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A big beneficiary of the COVID crisis has been Pfizer (NYSE:PFE), with two products, the revolutionary Comirnaty vaccine in partnership with BioNTech (BNTX), and its own treatment pill, Paxlovid, making a huge contribution to its earnings. The COVID pandemic has suspended reality for many and this is no more evident than in the scepticism with which the market views the amazing technical and financial success of Comirnaty. Even Pfizer seems to have succumbed to disbelief, in that it has presented its earnings reports with the Comirnaty revenues treated separately. The massive cash benefit is real notwithstanding the disbelief. And this cash river keeps delivering despite everyone wishing to see the end of COVID. Indeed many Governments are acting as if the pandemic is over, because people are tired of it. The reality is that the SARS-CoV-2 virus doesn’t care and it keeps turning up unpleasant surprise for an exhausted world. Here I suggest that the recent FDA Emergency Use Authorization (EUA) of Comirnaty for a fourth vaccination (the second booster dose) reinforces that the rivers of cash from Comirnaty will continue. Notwithstanding that 13 out of 22 Analyst ratings are for “hold” and Seeking Alpha has published several articles from contributors foreshadowing Pfizer’s upcoming stock price tumble, I don’t see how it’s possible that $100 billion in revenue in 2022 and beyond signals disaster. On the contrary I don’t think that SARS-CoV-2 is done with us yet as COVID gets another lease of life. The same might well apply for Pfizer’s stock price.
Fourth shot for Pfizer/BioNTech vaccine
Two weeks ago Pfizer/BioNTech submitted an Emergency Use Application (EUA) to the FDA for a second booster dose (fourth shot) of its Comirnaty vaccine for 65+ adults who received a booster more than four months previously. Data showed that 3-6 months after a third (booster) dose the antibody levels fell and infection rate and severity of COVID increased. The submission included data showing improved antibody response and reduced infection rates and severe disease after the fourth dose.
The FDA has quickly approved the EUA application for Comirnaty as well as Moderna’s (MRNA) Spikevax application for a second booster dose for its vaccine. The approval includes adults over 65 as well as 18+ year olds who are immunocompromised.
With a new variant BA.2 Omicron becoming dominant around the world, the fourth vaccine is already becoming available in various areas due to clear indications that it provides additional protection 3-6 months after the third (booster) dose. The fourth dose becomes available next week in Australia.
This means more sales of Comirnaty, especially as the BA.2 Omicron variant is clearly ramping up infections all around the world.
More than four doses of the vaccine?
The point about the SARS-CoV-2 virus is that it messes up the immune system and this is most probably why vaccination provides only temporary protection. When the vaccination was first approved it was suggested to be a 2-shot protection, then a third (booster) shot was raised and now we’ve reached the fourth shot. I see no reason why this is the end of the story. Be prepared for further vaccinations to maintain protection. Of course this would be good news for Pfizer. I can hear the conspiracy theorists going into overdrive about nasty big pharma, but for me personally, if to stay protected I need an annual (or even 6-month shot), I’m up for it. I don’t want to get COVID, and especially not Long COVID, because we don’t know how serious that Long COVID is going to be.
Things surrounding COVID that may impact Pfizer stock price
COVID, and particularly the mRNA vaccines from BioNTech/Pfizer and Moderna, has produced some curious and, for a scientist, hard to understand conclusions that influence how Pfizer in particular is perceived. Unfortunately ignorant posturing can still have an irrational influence on the Pfizer share price. I can’t help but think that the kinds of views that follow are in part responsible for some of the recent pullbacks in Pfizer share price.
