Pfizer and BioNTech's Combo Shot Missed the Mark. Is It Time to Sell?
Pfizer (NYSE: PFE) and BioNTech (NASDAQ: BNTX) recently fell behind in their race with Moderna (NASDAQ: MRNA) to develop new combination shots that could be worth billions in annual sales. Top-line results from an experimental vaccination to protect against influenza and COVID-19 weren't a complete disaster, but there isn't much room for error when it comes to vaccine development.
A late-stage clinical-trial setback is bad news, but that doesn't necessarily mean it's a good idea to sell any shares of Pfizer or BioNTech right now. Here's what shareholders from both companies need to know before making any rash decisions based on one clinical-trial outcome.
Pfizer and BioNTech miss on influenza
Pfizer and BioNTech enrolled more than 8,000 healthy adults into a phase 3 trial with an mRNA vaccine candidate built to protect against influenza and COVID-19. The combo shot contains the partners' COVID-19 vaccine, which has already been given to millions, plus Pfizer's experimental mRNA influenza vaccine.
As expected, folks injected with the combo shot exhibited immune responses that were as good or better than the partners' COVID-19 vaccine. The experimental combo shot even performed well against an approved flu vaccine regarding influenza A infections. When it came to protecting against influenza B strains, though, it failed to show non-inferiority.
Pfizer isn't the first mRNA vaccine developer to have trouble with influenza B. This April, CureVac and its partner GSK reported that immune responses to their candidate were lower than those of an approved vaccine.
Moderna also hit an influenza B stumbling block in 2023 with its seasonal influenza vaccine candidate. Unfortunately for Pfizer and BioNTech, Moderna already pulled its act together and reported a phase 3 non-inferiority trial success with its flu and COVID-19 combo shot in June.
What's next for Pfizer and BioNTech
Pfizer reported second-quarter sales of Comirnaty, the partners' approved COVID-19 vaccine, that plummeted 87% year over year to just $195 million. This wasn't such a big deal for Pfizer, which has reinvested previous profits into an industry-leading lineup of new products. If we ignore losses due to currency exchange rates, Comirnaty, and Pfizer's antiviral treatment for COVID-19, second-quarter sales soared 14% year over year.
Shares of Pfizer offer a huge 5.9% dividend yield at recent prices and probably much more in the years ahead. Last December, the company raised its quarterly payment for the 15th consecutive year.
Pfizer expects adjusted earnings to reach a range between $2.45 and $2.65 per share this year. This is more than it needs to cover its dividend commitment, currently set at $1.68 per share annually, and raise it further.
Both partners hoped that adding Pfizer's flu shot to Comirnaty could boost sagging demand for the COVID-19 vaccine. This is a lot more important to BioNTech, though, which still relies on the vaccine for 56% of total revenue. The rest of BioNTech's revenue comes from a pandemic-preparedness contract with the German government.
BioNTech has only one commercial-stage vaccine -- but it also has a long runway to get its next products off the ground. The company finished June with $11.4 billion in cash after losing $891 million in the second quarter.
Not time to sell
BioNTech is using its giant cash balance to develop an ambitious pipeline of experimental cancer therapies. It already has three cancer vaccine candidates in phase 2 clinical trials. I've seen too many cancer vaccines disappoint in late-stage trials to get excited about these programs, but a successful result could cause the stock to soar.
In addition to its cancer vaccine candidates, BioNTech is developing bispecific antibodies and an antibody-drug conjugate as cancer therapies. Both of these methods have produced blockbuster therapies in the past, and there's a chance that a successful trial result can push up shares of this stock long before expenses flatten its cash cushion.
For Pfizer shareholders, the recent vaccine combo failure in phase 3 is only a minor setback. A slew of recently launched products with rising sales make holding the Big Pharma stock (and perhaps buying a little more) seem like the right move.
Should you invest $1,000 in Pfizer right now?
Before you buy stock in Pfizer, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Pfizer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $763,374!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of August 12, 2024
Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends BioNTech Se, GSK, and Moderna. The Motley Fool has a disclosure policy.
