Pfizer’s Covid-19 Vaccine Delay Isn’t Welcome News for Shareholders

Owners of Pfizer (NYSE:PFE) and PFE stock ought to be concerned about what’s happening in several developed countries, including the U.K.

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The U.K.’s Chief Medical Officers, who operate under the country’s Department of Health & Social Care, put out a letter Dec. 31 that said it would delay the second dose of the Pfizer Covid-19 vaccine by up to 12 weeks (up from three weeks) to ensure more people get the first dose in short order.

The debate over the lag time is spreading to other countries. Here’s why that might not be so good for your investment.

How Might This Affect PFE Stock?

The one thing that’s bothered me about all the congratulations being given to the vaccine developers and initiatives like Operation Warp Speed is that they fail to recognize that companies such as Pfizer will profit greatly from Covid-19.

Although Pfizer did not receive funding from the U.S. government to develop its vaccine — its partner BioNTech got $455 million from the German government — it did get an implicit nod from the U.S. government that it would profit from the entire ordeal.

“What the U.S. did, meanwhile, was commit to buying hundreds of millions of vaccines in advance to ensure Americans were among the first in line if it clinches an emergency-use authorization or approval from the FDA,” Fortune reported in November.

“The Trump administration agreed in July to pay almost $2 billion for 100 million doses, with an option to acquire as many as 500 million more, once that clearance comes.”

Based on the full 600 million getting filled, Pfizer’s revenue from the vaccine could be as high as $12 billion ($20 per dose) from the U.S. government alone. Many other countries ordered Pfizer’s vaccine, including the UK (40 million), Japan (120 million), Canada (20 million), European Union (200-million plus option for 100 million), and Germany (30 million in addition to EU participation).

Add all those up and the register rings to the tune of $22.2 billion based on 1.11 billion doses. By comparison, Pfizer’s overall revenue in Q3 2020 was $12.1 billion.

So, there’s a lot at stake for Pfizer management. Any fly in the ointment, such as countries postponing the second dose, would likely affect how much revenue it ultimately makes from the vaccine.

That’s a potential problem for a stock that doesn’t seem to get any respect from investors.

Up 2.8% (including dividends) over the past 52 weeks, investors appear as though they would rather buy almost anything rather than the maker of the first Covid-19 vaccine to be approved on a global basis.

What’s the Holdup?

As we know, the U.K. is going through a massive surge in cases due to the new variant of SARS-CoV-2, which is far more transmissible than the previous virus. On Jan. 6, the government reported that the U.K. had 1,041 deaths, the highest daily rate since April 21, more than eight months ago.

Even worse, the number of patients in the hospital from Covid-19 went over 30,000 for the first time since the beginning of the pandemic. For this reason, Prime Minister Boris Johnson has put the country into its third lockdown, with primary and secondary schools closed until mid-February.

The government’s naturally concerned about the state of affairs. It will do anything to slow the virus’ progression, including getting more people the first Pfizer dose before delivering the second.

“In the short term, the additional increase of vaccine efficacy from the second dose is likely to be modest; the great majority of the initial protection from clinical disease is after the first dose of vaccine,” the government’s letter to the medical profession stated.

And the U.K.’s not the only country thinking about this idea. So, too, is Canada. Various Canadian media outlets reported this on Jan. 5.

“Dr. Theresa Tam, Canada’s chief public health officer, said Tuesday she has asked the National Advisory Committee on Immunization to investigate whether it would be warranted to delay the second doses of a COVID-19 vaccine in a bid to get first doses to more people faster,” The Globe and Mail reported.

The paper reports that approximately 150,000 Canadians have received their first Pfizer dose and some have already received their second dose after the 21 day lag between shots.

Denmark has delayed its second dose to six weeks and Germany’s also looking into doing so.

The biggest problem for most countries, including the U.S., isn’t how long between doses; people aren’t getting the first dose fast enough, leaving large swaths of the population vulnerable to contracting the virus.

The Bottom Line

Pfizer’s CEO, Albert Bourla, says the company didn’t take any government money to allow its scientists to develop a vaccine independently.

“Basically I gave them an open checkbook so that they can worry only about scientific challenges, not anything else. And also, I wanted to keep Pfizer out of politics, by the way,” Bourla said.

The truth is, Pfizer didn’t take any money because it knew it would make a boatload of cash from Covid-19.

Now, that boatload might be springing a leak.

If you own PFE stock, the move to delay the second dose is not good news. Probably not fatal, but given it’s been one of the worst performers in the S&P 500 over the past five years, it’s got to be hard to take for longtime shareholders.

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

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