Pfizer, BioNTech and Moderna are working feverishly to launch new Covid boosters ahead of a fall campaign. But with the vaccine stocks already facing a sales cliff in 2023, experts are grappling with a key question: Are these new shots too late to stem losses for the likes of Pfizer stock and Moderna stock?
When the Food and Drug Administration met this summer, its experts struggled to find the right path. Some said to go ahead with already developed — but not yet authorized — boosters targeting an older version of omicron that no longer exists in the U.S. Others said to wait for researchers to develop new boosters capable of batting down the current dominant forms of the variant.
The agency chose the latter. But epidemiologists say it's only a matter of time before the next variant, an omicron successor or otherwise, rears its head. This puts researchers in a literal race against the virus before it churns out the next mutation.
Meanwhile, about 96,000 new cases occur in the U.S. every day. That number is nowhere near the omicron peak, but it's approaching the high reached with delta, the fourth widespread iteration of the virus.
Corey Casper, chief executive of the Access to Advanced Health Institute, says vaccine developers will always be chasing the virus. The nonprofit institute is working on a next-generation vaccine that it hopes can protect against all coronaviruses, a so-called pan vaccine.
"There are several mottos we have in infectious diseases and virology," Casper told Investor's Business Daily. "The virus always wins. The virus is always a few steps ahead of us. Any vaccine strategy that requires us to catch up means we're always going to be behind."
Covid Vaccine Stocks Seek Emergency FDA Authorization
And the situation is in constant flux, which makes things tricky for drugmakers and regulators.
This week, Pfizer with BioNTech and Moderna asked the FDA to grant emergency authorization for their updated boosters. These shots, known as a bivalent vaccines, can tackle two strains in one dose. In this case, they target omicron offshoots called BA.4 and BA.5. Regulators in Europe are considering an earlier iteration of the booster that targets an older omicron subvariant, BA.1.
Meanwhile, regulators in the U.K. have already given Moderna the go-ahead for its BA.1-blocking shot. The company says the updated booster generates more antibodies in response to omicron subvariants than its original booster shot. And regulators in Europe amended an earlier deal, adding 15 million doses of the BA.1-focused booster shot.
In the U.S., where regulators prefer BA.4- and BA.5-blocking boosters, Moderna has signed a deal with the U.S. government for an initial 66 million doses with an option for 234 million more, though its booster has yet to receive the FDA's stamp of approval. Canadian officials also have tapped the biotech stock for 12 million omicron boosters, though they haven't identified the preferred shot.
Novavax is taking a different track. It recently asked the FDA to sign off on its booster shot. But that shot is based on the original strain. The company is also testing two omicron-blocking boosters. Novavax told IBD that it doesn't expect to have one available until the fourth quarter.
The FDA didn't return a request for comment.
Pfizer Stock, Moderna Stock And Vaccine Sales
New boosters could be the ultimate make-or-break for vaccine stocks.
Pfizer stock and Moderna stock have benefited from a collective $87 billion in Covid vaccine sales since winning authorization for their shots in December 2020. The sales growth has been so bullish, in fact, that Pfizer's revenue is expected to top $100 billion this year, more than double the $41.9 billion it had in 2020. Moderna's sales, a mere $803 million in 2020, ballooned to $18.5 billion in 2021 and are expected to close in on $22 billion this year.
But the party is expected to stop in 2023. Endemic Covid won't offer the same massive vaccine sales growth potential as pandemic Covid for Pfizer stock and Moderna stock. Still, experts say booster shots could help slow the declines.
Analysts expect both companies to see sales decline next year. This year, they expect $32.7 billion from Pfizer's Covid shot, Comirnaty. But they see sales falling to $17.4 billion next year. In the long term, Comirnaty could bring in less than $9 billion annually, according to Pfizer stock analysts polled by FactSet. Those estimates could put Pfizer's total sales at $79.8 billion next year and under $70 billion later on.
Moderna is on a similar trajectory with sales projected to fall to $10.2 billion in 2023, including $9.25 billion from its Covid shot, Spikevax. The fall could take a further bite out of Moderna stock. BioNTech, with whom Pfizer shares Covid vaccine profits, is believed to have hit its sales peak last year at just below $21.2 billion.
