Stocks with a COVID-19 vaccine angle have made significant gains on developmental milestones, and in some cases have shown what is arguably irrational exuberance.
Irrational Exuberance Or Thought-Out Strategy? The rally seen in vaccine developers has come despite skepticism regarding the safety and efficacy of investigational vaccines being developed with expedited timelines.
Normally, it takes about 10-18 years to move a vaccine candidate from discovery to commercialization. In the aftermath of COVID-19 pandemic, at least two companies have concluded clinical trials in less than a year and are awaiting regulatory clearance.
Additionally, there are questions regarding the market and commercial opportunity for multiple players.
Pfizer is likely to rake in vaccine revenue of $4.6 billion in 2021, before the annual run-rate moderates to $2.8 billion in 2023 and subsequently plateaus between $1.2 billion and $1.6 billion in the period from 2026 to $2029, SVB Leerink analyst Geoffrey Porges said in a recent note.
When the vaccine market passes from the pandemic to endemic setting, the uptake is likely to slow down.
Here's a look at how stock prices have appreciated throughout the vaccine program timeline.
Pfizer Inc. PFE and its German partner BioNTech SE – ADR BNTX are developing the BNT162b2 mRNA vaccine and are widely viewed as the frontrunners among vaccine developers.
The companies' vaccine candidate passed a late-stage trial with95% efficacy reported in a large-scale trial and no serious adverse events.
On Friday, the companies became the first to file for emergency use authorization in the U.S. and have already started a rolling BLA submission in Europe.
Pfizer and BioNTech announced their vaccine program March 17. An investment of $1,000 in Pfizer ahead of the program launch would be worth $1,321.20 as of Friday, a return of roughly 32%.
A similar investment in BioNTech made ahead of March 17 would be worth $2,601.75, up 160% over an eight-month period.
Moderna Inc MRNA has been another high flier since it launched its coronavirus program. The Cambridge, Massachusetts-based biopharma's vaccine program was launched Jan. 23, with funding by CEPI and IND-enabling studies done by the NIAID.
Like Pfizer and BioNTech, Moderna's program has also progressed without any hiccups. Moderna is also developing a mRNA vaccine, codenamed mRNA-1273. The company reported last week interim efficacy data from the Phase 3 COVE study, showing 95% efficacy.
An investment of $1,000 in Moderna's shares ahead of its vaccine launch announcement would worth $4,490 as of Friday, representing a roughly 350% return in 10 months.
Related Link: The Week Ahead In Biotech: Moderna Vaccine And Roche, Revance, Rhythm, Liquidia FDA Updates
AstraZeneca plc AZN released interim Phase 3 data Monday, showing vaccine efficacy ranging between 62% and 90%, depending on the dose regimen.
The company's vaccine candidate AZD1222, developed in collaboration with the Oxford University, is a weakened version of a common cold virus that has been genetically changed so that it is impossible for it to grow in humans.
Safety concerns stalled the Phase 3 studies, although they have since resumed following regulatory clearance.
AstraZeneca announced a collaboration agreement with the Oxford University on April 30.
A $1,000 investment in AstraZeneca on April 29, ahead of the day the agreement was announced, would have been worth $1,106 as of Friday. This represents a 10.6% gain in about seven months.
Johnson & Johnson JNJ unveiled its vaccine program Jan. 29. The vaccine candidate JNJ-78436735 is being developed by J&J's Janssen unit and leverages the company's AdVac technology, which was also used to develop and manufacture Janssen's European Commission-approved Ebola vaccine.
The company initiated a second Phase 3 study of the vaccine candidate in mid-November and is targeting enrollment of 60,000 participants worldwide. Apart from the single-dose regiment Janssen tested earlier, it has now begun testing a two-dose regimen.
If an investor had purchased J&J shares for $1,000 ahead of the announcement of its foray into vaccine development, they would be up about 2% at $1,018 as of Friday.
Novavax, Inc. NVAX is developing NVX CoV2373 using its proprietary recombinant protein nanoparticle technology platform to generate antigens derived from the coronavirus spike protein. The company uses its proprietary Matrix-M adjuvant to enhance the immune response.
The vaccine candidate is currently being evaluated in a late-stage study in the U.K., with the U.S. portion of the late-stage study to start by the end of November.
A $1,000 investment in Novavax ahead of the announcement concerning the program Feb. 26 would be worth about $10,905 as of Friday, a gain of about 990%.
The lofty valuation built up in shares of some of these smid-cap biopharma companies introduces risks. If a vaccine program does not come to fruition or if the potential value investors are ascribing to the program is not realized, there is the danger of imminent corrections in the stocks.
Related Link: Moderna Analysts On Positive Coronavirus Vaccine Data, Revenue Potential
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