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Why Pfizer and BioNTech are Now Vaccine Frontrunners

Pfizer (PFE) and BioNTech (BNTX) have stealthily positioned themselves as the new leaders in the COVID-19 vaccine race.

They recently received an FDA fast-track label for BNT162, pushing the timeline for their vaccine candidate to start late-stage trials for 30,000 patients this July as well — a timeline similar to Moderna’s plans.

Like Moderna’s vaccine candidate, Pfizer and BioNTech also use mRNA technology.

Basically, this system takes advantage of our own biological building block to trigger our body to create proteins. These can then help us protect ourselves from pathogens such as the coronavirus.

The announcement of the FDA fast-track pushed Pfizer stock to immediately jump by 5%, an impressive leap for a company with almost $200 billion in market capitalization. Meanwhile, BioNTech stock rose by 15%.

While the vaccine is anticipated to be launched by December 2020, Pfizer executives appear to be more bullish on the timeline.

In fact, the company expects a release date for the late-stage trial data to be available by September with a potential FDA approval by October.

If Pfizer’s vaccine candidate does manage to pass muster, then the two companies are expected to manufacture almost 100 million doses by the end of the year, with the number reaching 1.2 billion by December 2021.

Other than BNT162, Pfizer and BioNTech also received FDA fast track designations for two of the most advanced candidates in their pipeline, BNT162b1 and BNT162b2.

Having all these vaccine candidates under FDA fast track reviews is a welcome reprieve in this ongoing pandemic.

To say that we need an effective vaccine now more than ever is an understatement. This health crisis has been pushing not only the US but also the entire world on the brink of a financial shutdown.

So far, we have recorded over 13 million cases globally—3.5 million of those come from the US alone. With the increasing number of cases, more and more hospitals are crying out for help because they’re getting overburdened.

Apart from its coronavirus program, Pfizer offers a plethora of opportunities for investors.

In 2019, the company raked in $51.8 billion in revenue.

For this year, Pfizer has been zeroing in on improving its pipeline with eight potential blockbuster products anticipated to generate an additional $1 billion or more in annual sales.

Outside its own pipeline, Pfizer is also expected to reap the rewards from its spinoff Upjohn and the merger of this particular unit with Mylan (MYL).

The new company, called Viatris, will inherit some previous blockbusters from Pfizer.

This move is aimed to pave the way for Pfizer to focus on its rising stars like blood clot treatment Eliquis and heart failure medication Vyndaqel. Overall, these changes are projected to provide a bigger impact on Pfizer’s growth.

Meanwhile, BioNTech is also an interesting company to check out.

As with any typical biotechnology stock with no product out in the market yet, BioNTech remains speculative despite its $17.83 billion market capitalization.

However, its involvement with Pfizer in the development of a COVID-19 vaccine will definitely light a fire under this German company.

With that in mind, BioNTech shouldn’t be considered a one-trick pony.

Prior to its work with Pfizer, the company has been focused on creating individualized cancer treatments. So far, it has 10 cancer drug candidates in the 11 clinical trials underway.

Aside from Pfizer, BioNTech has also been working on other biotechnology and healthcare bigwigs like Sanofi (SNY) and Roche (RHHBY).

The race to complete the Phase 3 of the late-stage clinical trials for the COVID-19 vaccine has been tight.

Initially, it was only Moderna that held the top spot—and the stock definitely flourished because of it. Since the pandemic broke out, this biotechnology company’s stock skyrocketed to a jaw-dropping 202% year to date.

At the time, the close second was another small biotechnology with a market capitalization of $6.44 billion, Novavax (NVAX). The company’s stock also soared by a whopping 252.1% thanks to its COVID-19 efforts.

Now, Pfizer and BioNTech are well on their way to dethroning Moderna—if they haven’t done so already.

With a market capitalization of $198.42 billion compared to Moderna’s $31.9 billion, Pfizer has the upper hand in terms of resources, more extensive access to manufacturing partners, and of course, distribution.

pfizer

June 30, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
June 30, 2020
Fiat Lux

Featured Trade:

(MODERNA’S BIG CORONA PLAY FOR A SMALL COMPANY)
(MRNA), (INO), (NVAX), (JNJ), (PFE), (BNTX), (LZAGF), (REGN), (AZN), (LLY), (MRK)

Moderna's Big Corona Play for a Small Company

Biotech Letter

Credit where credit is due.

