gorodenkoff
Pfizer Inc. (NYSE:PFE) is a great long-term biotech to own because it has two great long-term prospects that it is gearing towards. The first is the opportunity to increase sales with the use of its Covid-19 vaccine COMIRNATY and its oral drug PAXLOVID. That’s because the big pharma maintains 2022 sales guidance of COMIRNATY to be $32 billion and PAXLOVID to be $22 billion.
The government, Pfizer, and its German partner BioNTech inked a $3.2 billion deal in June of 2022 to provide vaccine doses to the U.S. government ahead of an expected fall vaccination campaign. Even with the pandemic not being as bad it was when it first started, Covid-19 will still remain as a cause for concern over the years. The pandemic ending is in sight, but regardless, Pfizer expects the sales guidance for both its products to be what I highlighted above. It remains to be seen what exactly happens this fall of 2022, but there is the possibility of a rise in cases as the weather gets colder. Even then, I don’t want to pin the future hopes on Pfizer on just Covid-19 sales alone.
There is another possible expansion opportunity to generate revenue from another large market indication. This could possibly happen as Pfizer announced initiation of its phase 3 study using a quadrivalent modified RNA ((modRNA)) influenza vaccine. This is going to be a huge study and, if successful, it may end up helping to reduce hospitalizations and deaths from the flu virus. Based on potential for the U.S. government to request additional vaccines to be delivered for the upcoming 2022 fall season, plus the ability to expand mRNA vaccine capability towards influenza, these are the reasons why I believe that Pfizer is a great market opportunity to buy.
Covid-19 Vaccine And Oral Drug Are Both Still Expected To Rack Up Impressive Sales In 2022
Covid-19 may not be the pandemic it once was when it first started, but it still remains an issue. The World Health Organization (WHO) and CDC still believe that this is a major issue. It is not one that will go away immediately and it will likely remain for many years. For example, despite vaccinations, natural immunity and other treatments there are still about 400 people dying in the United States every day.
What this means for Pfizer is that it will still expect to generate a substantial amount of revenue for years to come. Especially in 2022, where it maintains guidance that it will earn $32 billion from COMIRNATY and then $22 billion for PAXLOVID. Up above I did highlight that there is a possible expansion opportunity specifically for Covid-19, and this is where it comes in.
Pfizer and BioNTech inked a deal for the U.S. Government to provide 105 million vaccine doses ahead of what may be to come in Fall of 2022. It’s important to keep in mind that this won’t only include standard vaccines. The U.S. Government specifically wants the shots to help out against omicron and other subvariants which are highly more contagious than prior iterations of the virus. Why did the U.S. Government ink this $3.2 billion deal in June of 2022 for 105 million vaccine doses? That’s because the omicron BA.4 and BA.5 subvariants have caused major problems for Americans even during the summer.
Consider the fact that I noted above, despite so many available treatment options, there are still 400 deaths a day in the United States at the very moment. Not only that, but there is a huge unknown approaching, and this is whether or not there will be a huge Covid-19 surge in fall of 2022. It is possible that during the winter months, where it gets colder and more people will be indoors, that a huge Covid-19 wave could reemerge.
As it pertains to Pfizer though, it may possibly immediately capitalize on such a wave. How would it capitalize? Well, that’s because the initial deal noted above for $3.2 billion in June of 2022 for 105 million vaccine doses is not all that is possible. There is an opening in the deal for the U.S. Government to purchase up to another 195 million doses. If such an option is drawn upon by the U.S. Government, then Pfizer would generate additional revenue because of it. While there is no assurance or guarantee that such an option will be taken, the main thing to conclude is that the original 2022 sales guidance given for COMIRNATY and PAXLOVID will remain. Any additional sales achieved after that will be icing on the cake.
Not All Hopes Are Clinging Towards Covid-19 Treatment Revenues
The main premise now for Pfizer and BioNTech is that billions of dollars of its revenues are with respect to Covid-19 treatment sales, both with COMIRNATY and PAXLOVID. However, there is an ability to take what has already been achieved with Covid-19 and apply it towards influenza. This is where another expansion opportunity exists to eventually possibly generate additional revenue. Pfizer has initiated a phase 3 pivotal study using a quadrivalent modified RNA influenza vaccine. The goal is to see if such an mRNA (messenger RNA) vaccine is capable of improving protection rates and immunity.
Diving a bit deeper here, I think that it’s quite possible that such a quadrivalent RNA vaccine can do well against influenza. I think it is all due to the fact that influenza viruses have a genome made up of RNA, not DNA. As such, they evolve far more rapidly, and new treatment options to counter this fact may be necessary. Wait a second, aren’t there already many vaccines out there for influenza? Yes, and while that may be the case, this goes back to the notion highlighted above that protection rates are not that great. Consider that vaccines reduce the risk by 40% to 60% of having to go see a Doctor for this virus. Think about what an mRNA vaccine might be able to achieve. It’s quite possible, but not guaranteed, that it might be able to reduce the risk of infection even further.
As such, Pfizer is recruiting 25,000 healthy U.S. adults to see how well such a quadrivalent mRNA vaccine can do against influenza. The global influenza vaccine market is expected to reach $10.12 billion by 2030. Even though influenza has been around a very long time, it still remains a major concern just like Covid-19. It is estimated that there are still about 52,000 flu deaths every year. This is another indication that is worth exploring for Pfizer. If this phase 3 trial is ultimately successful, then this goes back to my statement about the possibility of expanding mRNA vaccination beyond Covid-19.
