When Pfizer (PFE 2.40%) announced on April 9 that its five-point plan included a promising coronavirus treatment and a potential vaccine candidate in the works, shares soared to their highest point since the beginning of March. Pfizer stock has been on an upward trajectory ever since. The company is hoping to start phase 1 trials for its prospective coronavirus treatment by the fall. Pfizer is working on its vaccine candidate with German drugmaker BioNTech, with the German regulatory authority approving their phase 1/2 clinical trial on April 22.
Pfizer's collaboration with BioNTech could significantly accelerate the vaccine development timeline. In fact, if the vaccine passes regulatory and clinical muster, the companies are looking at a vaccine launch date before the close of 2020. If you've been holding out on buying Pfizer shares, here's why now might be the time to invest in this stock.
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A diverse portfolio of treatment candidates
Pfizer is currently evaluating an unnamed compound for the treatment of the novel coronavirus, with hopes to initiate phase 1 studies, which are tested on humans, by fall, assuming pre-clinical studies pass muster. During a preliminary data review, researchers confirmed that this compound is an inhibitor of the SARS-CoV-2 3C-like protease and also exhibits anti-viral properties against SARS-CoV-2.
While preclinical studies are needed for further confirmation, these findings mean that this compound could halt or terminate the novel coronavirus in its early stages in patients who are experiencing relatively mild symptoms. Next, Pfizer will launch pre-clinical studies to assess the viability of the lead molecule for clinical delivery and additional profiling of the molecule's anti-viral properties. If all goes to plan, the compound could enter phase 1 studies in the fall.
On a much smaller front, Pfizer researchers have published an open-access review on the anti-viral potential of well-known antibiotic azithromycin. The company hopes to its study will promote additional research on the drug's viability to treat the novel coronavirus. At this time, azithromycin is not approved as an anti-viral treatment. So the unnamed compound Pfizer is working on seems like a more likely treatment candidate for investors to watch at the moment.
Millions of vaccines by 2021?
By far, the most newsworthy move Pfizer has made of late is to join forces with BioNTech to develop a coronavirus vaccine. With the intent of ramping up the timeline from testing to trials to production, the companies will be using vaccine candidates from BioNTech's well-established mRNA program and launching joint clinical studies across the U.S. and Europe. In exchange for BioNTech's mRNA program, Pfizer is proffering its research, development, and manufacturing expertise. Phase 1 clinical trials for this vaccine candidate could commence as soon as the end of April.
Chief scientific officer and president of Pfizer's worldwide research, development, and medical division, Mikael Dolsten, said the following about the company's joint efforts with BioNTech:
Combatting the COVID-19 pandemic will require unprecedented collaboration across the innovation ecosystem, with companies coming together to unite capabilities like never before. I am proud of Pfizer's collaboration with BioNTech and have every confidence in our ability to harness the power of science -- together -- to bring forth a potential vaccine that the world needs as quickly as possible.
This landmark collaboration means millions of vaccine doses could easily be available to the public before the close of 2020, which is far ahead of the targets being set by most other companies working on a coronavirus vaccine.
Working from a strong position
Pfizer advanced BioNTech $185 million in return for access to its mRNA program, along with equity backing worth $113 million and ongoing installments to total up to $748 million. Given the potential billions in revenue that a successful coronavirus vaccine could bring to Pfizer, and the incredible year the company had in 2019, it's safe to say that this investment could be recouped in spades.
A coronavirus vaccine program is far from the only promising development Pfizer has in the offing. While Pfizer has put many key developments on hold to focus on its coronavirus candidates, the company is still planning to merge subsidiary Upjohn with Mylan (MYL), which will be rebranded as Viatris later in the year. The merger will bring a slew of new drugs into Pfizer's portfolio, including anticoagulant Eliquis and the breast cancer treatment Ibrance. The Upjohn-Mylan merger alone was projected to bring in pro forma earnings of up to $20 billion this year, but even adjusted for the delay caused by COVID-19, the combination of these two companies will be a significant growth factor for Pfizer in 2020 and beyond.
In 2019 alone, Pfizer raked in nearly $52 billion in revenue, with cash flow close to $10 billion at the end of December. Shares are currently trading at approximately 20% below its 52-week high of $44.56 and roughly 27% above its 52-week low of $27.88. The current dividend yield is resting at about 4.21%.
Pfizer looks set to go from strength to strength. The company entered the coronavirus bear market from a profitable 2019, and its strategic collaboration with BioNTech could result in hundreds of millions of vaccines worth billions of dollars in revenue being made available to the public by 2021. Shares have continued to rise since the collaboration was announced, and Pfizer doesn't appear to be slowing down. Pfizer seems poised for continued, long-term growth, and for this reason, I believe investors should take a second look at this stock.
