—especially if they can finally get the HIV BLA over the finish line.
Todos Medical (OTCMKTS: TOMDF)
Todos Medical’s COVID treatment, Tollovir™, is arguably the most promising COVID treatment in development. A phase 2 study showed a 100% reduction in mortality in severe to critical hospitalized COVID-19 patients which is why there is some chatter of Tollovir “taking dying off the table.” Tollovir also reduced hospitalization duration and the percentage of patients progressing to mechanical ventilation. Just as an aside, the Todos phase 2 trial had placebo mortality at 22% and the leronlimab severe-to-critical phase 3 trial had placebo mortality at 24%, making Veru’s recent trial results look a bit suspicious. In the active arm of Veru’s Sabizabulin phase 3 trial, the mortality rate was 20% for moderate-to-severe (not even severe-to-critical) hospitalized COVID-19 patients.
Taking these numbers into account, in the hospitalized setting Tollvir is so far clearly thecream of the crop. The drug is orally administered, and its safety has been pristine so far. Todos Medical and its Tollovir have further derisked besides its fantastic phase 2 results because Tollovir targets the same enzyme as Pfizer’s drug Paxlovid, which the FDA is clearly comfortable with already received EUA and Pfizer has submitted an NDA full approval. Both drugs are called 3CL protease inhibitors, and they work by blocking the enzyme that cuts up the replicated polyprotein into usable pieces that make up the virion. Tollovir, however, likely has a better toxicity profile that Paxlovid. Paxlovid uses an HIV drug, ritonovir, which has black box warning label, to delay the liver metabolism of the actual 3CL protease inhibitor, nirmatrelivir, so it stays in the body longer.
Tollovir, on the other hand, has little to no side effects so it could be a better drug for longer-term use. Treatment duration is becoming a problem with Paxlovid, with cases of viral rebound after the treatment is over, where the patient actually gets sick after finishing their Paxlovid regimen. Tollovir was tested in hospitalized COVID-19, not a mild-to-moderate disease like Paxlovid, it makes sense given the efficacy and safety that it could displace Paxlovid as a preferred treatment.
The theory for Tollovir’s longer-term use and safety and potentially being preferred over Paxlovid is based on numerous recent case studies with the dietary supplement Tollovid, which is a nutraceutical form of Tollovir. Tollovid saved patients with Paxlovid rebound with long COVID. Todos has conducted many Tollovid case studies in long-COVID and acute COVID, and the aggregated results are impressive.
In an observational study shown above, Tollovid got very high marks for acute covid-19. Investors need to keep in mind that Tollovid is very close in formulation to the investigational drug Tollovir. So what applies to Tollovir applies to Tollovid and vice versa. If Tollovid (dietary supplement) had an effect on acute COVID-19 and long-COVID, then it stands to reason that (the drug) Tollovir could do the same or better in a clinical trial. The key highlight of this distinction is that there is an extremely low risk of failure in doing either an acute COVID or Long COVID study using Tollovir given these results and Paxlovid’s great results and EUA approval. This potential phase 3 asset would need a small amount of money to run a clinical trial capable of displacing Paxlovid as the standard of care. Investors who understand risk could appreciate that these assets are worth more than a billion or $1.00+/share. In fact, the company had 3CL Sciences appraised by an independent firm at $1.9 billion.
Todos Medical also has another interesting facet to their business. They have a COVID-19 testing business and lab located in Alpharetta, Georgia. The lab is fully automated and has the capacity to do 25,000 PCR tests daily. At $100/ test that represents $2.5 million of daily potential. The company is also very early to bring a validated Monkeypox test to market, which could happen as soon as next week. They are also validating a saliva-based Monkeypox test to aid in the early detection of Monkeypox.
Investors buying into the Covid is back investment thesis should consider a basket of these COVID-19 stocks. This is the diversified way to profit off the investment thesis of COVID-19’s return in the fall. VERU is the stock that represents the most alpha because it is on the cusp of approval with a potential binary decision due from the FDA in the immediate future. Investors that like multiple shots on goal with respect to indications could do well with CYDY and its rich pipeline of phase 2 and phase 3 assets. Their CCR5 antagonist has done well in clinical trials, but there is uncertainty with respect to their BLA filing, which, if approved, would send their stock soaring. The standout in the group is TOMDF because it has a therapeutic (Covid & Long Covid), a dietary supplement, and testing revenues in COVID and monkeypox. Todos represent the best risk-to-return ratio of the group. The stock, in comparison, is incredibly cheap, trading at a $38 million market capitalization. Juxtapose that to VERU with a $1.25 billion market cap and CYDY with a $708 million market cap.
Long-term investors in TOMDF could not experience price discovery while a toxic noteholder unloaded his position. The CEO helped confirm the exit on Twitter, and the stock has been on a tear ever since and has the potential to reach a $250 million+ market cap in the short run representing a $.20 price target assuming the existing share structure without debt conversion. Once investors realize that TOMDF is one social media influencer away from breaking the internet on how great Tollovid works in COVID or one clinical trial away from showing superiority to Paxlovid, price discovery will accelerate. While VERU might be a great binary play, long-term money could be made in TOMDF if investors believe markets are efficient.
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Disclosure: Insider Financial and its owners do not have a position in the stocks posted and have posted this article for free without editorial input. This article was written by a guest contributor and solely reflects his opinions.