When the updated Covid-19 booster shots arrive in pharmacies across the US next month, how many people will be lining up to take them?
Early this year, the companies that will make the lion’s share of the picks,
Pfizer
(ticker stock: PFE) f
accident
(MRNA), both said they expect 100 million Covid-19 vaccine doses to reach arms in the United States in 2023. However, more than halfway through the year, only about 12 million doses have been administered in the country, and companies are scrambling to manage expectations.
This fall, pick makers face an unprecedented challenge. Both built out manufacturing and distributing expensive Covid-19 vaccines in 2021 and 2022, as governments bought billions of doses. Now, demand is fading as the pandemic winds down, while in the lucrative US market, the federal government has largely given up on the business of procuring Covid-19 vaccines, leaving the procurement to pharmacies, health systems and other players.
Together, these two factors are throwing uncertainty about the future of the Covid-19 vaccine business and driving down share prices
Pfizer
And
accident
Amid distressed profits and revenues, unease runs deep among investors looking for long-term growth. Next month, it will all come down to one question: How many Americans will choose to take this year’s Covid-19 boosters?
Companies know they have a problem. “We’re very aware that all of this uncertainty makes it difficult to project future revenue for Pfizer…and it also affects our share price,” Albert Bourla, CEO of Pfizer, said on an earnings call early this month.
Pfizer shares are down 30.1% this year to $35.84, the first time that stock has traded at that level since spring 2021, when the vaccine was first introduced and before the company’s Covid-19 products generated record profits for two years. For Moderna, the sell-off has been sharper: Shares are down 43.1% this year. shares
Biotechnology
(BNTX), the German company that partnered with Pfizer for its vaccine, is down 28.3% this year.
Moderna executives said on an earnings call in early August that they now expect the 2023 market to be between 50 million and 100 million doses, while Pfizer executives said on a call the same week that 12.4 million doses have been given so far in the US this week. general. It was “beyond” their previous expectations.
“I think investors still think the near-term guidance is very ambitious,” says Jared Halls, equity strategist for Mizuho Healthcare. “I think real demand is much more in line with that with 50 (million) than 100 (million).”
Even as companies move to revise their forecasts, lower-than-expected demand could push stock prices further down. Third-quarter earnings should provide more clarity to investors, now that contracts with pharmacies and other distributors are more firmly established.
In September, Pfizer, Moderna, and a smaller vaccine maker
novafax
NVAX is expected to release updated enhancers that target the XBB.1.5 strain of the virus, which was developed following the FDA’s June order. US health authorities are moving to a flu-like approach this year that will see most of the year’s Covid-19 vaccine doses from the release of updated shots in September through the end of the year.
The optimistic estimates of vaccine uptake for 2023 were generally based on the US flu vaccine market, which is in the order of 150 million doses per year, or roughly half of the US population. The most pessimistic estimates assume that uptake will be limited to the elderly and other vulnerable groups. Using the latter approach, Goldman Sachs analyst Salveen Richter’s team estimates that only 23.7 million doses were sold in the US in 2023. (Richter’s estimate of $7 billion in 2023 Covid-19 revenue for Moderna is based on a combination of this estimate and a separate estimate based on uptake of the influenza vaccine.)
Estimates are dropping as Covid-19 fades into the background as a global health concern. The official public health emergency ended in the United States in May, as did the global health emergency of the World Health Organization. Fewer people are currently hospitalized with Covid-19 in the United States than at any point since the start of the pandemic, even taking into account last rise. And as the virus continues to evolve, variants emerge They do not appear to pose a particular threat to public health.
Last year, the Centers for Disease Control and Prevention recommended 2022 bivalent boosters for anyone over six months of age. This year, that recommendation could be narrower. “I think they’re going to do what almost every country in the developed world is doing, which is target this vaccine to those who are most likely to benefit from it,” said Dr. Paul Offit, a professor of pediatrics at the Children’s Hospital of Philadelphia. and a member of the Food and Drug Administration’s Vaccines Advisory Committee.
said Stefan Bancel, CEO of Moderna Barron He wouldn’t be surprised if the CDC’s recommendation was actually more targeted. “Do I personally think a healthy 24-year-old needs another dose of COVID?” he said. Still, he said, they “probably want not to get sick.”
Last year, 48.9 million doses of the updated 2022 boosters were administered between their launch in September and the end of the year. Bancel said Barron It was originally expected that demand during the fall 2023 season would significantly exceed the number of doses administered in the fall of 2022, because Authorized reinforcements tour in spring 2022 Undermining demand in the fall.
“Many people have had multiple shots because of the Omicron wave,” which peaked in the early months of 2022, Bancel said. “I wasn’t too surprised that in the fall time frame some people didn’t get another booster shot.”
Bancel said Moderna reached its initial estimate of 100 million doses after looking at flu demand. “We believe in the rational place, people who want a flu shot should get a covid shot,” he said. “The one thing I think about a lot, that I can’t get my head around, is, if you think 50 million (Covid shots) are going to happen this year, that means two out of three people who walk into a pharmacy or doctor’s office asking for flu shots will be refused a shot.” Covid.”
Not all experts agree with Bancel’s framing of the flu vaccine and Covid-19 as roughly equivalent. “Influenza is different from SARS-CoV-2,” Offit said. When annual flu vaccines target the wrong strain, Offit said, they offer little protection. With Covid-19, T-cell protection provided by previous rounds from vaccination can provide protection against severe disease, even in the absence of new antibodies to prevent infection.
Amid a growing sense that demand for a Covid-19 vaccine may be significantly lower than expected, both companies are planning cuts. Pfizer said in early August that it had a cost-saving plan in place if U.S. vaccine uptake falls short of expectations.
“We want to strike that appropriate balance (and) make sure that the investments we’re making against COVID are in line with the needs of the public from a COVID vaccination perspective,” said Pfizer CFO David Denton. Barron on time. “We’re going to make sure we have the right field structure, the right cost infrastructure, the right focus on R&D to make sure that all of those are in line with what we expect from COVID going forward.”
Meanwhile, Moderna’s selling, general and administrative expenses were up 57% compared to the same quarter last year, while research and development expenses were up 62%. “Their cost base is incredibly high,” says Holz.
Bancel acknowledged that the company has a very large capacity to manufacture a Covid-19 vaccine. “Our commodity costs are very high, because we have very large production capacity now,” he said. He said the company will reduce its manufacturing capacity for Covid-19. “We will not hold for the next five years, two or three times the capacity we need, and this is costing us dearly, and there is no need for it,” he said.
Right now, it’s only weeks before updated boosters start arriving at corner pharmacies across the US, and companies start to see a much clearer picture of what vaccine demand will look like this year and in the future.
Write to Josh Nathan Kazis at josh.nathan-kazis@barrons.com