As scary as vaccine passports might sound, they may soon become our reality. G7 countries need only commit to collaboration.
Of course, fear mongers and conspiracy theorists will question the need for a passport. And its creation could potentially deceive people into thinking that vaccinated people are no longer at risk from the novel coronavirus.
Breakthrough cases, where a fully vaccinated person still contracts Covid-19, are exceedingly rare but still possible. This doesn’t mean those vaccines “aren’t working,” but serves as a reminder that vaccines aren’t a foolproof silver bullet for the novel pandemic.
That being said, vaccines dramatically lower the likelihood of contracting or transmitting the novel coronavirus, as well as reducing the severity and lethality of any breakthrough infection. It’s perfectly possible governments decide those benefits outweigh the possible backlash to vaccine passports.
With that in mind, here are seven pharma stocks that get a stamp of approval:
- AstraZeneca (NASDAQ:AZN)
- BioNTech (NASDAQ:BNTX)
- Johnson & Johnson (NYSE:JNJ)
- Moderna (NASDAQ:MRNA)
- Novavax (NASDAQ:NVAX)
- Pfizer (NYSE:PFE)
- Regeneron Pharmaceuticals (NASDAQ:REGN)
In the above chart, BioNTech, Novavax, and Moderna score poorly on quality. That does not hurt their overall ratings. As the leading Covid-19 vaccine suppliers, markets are willing to overlook these company’s higher operating costs in the near-term. Meanwhile, Pfizer and Regeneron score the best overall. These established pharmaceutical stocks have revenue outside of the vaccine market.
Safety concerns are keeping a lid on AstraZeneca’s stock performance. Until the company has an explanation for the blood clot risks in younger subjects, vaccine orders may stall. On March 29, Canada recommended that its vaccine should not be used in adults under 55 years of age.
Canada’s National Advisory Committee on Immunization (NACI) voiced concerns about AZN’s vaccine safety, citing reports from Europe for rare cases of serious blood clots, associated with thrombocytopenia. Scientists call this event Vaccine-Induced Prothrombotic Immune Thrombocytopenia (VIPIT). On March 31, Germany halted AstraZeneca’s vaccine in younger patients, also citing reports of clotting disorders in recently vaccinated people.
As the chart above shows, every analyst on Wall Street rates AZN stock a “strong buy.”
But in the last year, AZN shares have disappointed investors. The analysts are wrong in recommending it, at least for now.
To date, Canada has administered 500,000 shots of the AstraZeneca vaccine. Germany administered 2.7 million doses while reporting 31 cases of cerebral thrombosis.
Aside from the vaccine headwinds, AstraZeneca’s $204.9 million contract with the U.S. Department of Defense is a positive development. It will study the effects of a minimum of 100,000 doses of AZD7442. This antibody product is supposed to prevent or treat the clinical effects of Covid-19. AZD7442 is a long-acting antibody combination.
BioNTech posted strong full-year 2020 results on March 30. Revenue rose by 344.2% from last year to EUR 482.3 million. Co-founder and CEO Ugur Sahin said the company delivered over 200 million vaccine doses to over 65 countries. Since its vaccine study confirms high efficacy and no serious safety concerns, BNTX is well on the way to increasing revenue in 2021 and beyond.
Pfizer and BioNTech announced on April 1 that its Covid-19 vaccine BNT162b2 was 91.3% effective and 100% effective against severe disease. This is a key observation that will give people confidence to return to work and traveling. Any government that implements vaccine passports will surely include it in a list of approved vaccines.
Yet BNTX isn’t a one-trick pony either. It has three cancer immunotherapies that will enter trials with registrational potential this year. Plus, it grew its research and development staff from over 600 to over 1,900 (see slide 6).
Investors can expect this company to become a global immunotherapy powerhouse.
Johnson & Johnson (JNJ)
A human error that ruined 15 million of JNJ’s Covid-19 vaccine doses is unfortunate and will hurt the firm’s near-term vaccine revenue. But any drop in JNJ stock creates a buying opportunity for investors who missed the last run-up.
Investors should expect vaccine production delays as the company adds oversight to the factory to maintain emergency authorization. Getting the facility on schedule again may take as long as a few weeks.
JNJ’s partner, Emergent, may not have had the necessary expertise to produce the vaccine. In the weeks ahead, JNJ and Emergent will have to figure out what went wrong and fix it, quickly.
