Before COVID-19 brought on the world’s worst pandemic in a century, vaccines were not particularly highly valued by drug companies, nor by investors. All that has changed dramatically, though, in the last 15 or so months.
“Vaccines were sort of overlooked by pharmaceutical companies, biotech companies and also investors because the regulatory path was unclear. They weren’t getting much capital or investment,” said Vamil Divan, senior biopharmaceuticals research analyst and managing director at Mizuho Securities. “But certainly that’s changed in the last year with COVID-19. People are now realizing the investment opportunities and the regulatory path is a little bit more clearer.”
Indeed, Pfizer (PFE) - Get Pfizer Inc. Report recently raised its estimate for 2021 COVID-19 vaccine-related revenues to $26 billion from $15 billion, while Moderna (MRNA) - Get Moderna, Inc. Report upped its expectations for 2021 COVID-19-related revenues to $19.2 billion from $18.4 billion. And BioNTech (BNTX) - Get BioNTech SE Sponsored ADR Report, Pfizer’s German partner in the development of their COVID vaccine, estimates it will generate as much as $15 billion in revenues this year from the vaccine.
Analysts expect these companies’ COVID-19-related revenues to peak in 2022 or 2023, however.
“That rapid growth rate will ease in 2022 or 2023, but it won’t plunge to zero,” said Ted Tenthoff, an analyst with Piper Sandler.
But further growth for drug companies may well come from the technology brought into its full potential by the latest COVID vaccines.
A Growing Comfort Level With mRNA
Messenger RNA (mRNA), a key component in COVID-19 vaccines produced by Moderna and Pfizer/BioNTech, has been around for roughly three decades as a research project by various entities to address everything from fighting deadly diseases to replacing stem cells. But it’s never been approved for use in a vaccine until the FDA late last year granted emergency approval for it in COVID-19 vaccines made by the three companies.
mRNA teaches cells how to make a spike protein that triggers an immune response within our bodies that results in the production of antibodies to fight off all such spike proteins, including the coronavirus, according to a report from the Centers for Disease Control and Prevention (the Johnson & Johnson (JNJ) - Get Johnson & Johnson (JNJ) Report vaccine uses a different technology, introducing a harmless virus with some of the genetic code of the coronavirus to trigger an immune response).
Now, Moderna, Pfizer and other biotech companies are looking at ways to leverage mRNA in other vaccines and drug therapies, a move that comes as the FDA has shown it’s warmed to the idea of mRNA-based vaccines, and can move quickly when needed to approve vaccines, analysts said.
“It usually takes six to 10 years to get a vaccine approved. But, in this case, multiple COVID vaccines were approved in a year,” Tenthoff said. “That’s astonishing.”
Mizuho’s Divan believes that the FDA, biotech companies and pharmaceutical giants can leverage the experience they gained from moving swiftly and efficiently in approving the COVID-19 vaccines and apply it to the development and approval of other vaccines and drug therapies. But while the FDA approval process is likely to move at a more efficient clip, it’s not likely to be at the whirlwind pace of that for the COVID-19 vaccines, analysts said.
"There is no predetermined timeline for vaccine development,” an FDA spokesperson told TheStreet.
“Typically, the better the scientific understanding of a pathogen and disease it causes, the more efficient vaccine development. The FDA has prescribed review times under the Prescription Drug User Fee Act during non-pandemic situations. At this time, we cannot speculate on what impact -- if any -- the ongoing public health emergency will have on review times in the future."
Overall, though, mRNA is likely to receive a warmer reception than in the past from the FDA.
“mRNA was never approved as a vaccine until COVID-19 and it was given emergency approval from the FDA. Now that the vaccine has been administered to hundreds of thousands and millions of people, the FDA is getting comfortable with how it works and it’s de-risking the technology,” Tenthoff said.
Although mRNA has not been used in any fully FDA-licensed preventive vaccine (the vaccines in use now have only been approved for emergency use so far), FDA scientists have experience with this technology as it has been used to develop other preventive investigational vaccines that have been tested in human clinical trials, an FDA spokesperson told TheStreet. The spokesperson added that the "FDA does not have specific safety concerns with a vaccine that utilizes this technology."
Companies to Watch
When it comes to publicly-traded companies in the mRNA space, Moderna, BioNTech and a handful of other industry titans are exploring other use cases for mRNA beyond the COVID-19 vaccine. These companies are interested in tackling other types of infectious diseases such as HIV, as well as addressing diseases like cancer with mRNA-based vaccines and drug therapies.
And although analysts caution these mRNA developments are in the early stages and it’s difficult to say whether they will ultimately be successful, they note these companies are working to leverage the success that mRNA has received to date:
- Pfizer announced in its recent first-quarter results that it will begin launching its own mRNA-based development programs, expanding beyond its joint mRNA COVID-19 project with BioNTech. Pfizer has not yet disclosed the use cases it will pursue with its mRNA development programs.
- Moderna is exploring mRNA’s use in developing vaccines for influenza, Zika, cancer treatments and Cytomegalovirus (CMV).
- BioNTech is developing several types of mRNA drug therapies using mRNA to fight cancer, the flu and also to serve as a vaccine.
- Arcturus Therapeutics (ARCT) - Get Arcturus Therapeutics Holdings, Inc. Report is a pure-play mRNA biotech company that is focusing on infectious disease vaccines, particularly as it relates to liver and respiratory diseases.
- CureVac (CVAC) - Get CureVac Report is using mRNA to develop vaccines to fight infectious pathogens, as well as a COVID-19 vaccine.
- Translate Bio (TBIO) - Get Translate Bio, Inc. Report is developing a treatment for cystic fibrosis using mRNA and it has also teamed up with French pharma titan Sanofi (SNY) - Get Sanofi Sponsored ADR Report to develop flu vaccines and COVID-19 vaccines using mRNA.
- Gritstone Oncology (GRTS) - Get Gritstone Oncology, Inc. Report and its partner Gilead Sciences (GILD) - Get Gilead Sciences, Inc. (GILD) Report are exploring the use of mRNA in vaccines to treat HIV.
Although mRNA-based treatments will likely become more prevalent in the future, investors shouldn’t expect those successes to be on the order of the COVID opportunity.
“I think mRNA is likely to be successful in fighting other infectious diseases and also probably outside of infectious diseases. It’s pretty likely we’ll see some positive revenues from these other areas,” Divan said. “But I don’t think any of them are going to be like Pfizer’s $15 billion or more type of opportunity like the COVID vaccines. Instead, there may be other vaccines that have a billion or a couple of billion-dollar opportunities. Or, there may be a series of vaccines developed as a basket of vaccines that together generate $5 billion, $6 billion, $7 billion or even $10 billion in annual sales. But I don’t think it will come from just one vaccine.”