Nearly four months ago I wrote that should the Covid-19 vaccine being developed by Pfizer Inc. (PFE, Financial) prove successful, it could generate revenue of $15 billion. That expectation is moving closer to reality after the New York-based pharmaceutical leader and partner BioNTech SE (BNTX, Financial) announced on Monday their leading candidate worked 90% of the time.
Pfizer shares shot up more than 11% on the news, but were down to $38.68 on Tuesday. That's still only about $3 below the company's 52-week high.
Perhaps Tuesday's drop reflects several unanswered questions about the vaccine, one big one being whether or not the Pfizer shot will prevent the most severe cases of the coronavirus.
"We need to see the data in the end, but that still doesn't dampen my enthusiasm. This is fantastic," said Florian Krammer, a virologist at Icahn School of Medicine at Mount Sinai in New York City, who is one of the trial's more than 40,000 participants, reported Nature. "I hope I'm not in the placebo group."
Although the vaccine might not turn out to be quite so successful once the trial is complete and all the data have been analyzed, its effectiveness is likely to stay well above 50%, says Eric Topol, a cardiologist and director of the Scripps Research Translational Institute in La Jolla, California. This is the level that the Food and Drug Administration says is required for a coronavirus vaccine to be approved for emergency use.
Other questions about the vaccine include:
- Does it prevent moderate and severe cases of the virus?
- Does it prevent people who show no or only very mild symptoms of Covid-19 from spreading the virus?
- Is the vaccine effective in certain demographic groups, such as over-65s or African Americans?
Even in the face of these uncertainties, FierceBiotech reported that in a note to clients, SVB Leerink analyst Geoffrey Porges said Pfizer should capture all of the early share of the market, taking in some $260 million in the fourth quarter of 2020. In 2021, the cash should really start rolling in, with revenue of $4.6 billion for the year. Sales will slow down in 2023, hitting an expected $2.8 billion. Porges thinks the shot will still be generating revenue of $1.2 billion to $1.6 billion annually from 2026 to 2029.
An effective vaccine could dampen sales for companies with therapies for the coronavirus. That group includes Eli Lilly and Co. (LLY, Financial), Regeneron Pharmaceuticals Inc. (REGN, Financial) and Gilead Sciences Inc. (GILD, Financial). The latter is already booking substantial sales for its drug Veklury.
Pfizer's announcement also buoyed the shares of another vaccine front-runner, Moderna Inc. (MRNA). The stock of the Boston-area biotech is up about $3.50 from last Friday. The company recently finished enrolling 30,000 participants in its late-stage test. Moderna has already taken in more than $1 billion in deposits from various governments eager to get their hands on the shot.
Disclosure: The author holds positions in Pfizer, Eli Lilly and Gilead Sciences.
Read more here:
- Hologic's Quarterly Sales Climb 56% on Demand for Covid Testing
- AbbVie Shares Soar on 3rd-Quarter Results, Bright Outlook
- Novartis Expands Presence in Gene Therapy With Acquisition
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