Here I summarise a few things that surprise me because they show how easy it is for some people to be misled.
i) We are sick of masks, lockdowns etc so let’s just stop this
I live in Australia, where there has been a massive public effort to address the deleterious effects of COVID by a combination of public safety efforts (masks, contact tracing, lockdowns) and extensive vaccination campaigns. Elections looming for the Federal Government and NSW State Government, led to leaders of both Governments sensing public fatigue and the decision was taken to just let it rip. This has been demoralising for healthcare workers as they have watched the incidence of infections rise dramatically. Effectively all efforts to monitor infections and to prevent spread of COVID have been abandoned. COVID positive overseas arrivals will be allowed to enter Australia without need to quarantine. This has led to 227 COVID deaths/million in Australia, a sudden 10 fold increase on what was maintained throughout the COVID pandemic. Of course this remains much smaller than the US statistics of 3001 deaths/million, but it shows what complacency and disregard for the science leads to.
The point is that winter is coming to Australia and, maybe a new variant that could easily threaten to overrun the healthcare system. We may be finished with COVID, but the virus isn’t finished with us. This story has been repeated a number of times all over the planet.
ii) I can still get COVID although I’ve been vaccinated so the Pfizer vaccine can’t be a vaccine
This comes from a conviction that vaccines stop infections completely. It is true that for polio and smallpox vaccinations, a single vaccination program effectively led to substantial disappearance of the disease and long term protection was gained. The point is that coronaviruses are devilish viruses because they mess with our immune system, the very system that provides protection. I remain astonished how effective the Pfizer/BioNTech and Moderna mRNA vaccines have been (and also other vaccines for SARS-CoV-2 which causes COVID).
iii) mRNA vaccines cause DNA changes
The conspiracy theories are out of control when anti-vaxxers try to defy how mRNA works in the body. Some things are just silly but unfortunately a lot of vulnerable people in the community are unable to distinguish nonsense from reality.
The above are just a small sample of silly stuff circulating about COVID.
And a dose of reality about COVID
A new variant, BA.2 Omicron, is creating chaos in China now. Lest you think that COVID is over, in addition to the crisis in Shanghai (which alone seems to be impacting the global oil price because 45% of Shanghai is locked down), there are outbreaks of the BA.2 Omicron variant all around the world. Notwithstanding the lockdown of almost half of Shanghai, the total COVID cases in China stands at 144,515 and deaths/million sit at 3. China is the last holdout country seeking to keep the virus at bay.
The US death toll has exceeded 1 million and hundreds of people are still dying daily in the US. With 81.7 million cases and 3,003 deaths/million in the US, COVID is still with us. LA is having an outbreak of the BA.2 variant of Omicron. Cornell University has a “substantial presence” of COVID on campus, with 515 infections on campus between 17 and 23 March. This is what happens when mask wearing is relaxed amid increased social activities. The good news is that 97% of the student population is vaccinated.
The UK is having another outbreak with one million new cases over the past week.
Left field issue: Long COVID
With 485 million COVID cases worldwide and 6.2 million deaths (in the US 81 million cases and over 1 million deaths), it isn’t surprising that the focus has been on people catching COVID and the acute impact of the disease, which includes mild illness for those vaccinated, but possible serious illness, hospitalisation and even death (mostly) for the non-vaccinated. However it is becoming clear that there is another dimension to SARS-CoV-2 infection that can be serious and long term. This manifestation of COVID infection is termed Long COVID and it covers a variety of chronic effects that are only now becoming apparent. The symptoms of Long COVID extend beyond respiratory impairment to include in particular heart and brain defects. Some clinicians are beginning to think that Long COVID will produce a huge long term global health crisis.
One consideration of Long COVID is the possibility that being vaccinated leads to fewer people exhibiting Long COVID and if they do, the symptoms might be less debilitating. It is early days but there is now evidence that vaccination is protective. This could mean another avenue for continued Comirnaty vaccination, because the benefits of not getting (or experiencing milder symptoms) Long COVID itself may justify vaccination. This may be a more effective way of addressing Long COVID than trying to find treatments for those affected, although there is a lot of work going on in this area.
I summary watch out for avoiding Long COVID becoming another reason for Comirnaty vaccination.
Other factors affecting Pfizer’s share price
Of course there will eventually be an end to the COVID pandemic, but this may be more in the future than many think currently.
