During the Covid-19 pandemic, vaccine stocks shot up on the promise that they could end the lockdowns. Many vaccines were developed, but few were approved. Since the end of 2021, even the approved vaccine developers have seen their stocks slump as part of the biotech price rout. However the winners of the vaccine race are still companies to watch closely for their post-pandemic moves.
Pfizer (NYSE:PFE), Moderna (NASDAQ:MRNA) and Novavax (NASDAQ:NVAX) all have Covid-19 vaccines in the U.S. market. All have generated revenue from their vaccines, but by now, most Americans have been vaccinated. As less and less people need to receive Covid-19 vaccinations, these companies will have to prove that they can find new targets for new revenue. The hope is that success from Covid-19 has given them the tools to give us more vaccines.
Investing in a vaccine company will require an appreciation of the technology it uses, and the patience to await clinical trial results. But the rewards can be great both for the investor and for mankind. If you want to know what the future of vaccines will bring, these are three vaccine stocks to watch for their post-pandemic moves.
Pfizer (NYSE:PFE) was the first company to receive an emergency use authorization (EUA) for a Covid-19 vaccine in America. Pfizer’s vaccine was also the first mRNA vaccine to receive FDA approval. Unlike traditional vaccines, an mRNA vaccine lets the body’s own cells make viral proteins. This causes the immune system to activate and immunity to develop. Because these vaccines only need an mRNA sequence, there is hope they can be developed and sold faster than traditional vaccines.
Being first to market was a boon for Pfizer. Its earnings state that in 2022 it made $38 billion from Covid-19 vaccine sales. With total 2022 revenue of $100 billion, the vaccine is worth a large portion of its business. But the future may be dimming. Pfizer expects to make just $14 billion from the vaccine in 2023. It needs to find new products to replace this lost revenue.
The good news is that as an established drug company, Pfizer has many clinical trials ongoing, particularly the important Phase 3 trials needed for FDA approval. Notably, it is testing a quadrivalent influenza vaccine that uses mRNA. The success of its Covid-19 vaccine has given Pfizer the tools and experience to make more such vaccines, and if mRNA vaccines are truly faster to develop than traditional vaccines, then Pfizer can profit greatly from this.
The bottom line is that Pfizer’s Covid-19 success gave it a huge revenue boost, as well as the tools it is using to find more revenue as Covid-19 fades from memory. Keep an eye on the clinical trials, but Pfizer should be on anyone’s watchlist.
Four years ago, Moderna (NASDAQ:MRNA) was worth just 10% of what it is now. As a small vaccine company pioneering mRNA vaccines, it was greatly buoyed by the Covid-19 pandemic. Moderna’s vaccine was the second to receive an emergency use authorization (EUA), just weeks after Pfizer. While Pfizer accounts for around 58% of all American Covid-19 vaccinations, Moderna is at a respectable 37%.
Moderna’s large market share gave it enviable earnings, with $19 billion in revenue and $9.9 billion in expenses in 2022. But like Pfizer, Moderna expects that revenue to fade now that most Americans are vaccinated. To that end, it’s trialing HIV vaccines, Nipah Virus vaccines and many more.
Moderna’s thesis is that mRNA vaccines are the future, and that they can be rapidly developed and used to prevent intractable illnesses that have stymied traditional vaccines. The company itself was even named for this thesis, being named after the words “modified RNA” which is exactly what its vaccines use.
But that thesis has been put to the test. Moderna faced the high-profile failure of its flu vaccine, which in February was shown to be inferior to competitors in clinical trial.
But a long-term investor must understand that more clinical trials fail than succeed, no matter the company. A successful drug company must have the financial cushion to move past its failures and the know-how to leverage its successes. Moderna’s experience with the Covid-19 pandemic gave it both.
In July 2022, Novavax gained an emergency use authorization (EUA) for its Covid-19 vaccine, the fourth approved in the U.S. This came over a year after Pfizer and Moderna received their EUAs however, and after most Americans had already been vaccinated. Novavax’s late entry meant it didn’t receive nearly as much of a boost as other vaccine makers.
Novavax’s vaccine is not based on mRNA. It uses pieces of viral proteins alongside a patented adjuvant. The adjuvant forces the body’s immune system to start working, and the viral proteins give the immune system something to target. Novavax hopes its adjuvants can be used in many different vaccines.
Novavax hopes its vaccine can have global reach. Because they don’t require specialized equipment to store, they can be more used in the global south where such equipment isn’t common.
Production Is a Challenge for Novavax
But the reasons behind Novavax’s late entry also highlight the risks of their global strategy. Novavax was initially unable to manufacture vaccine doses at the quantity and purity required by regulators. The end result was months of delays.
Novavax still shows issues with scaling. In November 2022 it terminated an agreement to deliver 350 million vaccine doses due to insufficient production. Searches for new revenue are also hitting snags. Novavax’s influenza/COVID and malaria vaccine pipelines are ongoing, but it paused development of an RSV vaccine. With Covid-19 winding down, Novavax needs to find new ways to make money if it wants to survive.
In the short term, that survival will not be difficult. Novavax’s 2022 earnings report showed $2 billion in revenue and $2.6 billion in expenses, alongside $1.3 billion in cash. However, to be worth investment, it has to show that it can deliver products on time and at scale. Until it does, it’ll just be an also-ran.
On the date of publication, John Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.