Tiny Moderna Inc (MRNA) has been at the forefront ever since this pandemic broke, with its vaccine program growing in leaps and bounds compared to competitors, like Novavax (NVAX), which has $3.02 billion in market capitalization, and Inovio (INO), which has $2.20 billion.

The latest report on Moderna’s progress pushes it much further ahead of its competitors.

Looking at its timeline, Moderna could have efficacy data on its COVID-19 vaccine, called mRNA-1273, by Thanksgiving.

Moderna’s vaccine, which is similar to the work of Pfizer’s German collaborator BioNTech (BNTX), utilizes a novel approach that inserts small doses of genetic instructions into the cells of humans.

These then trigger the production of harmless proteins, which mimic the SARS-CoV-2 virus. The proteins subsequently alert the body to produce antibodies, making the vaccine a proactive measure that protects people from infection by the actual virus.

Right now, Moderna is in the second stage of the trials. The final stage involving 30,000 people is expected to begin in July.

With the vaccine program well underway, Moderna secured manufacturing capabilities through a strategic collaboration with Swiss biotechnology company Lonza (LZAGF).

This partnership with a manufacturing site ensures that Moderna is on track to deliver approximately 500 million doses of the mRNA-1273 vaccine every year and could handle up to 1 billion doses annually starting from 2021.

With such massive competitors like Pfizer (PFE) and Johnson & Johnson (JNJ) but also other healthcare heavyweights, such as Regeneron (REGN), AstraZeneca (AZN), Eli Lilly (LLY), and Merck (MRK), the best-case scenario for Moderna is to launch its COVID-19 vaccine before its peers.

Considering the progress it has made so far and the 208% jump in Moderna’s shares this year, it looks like investors anticipate that the company can win the COVID-19 vaccine race and capitalize on its future cash-making machine.

After all, no other biotechnology stock has taken more advantage of this health crisis than Moderna. The company exploded from having the biggest IPO in biotechnology history to now being celebrated as the COVID-19 vaccine leader.

Moderna grew from being a biotechnology company worth roughly $4 billion to $5 billion to an impressive $25 billion frontrunner in a few months’ time.

This is especially impressive since Moderna commanded this kind of valuation without having any approved product in the market. In fact, this clinical stage biotechnology company is valued more than several companies with marketed treatments.

While it has no product in the market today, Moderna actually has a robust pipeline that boasts 22 mRNA candidates, with 12 of these already in clinical studies. The lineup includes potential vaccines for the Zika virus along with a promising oncology pipeline.

Prior to the COVID-19 pandemic, Moderna’s lead candidate was its cytomegalovirus (CMV) vaccine called mRNA-1647. CMV, which affects almost 80% of adults in the US alone, is caused by a virus related to those that cause chickenpox and mononucleosis.

Moderna expects the Phase 2 study analysis for mRNA-1647 to be completed by the third quarter of 2020, with Phase 3 set to start by early 2021.

The company is also working with fellow biotechnology companies on potential cancer vaccines.

So far, Moderna has been focusing on two candidates which are also currently undergoing Phase 2 testing.

The first candidate is called mRNA-4157, which is a personalized cancer vaccine developed for melanoma patients.

Moderna is evaluating the combination of this vaccine with Merck’s top-selling cancer treatment Keytruda. This could turn out to be a potent combination considering Keytruda’s track record.

The second candidate is a collaboration with AstraZeneca. The latter licensed the rights to one of Moderna’s heart disease drug candidate called AZD8601. If successful, this drug will be marketed to patients in need of coronary artery bypass grafting (CABG) surgery.

Riding the momentum of its COVID-19 vaccine program, Moderna conducted a secondary stock offering last May. With $1.34 billion in gross proceeds from that sale alone, the company ensured that it’s well-capitalized to fund its development programs.

While its $25 billion market capitalization is pennies compared to fellow COVID-19 vaccine leaders JNJ and Pfizer, the smaller biotechnology company is definitely giving these behemoths a run for their money.

May 19, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
May 19, 2020
Fiat Lux

Featured Trade:

(PFIZER’S LATEST COVID-19 VACCINE ENTRY)
(PFE), (BNTX), (MRNA), (INO), (CTLT), (SVA), (EBS), (MYL)

Pfizer’s Latest COVID-19 Vaccine Entry

Biotech Letter

Clearly, the long-term solution to this health crisis, and possibly the only hope we have to returning to “normal,” is a safe and effective vaccine.