Vaccine Stocks Are Well Off Peaks
| Stock | Ticker | Covid-era peak price | Date of Covid peak | Price as of Aug. 24 close | Pct change |
|---|---|---|---|---|---|
| Pfizer | PFE | 61.71 | 12/20/2021 | 47.43 | -23.1% |
| BioNTech | BNTX | 464.00 | 8/10/2021 | 146.24 | -68.5% |
| Moderna | MRNA | 497.49 | 8/10/2021 | 139.70 | -71.9% |
| Johnson & Johnson | JNJ | 186.69 | 4/25/2022 | 165.58 | -11.3% |
| Novavax | NVAX | 331.68 | 2/9/2021 | 37.07 | -88.8% |
Third Bridge lead health care analyst Lee Brown says Covid vaccines could eventually be a $7 billion business annually in the U.S. A lot of that will depend on booster demand.
Investors in vaccine stocks are also watching Novavax. The company gained its first Covid vaccine authorization last November. The FDA signed off on its primary series in July. Johnson & Johnson, meanwhile, has de-emphasized its Covid shot and isn't working on an update.
The constant news flow helped vaccine stocks climb to a peak in mid-2021. BioNTech and Moderna stocks surged to record highs in August 2021. Moderna stock traded just below 500 and BioNTech shares were at 464. Since then, shares have tumbled. Both have stayed mostly below 200 this year.
Pfizer stock has held up slightly better. Its shares hit a 61.71 high in December and then tapered somewhat. But Pfizer stock is helped by the company's Covid pill, Paxlovid. On a technical basis, Pfizer stock is consolidating with that high point as a potential entry. (Learn how to use a stock chart to find the best buy point.)
Novavax stock soared to its highest-ever point near 332 in February 2021. But shares have plummeted nearly 90% since then and now trade around 35.
Covid Booster Shots Worked Well, Until Omicron
The currently authorized boosters worked really well — until omicron appeared.
In the U.S., the FDA has authorized a full-size dose of the Pfizer shot — developed in partnership with BioNTech — along with a half-size dose of Moderna's jab and a second dose of J&J's shot as boosters. Notably, the Centers for Disease Control and Prevention have said they prefer the vaccines from Pfizer and Moderna, due to effectiveness questions surrounding the J&J shot.
Novavax has a booster shot available to adults in three countries. But the FDA is still mulling the company's request for authorization in the U.S.
Omicron's emergence sank vaccine stocks earlier this year. The current shots still offer a strong layer of protection against severe Covid and death, but they aren't protecting as well against symptomatic cases.
Omicron tends to lead to less severe cases of Covid. But reinfections have been frequent, even among those who have a full series of shots.
And then, omicron spun off its own subvariants.
The Quick Turnaround To BA.5
Companies developed and tested bivalent vaccine boosters targeting the earlier BA.1 omicron spinoff plus the original strain. However, that iteration of omicron no longer accounts for any cases in the U.S. Cases of another older variant, BA.2.12.1, are waning.
The newest dominant version of omicron, BA.5, was at the root of nearly 89% of cases Aug. 14-20, according to the CDC. Scientists have also recently discovered BA.2.75 and BA.4.6. The latter now accounts for upward of 6% of cases in the U.S.
Laboratory testing suggests the updated BA.4 and BA.5 booster prompts a high level of antibodies able to block BA.1, BA.2, BA.4 and BA.5, Pfizer said in a recent news release. However, neither Pfizer nor rival Moderna have had time to test their newest booster shots in people. Instead, the FDA says it will consider laboratory tests of the newest shots, plus earlier testing of the BA.1 blockers in people.
Moderna says its BA.1-blocking booster leads to "significantly higher" antibodies targeting omicron — including BA.4 and BA.5 — compared with its original booster. Novavax has said its BA.1-focused booster led to "broad antibody responses" against the omicron family.
But the FDA wants better protection.
A Modeling Trick For Epidemiologists
Therein lies the modeling trick for epidemiologists and investors in vaccine firms like Pfizer stock and Moderna stock.
Even if the shots launch early enough to stop another Covid wave, will the new shots appeal to the masses?
As it is, less than half of people eligible for a booster shot have gotten one. The FDA also has signed off on a second booster shot for people age 50 and older. Only a third of that group has sought a second jab.
The U.S. is running a risk waiting for BA.4- and BA.5-tailored boosters, says Michael Breen, senior director of infectious diseases and oncology at GlobalData Healthcare.
First, the virus could mutate again, rendering the boosters moot. Second, enough people could contract Covid that they might hold off on boosters. And, third, regulatory holdups could kick the boosting can further down the road.
