Follow Andrew Keene Start the conversation
Comment on This Story
Or to contact Money Morning Customer Service, click here.
As the pandemic continues to rage on, so does the race to develop a vaccine. But not every biotech company is doing well in the search for an effective vaccine or treatment.
Since day one, companies came out of the woodwork to throw their hat into the ring - hoping to be the first to develop the coveted medical breakthrough. Many of these firms, however, have had their fair share of struggles.
One of the latest companies to face some tough hurdles is U.S. pharmaceutical company Eli Lilly and Co. (NYSE: LLY). Since the beginning of the pandemic, Eli Lilly has been a frontrunner in this race, searching for authorization for its antibody treatment.
But the company has yet to find solid ground to stand on.
Eli Lilly has not only struggled to find a vaccine, but it also fell short of analysts' expectations for third-quarter profits. And this was all thanks to the increased costs to develop possible COVID-19 therapies. But the drop in revenue isn't the only thing putting the stock in a bad light.
Earlier this month, the Eli Lilly antibody clinical trial was paused due to safety concerns. And a day before the earnings announcement, it was announced that no additional COVID-19 patients that had been hospitalized would receive its treatment. This decision was made after data from a government-run trial revealed that the therapy was failing and was unlikely to help patients recover as the company has hoped.
And if I'm honest, I wasn't all that surprised by this bad news surrounding Eli Lilly. So today I'm going to show you a much more profitable move to make instead of chasing every vaccine "breakthrough" news...
Until There's a Breakthrough, Bet on This Move
I find it interesting that so many investors chase companies that make noise about a possible vaccine because that's what most of it is - noise.
It's equally interesting that despite months and months without a vaccine, investors are still running after those same stocks, pushing the stock higher with any whispering of a "breakthrough."
The reason why I find it so interesting is that it's pretty well-known that pharmaceutical companies don't make much money on vaccines or drugs. LLY has spent nearly $400 million pursuing this vaccine and hasn't been left with much but a downturned stock and revenue loss. Not a good look for this company or its investors.
And that's precisely why I've stayed away from pouring money into vaccine dream-chasers.
But there is a way - a smart, profitable way - to invest in the race to the vaccine. It's just not the move you might think to make. And that move is the SPDR S&P Biotech ETF (NYSEArca: XBI), which tracks the biotech sector.
The way to play it? Look to short this ETF on any rally - and then take your money and run.
And before you go, make sure you check out this must-watch stock-picking presentation...
You see, I hate watching people try to chase money by following the news headlines - because there's so much information they leave out.
Do you know who else hates this? My colleague, three-decade trading expert Shah Gilani, who also happens to be Money Morning's Chief Investment Strategist. And recently he held his first-ever stock-picking lightning round event.
During this event, he'll be flying through stocks - over 50, to be exact - telling you which to consider buying NOW and which not to touch with a 10-foot pole.
This could be the largest buying opportunity in stock market history... click here now.
Follow Money Morning on Facebook and Twitter.
About the Author
Andrew Keene is a globally known trader and a renowned expert on all things options.