Companies and health experts around the world have stepped up to that challenge, with investors eagerly anticipating the stocks of the businesses to successfully deliver a vaccine to catapult in value overnight.

This is one of the driving forces behind Pfizer’s (PFE) relentless pursuit of a coronavirus vaccine.

Here’s a quick recap of where Pfizer was before this major announcement.

Pfizer was first recognized as an aggressive player in the vaccine race when the healthcare giant partnered with German biotechnology company BioNtech (BNTX).

After months of working together, Pfizer announced that it aims to produce 10 million to 20 million doses of COVID-19 vaccine by the end of 2020.

So far, Pfizer is testing at least four distinct variations of its vaccine called BNT162. The trials will test roughly 360 individuals, with the study expanding to involve thousands of volunteers if one or two variations of the vaccine indicate progress.

Conclusive data will be available in June or July this year. Meanwhile, Pfizer’s coronavirus vaccine candidate, co-created with BioNtech, is projected to be ready for launch by October.

In an effort to make room for the production of BNT162, Pfizer decided to outsource the production of some of its own branded products to various manufacturers such as Catalent (CTLT).

This move means that instead of paying contract manufacturers to produce millions of doses of a vaccine that might fail to even leave the warehouse, Pfizer has taken it upon itself to produce BNT162 in its own facilities.

According to the company’s estimates, it will cost approximately $150 million to produce BNT162. Since Pfizer is using its own facilities, it could jumpstart the distribution of up to 20 million doses of COVID-19 vaccine even before 2020 ends.

This move to ramp up the manufacture of an experimental drug candidate is a surprising gamble for Pfizer. However, the possibility of having millions of doses of this potential vaccine ready to ship at a moment’s notice could make it a worthwhile risk.

In terms of competition, Pfizer is racing against several biotechnology companies searching for a COVID-19 vaccine in the US and abroad.

One of them is Moderna (MRNA), which has a $19 billion market cap and funding access worth $2.4 billion including government endowment.

Moderna collaborated with Lona (OTC: LZAGY), which is an international chemical manufacturer, to scale up its production power.

Apart from this, smaller biotechnology companies like Inovio Pharmaceuticals (INO) and Novavax (NVAX) are involved in the COVID-19 vaccine race as well.

Inovio is backed by its history of vaccine research on the swine flu outbreak in 2009 and the 2013 avian flu.

Novavax, which has a modest market cap of $82.2 million, received government funding worth $4 million to help the company move forward with clinical trials.

Additional financial support was also sent by the Coalition for Epidemic Preparedness Innovations. In terms of manufacturing, Novavax has been working with Emergent BioSolutions (EBS) to meet production demands.

Outside the US, two of the frontrunners are Chinese companies CanSino Biologics and Sinovac Biotech (SVA).

The stocks of various micro-cap companies have been on the news since the COVID-19 vaccine race started. Several of these smaller firms used their newfound popularity to boost their stock price and generate additional capital to fund their operations.

I think there are several biotechnology and healthcare companies that warrant following. However, there remains a dearth of data on these companies working on the COVID-19 vaccine. Choosing the best stock from these names at this point demands too much guesswork, an investment strategy I have never endorsed.

The harsh reality is that most of these smaller companies will most probably never manage to get a program off the ground and into a conclusive efficacy trial. The main reasons are limited capital, restricted bandwidth, and lack of will to move forward.

Small companies, particularly in the biotechnology and healthcare sectors, typically lack the money and manpower to efficiently run a program without sacrificing the rest of their R&D efforts. For those companies that manage though, the pace will likely be too slow to actually merit a meaningful place in the market.

Investors looking to invest in the surging COVID-19 vaccine space should turn to companies that hold the greatest odds of success. That means larger and more established companies with global testing, regulatory, and manufacturing capacities.

This is not to dissuade anyone from taking a dip into the small-cap companies pool though.

Rather, I would recommend to simply keep these biotechnology companies on your watch list and see how the situation develops. After all, these are decent stocks on their own right.

Nonetheless, it’s still too early to tell how their long-term business models look like outside the search for a coronavirus vaccine.

In comparison, Pfizer has a proven track record of being a great investment. The company has been showing off a decent dividend growth for 10 consecutive years, reporting an annualized dividend worth $1.52 per share.

More importantly, this biotechnology and healthcare company is showing no signs of slowing down anytime soon. In 2019 alone, Pfizer introduced six new drugs on the market and shared that it has 95 more in its pipeline.