Johnson & Johnson’s vaccine gives it an edge over the other drug companies. Not only is it easier to administer a single dose but it is also easier to store the JNJ vaccine, which only requires standard cold storage. For example, the vaccine is estimated to remain stable for two years at -4 degrees Fahrenheit. This means health officials can store the vaccine longer, and the company may be a preferred choice when it comes to rural vaccine distribution.
Global shipments for Moderna’s vaccine continue unabated. On March 22, the Philippines secured 7 million additional doses of Covid-19 Vaccine Moderna. The country now has a total order commitment of up to 20 million doses.
At a cost of around $30 a dose, Moderna keeps growing its booking revenues. To diversify its business beyond the vaccine market, the company will develop more products. CEO Stephane Bancel said the company would broaden its mRNA-based pipeline. This includes developing a better flu vaccine, creating a cancer vaccine and ongoing work on its cytomegalovirus vaccine.
In the near term, MRNA is testing its vaccine’s efficacy against mutated versions of Covid-19. It will soon have clinical data to assesses the efficacy of the vaccine against the South Africa variant. The global pandemic will continue until drug companies have vaccines that work on more than one variant.
Still, the virus will keep mutating to survive in a population. Moderna needs clinical data that proves it is ready for this event.
Ahead of the approval of Novavax’s vaccine, the company inked an agreement with GlaxoSmithKline (NYSE:GSK) to produce the product. GSK will have a manufacturing capacity of up to 60 million vaccine doses.
The fill/finish is Novavax’s production bottleneck. The deal with GSK will solve that problem.
In January, Novavax reported 89.3% efficacy in a United Kingdom Phase 3 Trial. In its Q4 earnings report, the company highlighted the positive clinical results of its vaccine worldwide. It will eventually deliver the NVX-CoV2373 to the U.S., Australia, U.K., South Africa and Mexico.
Novavax believes the UK will authorize the filing by early Q2 of 2021. Its Investigation New Drug application with the Food and Drug Administration is under discussion. Novavax also anticipates the Emergency Use Authorization (EUA) filing in Q2.
Novavax is diversifying its vaccine business through NanoFlu development. It will explore combinations of the Covid-19 vaccine with the Respiratory syncytial virus (RSV) next.
Pfizer will benefit from its partnership with BioNTech. The pair will continue to study ways to improve the vaccine.
Pfizer and BNTX began a Phase 3 study to evaluate the safety and tolerability of the vaccine in single-dose vials and frozen liquid multi-dose vials. This formulation is different from the shot that won the FDA’s EUA in December 2020. A lyophilized formulation can be stored in a standard refrigerator. This would improve the vaccine’s availability.
If the companies post favorable study results, its vaccine may compete with those offered by AZN or JNJ. Pfizer has a massive budget for research and development. It will continue to put in the necessary resources to compete for more of the vaccine market.
A lyophilized mRNA is commercially beneficial from improved stability. Still, the process will lower yields. After the pandemic ends, Pfizer-BioNtech will be in a better position to increase production if it no longer needs ultra-cold storage at subzero temperatures.
Regeneron Pharmaceuticals (REGN)
Regeneron’s blockbuster drug Dupixent is a cash generator. This gives the company resources for developing its Covid-19 antibody treatment. Markets hardly noticed when the company posted Phase 3 trial results for REGN-COV.
On March 23, Regeneron reported that its REGEN-COV antibody reduced hospitalization or death by 70% in non-hospitalized Covid-19 patients. The cocktail also cut the duration of symptoms by four days. All doses in the 1,200 to 8,000 mg range had similar efficacy across all endpoints. Furthermore, Regeneron reported a dose as low as 300 mg demonstrated viral reduction. So this pharma may file a full Biologics License Application next.
Regeneron is a standout company working on treating infected subjects. Gilead Sciences (NASDAQ:GILD) had high hopes that hospitals would use its anti-viral for treating patients. Similarly, Markets bet that Enlivex Therapeutics (NASDAQ:ENLV) would have an interferon-based treatment for Covid-19 patients. But Regeneron’s clinical results suggest that the FDA will approve its antibody treatment next.
Disclosure: On the date of publication, Chris Lau did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Lau is a contributing author for InvestorPlace.com and numerous other financial sites. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. He shares his stock picks so readers get original insight that helps improve investment returns.