However, it is important to think down the track if one is to be a long term investor in Pfizer. The future can be looked at from two perspectives: i) What impact the mRNA technology is going to have on Pfizer’s business going forward, and ii) Pfizer’s ongoing drug pipeline.
Pfizer and mRNA technology
The Pfizer/BioNTech partnership is a historically significant partnership that has led to the successful COVID mRNA vaccine products. The question is whether the partnership with BioNTech will have a future beyond the COVID story. It makes sense to separate the innovation (BioNTech) from the execution (Pfizer) in terms of scale up and marketing, but it almost never happens that these skills survive and prosper in different corporate entities. Humans are curious and working together over long periods is not the norm.
It is too soon to know how this will play out, but there are some indications about the robustness of the partnership between Pfizer and BioNTech. I have no inside knowledge so what follows is just my speculation.
BioNTech partners : On its website, BioNTech acknowledges 148 partners in its journey towards the development of its COVID vaccine since early 2020. This is a pretty complete list, which includes individuals, Universities, various Biotech companies, consulting firms etc and some significant pharma companies (including Pfizer, Merck (MRK), Novartis (NVS), GlaxoSmithKline (GSK), Shanghai FosunPharma (OTCPK:FOSUF), Regeneron Pharma (REGN). The heartfelt comment from CEO Ugur Sahin indicates a deep commitment to partnership : “Despite the damage caused by the virus, I have been inspired each day by the spirit of collaboration and scientific discovery. It is one of the greatest honors of my life to be involved in this effort and to play a role in helping the world regain a sense of normality. I would like to thank each and every person that helped make this a reality.”
BioNTech’s core focus is patient-specific medicine, particularly on cancer. It’s business is partnership-focused and the company highlights seven collaboration agreements with major biopharma partners. Several of these agreements give BioNTech significant control over development programs and participation in the future of products arising. The goal of BioNTech is to maximise the potential of their mRNA technology platforms and to leverage the technology beyond cancer therapy.
The seven collaborations noted on the website all involve partnerships that are longstanding (commencing between 2015 and 2018). The Pfizer relationship is the most recent, commencing 2018 and it refers to a program involving mRNA-based vaccines for influenza. The other partners are Genentech (OTCQX:RHHBY) (immunotherapy), Lilly (LLY)(cancer), Sanofi (SNY)(human solid tumors), Genmab (GMAB)(antibodies), Bayer (OTCPK:BAYZF)(animal mRNA vaccines), Genevant (technology for mRNA-based therapeutics), Siemens (OTCPK:SIEGY)(cGMP production facility for individualised vaccines).
My takeaway is that there could end up being more products in a Pfizer/BioNTech partnership. The Comirnaty partnership doesn’t look like a flash in the pan.
Pfizer’s ongoing drug pipeline
Depending on where mRNA technology ends up fitting in Pfizer’s plans, it could be that a significant part of Pfizer’s future products could involve this technology. However, there are also many other programs in Pfizer’s pipeline that might contribute to Pfizer’s success in the future. This isn’t the place to review Pfizer’s pipeline, except to point out that Pfizer has 27 Phase 1, 25 Phase 2, 27 Phase 3, and 10 drugs in registration, for a total of 89 drugs in the pipeline.
A key issue that may have been overlooked by some is that Pfizer has built a huge cash war chest to be able to consider new opportunities and fund them aggressively.
Conclusion
The Pfizer/BioNTech partnership in developing SARS-CoV-2 vaccine Comirnaty is almost too good to be true, but it is true and it has created massive benefit as a result of Pfizer’s success in scaling up and vaccinating billions in a very short window of time. It isn’t an illusion and I don’t think COVID is over. This means that 2022 will not be the end of the $billions that Pfizer has received from Comirnaty. I expect the good times to continue.
I am not a financial advisor but I know the biotech industry well. I hope my commentary about Pfizer and its prospects as we get used to a fourth (booster) dose of the Comirnaty vaccine, helps you and your financial advisor to make sense of possible investment in Pfizer.
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