Market Potential With Partner BioNTech For 3rd Indication
As I noted above, Pfizer’s partnership with BioNTech has been instrumental in providing the avenue to develop COMIRNATY. In addition, I also touched upon the partnership for the influenza virus vaccine as well. There is a third indication possible, along with room for even more. First, going over the 3rd expansion opportunity. This lies with an agreement that Pfizer signed with BioNTech to advance an mRNA vaccine possibly capable of improving protection against Shingles. The development will involve BioNTech’s proprietary mRNA technology and then Pfizer’s very own antigen technology. By combining both of these strengths, the hope is to develop a shingles vaccine capable of providing superior protection.
Pfizer doesn’t get much with the deal other than $25 million once it has developed the right antigen sequences to be used for this Shingles vaccine, while BioNTech is in store for a $225 million upfront payment, potential to receive approval and sales milestone payments of up to $200 million, and then also sharing of the gross profit for a product, should it reach the market.
Ultimate Expansion Possible Thanks To Lipid Nanoparticle Licensing Deal
This is where I believe Pfizer has more room to grow and be that great long-term biotech to own I have stated up above. It is because Pfizer was able to gain expanded access to lipid nanoparticle (LNP) formulation technology from Acuitas for up to 10 target indications. Think about that. Such a deal made provides Pfizer the ability to expand to all these new additional target indications. Of course, it remains to be seen how well this LNP technology will do against such other unnamed target indications, but the fact that it can do so is great on its own. This will be on a non-exclusive basis of up to 10 vaccine or therapeutics targets, which gives Pfizer the ability to go after many other large market indications.
Why is this deal with Acuitas important? That’s because it all goes back to what I first highlighted above about a Covid-19 vaccine. COMIRNATY uses Acuitas’ LNP technology, therefore, the ability to be able to possibly expand it towards other indications is huge. Without LNP delivery, I highly doubt that COMIRNATY would have ever reached the market.
Financials
When it comes to being financially sound, Pfizer is in great shape. That’s because it generated 2nd quarter revenues of $27.7 billion representing year-over-year growth of about 53%. Such an increase in sales is largely attributed to what I highlighted above, in that 2022 sales guidance for COMIRNATY remains $32 billion and then $22 billion for PAXLOVID. It will have no problem in generating revenues in 2022 thanks to these two products. Not only that, but it has also gone on to state that it expects between $98 billion to $102 billion in sales this year. In my opinion, should the U.S. Government take the option to order those additional 195 million vaccine doses of COMIRNATY, then I believe Pfizer could do even better in projected 2022 sales.
Risks To Business
There are a few risks that investors should be aware of before investing in Pfizer. The first risk to consider would be with respect to the projected sales of $32 billion for COMIRNATY and then $22 billion for PAXLOVID. Even though this is the projection, how well sales of these two Covid-19 products succeed depends upon market conditions and other factors. There is no assurance that these projected revenues will be reached.
Another risk to consider is with respect to COMIRNATY itself. Why do I state that? That’s because the additional 195 million doses of vaccine are a U.S. Government option. If cases of Covid-19 don’t surge in the fall of 2022, then it’s highly unlikely that it will purchase these additional shots. Even though Pfizer has pushed through to initiate a pivotal phase 3 study using a quadrivalent mRNA vaccine for influenza, there is no guarantee that this study will achieve the intended efficacy. If that happens, then it will have to rely on other FDA approved products in its pipeline, such as COMIRNATY and PAXLOVID.
The final risk would be with respect to the LNP Acuitas licensing deal. While it gives Pfizer the ability to go after 10 other indications, how well it does with this opportunity depends on if these advance past several clinical trials with success.
Conclusion
The final conclusion is that Pfizer is a great long-term biotech to own. I think that it should be able to keep to its projection of being able to produce 2022 sales of $32 billion for COMIRNATY and then $22 billion for PAXLOVID. If it can get the U.S. Government to take the option for an additional 195 million doses option, then its projected sales should be even higher.
I believe that Pfizer is going to do well in the long-term. It has already initiated a phase 3 study for an influenza vaccine, plus it has made a deal with BioNTech to advance a Shingles vaccine as well. Further expansion opportunity exists with the expanded Acuitas LNP licensing deal, whereby it gains the ability to go after 10 new indications.
There are also a few other positive items to note. For instance, it is developing a GLP-1 agonist for the treatment of patients with Diabetes. It intends to host a webcast of a conference call with investment analysts at 4:30 p.m. EDT on Wednesday, September 21, 2022. There will be a review of data using GLP-1 for the treatment of patients with Diabetes. Such data will be presented at the European Association for the Study of Diabetes (EASD) 2022. Hopefully this update will be a good one, because this another possible area where Pfizer could gain a foothold in. Preliminary data released for this oral GLP-1 drug puts it as a strong contender against other diabetes drug makers.
Based on the expansion opportunities possible for mRNA vaccine development, plus additional advancements into other large market indications, these are the reasons why I believe Pfizer is a great long-term biotech to own.
Be the first to comment