European Officials Aim For BA.1
That could be why the European Union went the opposite direction, saying it would consider the already developed BA.1 boosters.
"By the time you manufacture it, scale it, test it, there doesn't seem to be demand for it," Breen said in an interview. "There is a possibility that whatever we're making a vaccine for right this second — whether it's omicron, whether it's the (BA.4 or BA.5 sub-lineage) — there's a chance that's not going to be dominant by the time it launches. Is it going to be close enough that it's at least better than (the original boosters)?"
Nielsen Hobbs, executive editor at Citeline, uses the same terminology as Casper of the Advanced Health Institute. Citeline is a pharmaceuticals-focused research firm.
Companies are "chasing" the virus, Hobbs says. With the annual flu, officials have some insight into which strains could dominate based on what's happening in South America. That's not the case with Covid.
"Is the strain that we're targeting still the one that's been infecting people?" he told IBD. "They've never quite gotten that right with flu vaccines. They're luckier in some years than they are in other years. I think that's going to be an ongoing challenge for them."
Can Vaccine Stocks Expect A Long Tailwind?
Eventually, Covid boosters could take a page out of the flu playbook. The annual flu campaign starts in the spring with a team responsible for identifying the influenza strains likely to be dominant in the fall. That gives vaccine developers time to make, test and scale up the year's round of flu shots.
But Covid is a bit trickier than the flu.
"Flu has a seasonality, Covid doesn't," said Breen, the GlobalData analyst.
Long-term demand for Covid vaccines and boosters will be key for vaccine stocks.
BioNTech and Moderna stock exploded onto the scene in 2020 with never-before-commercialized technology. Today, that technology is fueling immune responses for millions of people worldwide. Though Novavax is playing catch-up, its shares have risen and fallen alongside its contemporaries.
Just like analysts see Moderna and BioNTech sales peaking this year, expectations have also come down for Novavax. The company just slashed its outlook for the year due to challenging dynamics in the vaccine market.
Beta, Delta Tests Key For Vaccine Stocks
Still, there's a market for their updated shots, says Janko Nikolich-Zugich, head of immunobiology at the University of Arizona College of Medicine. Nikolich-Zugich also heads up the Aegis Consortium for Pandemic-Free Future. He says anything that can target BA.2 and later variants would be ideal. The current suite of vaccines and boosters all target the ancestral Covid virus, which hasn't circulated since late 2020.
He expects the update process to be quick. The FDA is hoping for a fall launch. Pfizer said this week that it's already ready to disseminate the updated BA.4- and BA.5-blocking booster. It's just waiting on the FDA to say the word.
"The changes are so tiny and so focused on the spike (protein) that we know the safety of the backbone (technology)," Nikolich-Zugich told IBD. "That's the important part. It would be unexpected to have any kind of issues or complications. This will not go from scratch to approval. That's the reason it can be scaled up quickly."
Pfizer spokeswoman Jerica Pitts says the company is employing the same model it previously used to test beta and delta boosters. Moderna spokeswoman Elise Meyer says the company expects to be able to ship its updated booster, pending authorization, in September.
"While we can't predict the future of the virus or the course of the pandemic, our mRNA platform has enabled us to be extremely responsive to relevant variants of concern," Meyer said in an email.
Novavax says it's testing two omicron boosters. But on the company's second-quarter earnings call, Novavax Chief Executive Stanley Erck said he doesn't believe a BA.5-focused booster is necessary.
Meanwhile, the vaccine stock tumbled almost 30% on lackluster second-quarter Covid vaccine sales.
Beyond The Latest Boosters, What Comes Next?
Experts all agreed, however, that getting a new Covid booster every four to five months is unsustainable.
"With the science on the universal or pan-coronavirus vaccines improving, you'll see a shift in the market towards those," Casper said. "Will Pfizer and Moderna also shift their approach at that point to favor something more like that? Sure. Their technology is well-suited for that. They could."
Meanwhile, investors in vaccine stocks will watch closely companies' efforts to prepare for any future pandemics. That's where Nikolich-Zugich expresses his biggest frustration. He says the world hasn't done even 5% of what it needs to do to become a pandemic-preventing society.
"I'm perplexed and, unfortunately, exasperated that we're still talking about the value of vaccines," he said. "If we're ever to be ready as a society for pandemics, we have to have a uniform response by the vast majority of us — all doing our share to prevent them."
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