Keep in mind as well that Pfizer’s current price of roughly $37 per share -- a far cry from its 52-week high that reached $44.56 -- is significantly lower than the industry average at the moment. For a stock that presents such a wealth of opportunities, Pfizer offers significant value to its investors.

March 26, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
March 26, 2020
Fiat Lux

Featured Trade:

(PFIZER PUSHES AHEAD WITH A CORONA CURE),
(PFE), (BNTX), (MYL)

Pfizer Pushes Ahead with a Corona Cure

Biotech Letter

Pfizer (PFE) has been widely recognized as one of the leading and largest vaccine makers in the industry.

Now, one of America’s biggest biotechnology companies will throw its weight behind German firm BioNTech (BNTX) in its quest to develop a COVID-19 vaccine.

Prior to this announcement, BioNTech has already been working inside China in collaboration with Chinese biopharmaceutical company Fosun Pharma (SHA: 600196).

Its partnership with Pfizer will entail efforts outside China and will be in collaboration with the University of Pennsylvania and the Bill and Melinda Gates Foundation. Specifically, the work will be done at sites in the US and Germany.

What we know so far about this experimental COVID vaccine is that it’s called BNT162.

Like the experimental vaccine from Moderna (MRNA), BioNTech’s version is also based on messenger RNA. Clinical trials will start by April.

BioNTech shares were up 55% following the announcement of this collaboration with Pfizer. Meanwhile, the giant biotechnology company’s shares jumped by 3.8%.

Before this coronavirus vaccine collaboration, BioNTech and Pfizer were already partners.

In 2018, the two companies agreed to work together in developing flu vaccines based on mRNA.

However, this recent expansion of their partnership gained more attention because of the intense focus on the efforts to combat the novel coronavirus.

The output of this partnership won’t be kept within the confines of the companies though.

According to Pfizer, any information or tool it comes up with will be shared with the entire scientific community.

The company also pledged its assistance to small biotechnology companies working on COVID-19 treatments and vaccines, going as far as offering its manufacturing power to help speed up the process.

Aside from its coronavirus efforts, the giant biotech has been working on plans to bolster its revenue streams.

Addressing the loss of exclusivity for seizure disorder drug Lyrica, an issue that weighed on the company’s top and bottom lines last year, Pfizer has been gearing up to merge the Upjohn unit with Mylan (MYL).

The merged companies will be called Viatris.

This is a good strategy. Since Upjohn is home to Lyrica and several older drugs nearing the end of their patent exclusivity, separating this unit will allow Pfizer to streamline its portfolio.

Instead of holding on to Lyrica as an anchor, the “new” Pfizer will focus on its new line of blockbuster drugs like breast cancer medication Ibrance and blood clot treatment Eliquis.

Apart from these, Pfizer is investing more on marketing its rising stars like Vyndaquel. The company’s pipeline is also filled with potential blockbusters particularly its 20-valent pneumococcal vaccine.

Although the Upjohn-Mylan merger will inevitably lower Pfizer’s dividend, shareholders of the giant biotech will still own part of Viatris. That means they would have a share in the dividend of the merged companies as well.

The combination of the dividends from both Pfizer and Viatris would total to roughly the same amount as the “old” Pfizer, which currently yields 5%.

What we’re experiencing right now is definitely unprecedented. COVID-19 has mutated from a respiratory disease affecting a single province in China into a global threat endangering everyone’s physical and financial well-being.

However, there’s always good news.

From an objective perspective, this coronavirus crisis has provided a rare opportunity for investors. After all, stock market corrections are actually quite common occurrences.

Looking at each correction in equities in the past, you can see that these were eventually triggered by a bull-market rally.

Remember, the ongoing vaccine research conducted by companies worldwide will yield results sooner or later. So even if COVID-19 is here to stay, it will no longer be a deadly threat in the long run.

In times like these, I think it’s more prudent to consider major biotechnology stocks when looking to invest.

This is because they have a higher capacity to keep trucking through this health crisis and to deal with its aftermath.

Despite the growing fear that this pandemic will lead us to a recession, Pfizer can still be easily categorized as a profitable company.

Considering that it’s trading at merely 13 times its expected earnings, this stock is quite a bargain.

Pfizer has a strong cash flow. Its long history shows that it has also weathered economic storms.

More importantly, it has a product pipeline that we find essential regardless of pandemics and strict quarantines. It doesn’t hurt that they’re priced attractively as well.

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