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Want to Invest in Coronavirus Vaccines? Consider This First

By Brian Orelli, PhD - Dec 1, 2020 at 3:07PM

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The differences between the vaccines could affect the eventual winner (if there is one).

Coronavirus vaccines offer an interesting growth opportunity for investors, but there are factors that investors should consider before jumping into the space. In this video from Motley Fool Live recorded on Nov. 23, Corinne Cardina, chief of Motley Fool's healthcare and cannabis bureau, and Brian Orelli, contributor, discuss how the durability of immunity, which is largely unknown at this point, factors into valuation. They also talk about other factors that could affect sales, including overall efficacy and the number of doses required.

Corinne Cardina: Let's talk a little bit about the partnership with the University of Oxford and who is going to get this particular vaccine candidate if it is approved and comes to fruition. The University of Oxford and AstraZeneca ( AZN 0.40% ) have said that they planned to produce this vaccine at cost, so they don't plan to make a profit from this during the pandemic, and then after the pandemic is really over, once things are more under control, they are going to continue making it at cost for developing countries. They have some partnerships with organizations including India Serum Institute to distribute it in the developing world. What does this mean for AstraZeneca as an investment? Should investors really not be considering how the potential upside of the vaccine is going to impact AstraZeneca because they don't plan to profit from it?

Brian Orelli: I certainly wouldn't. I guess it depends. It depends on whether -- how long the immunity lasts, so if it's a lifetime immunity or it's long enough that we don't have to worry about -- the coronavirus isn't spreading around, and so eventually just gets eliminated then, yes, it doesn't matter at all. Now, if the immunity is a year or two, or three and then they could start selling the vaccine after that, and at a profit, then it's more reasonable that's a longer term play there.

Cardina: That's a great point. So that durability of immunity that we will find out over time will become quite important in figuring out the long-term upside here.

Orelli: That's true of all of the vaccine makers still. It's not just AstraZeneca. Literally, every vaccine maker. The difference between what their current valuation is probably -- whether they are a value play or a value trap is probably dependent on whether they can continue to sell vaccine for multiple years.

Cardina: Great point. I think we all understand at this point that this is not a winner-take-all market, so I am curious what you think about the number of vaccines. Would we rather have 50 vaccines that have 70% efficacy or five vaccines with almost 100% efficacy? How should investors think about how many players bring their vaccines to market?

Orelli: I think we're getting to maybe five. I think that's a reasonable number to vaccinate most of the United States but certainly, we could get there a lot faster if there was 10 or 50. It's just a manufacturing issue. I would rather a 95% vaccine than a 70% vaccine, and that makes it interesting. Are people going to not want to take the AstraZeneca's vaccine because Pfizer and Moderna's ( MRNA -2.93% )vaccines are better? Are Pfizer ( PFE -1.28% ) and Moderna's vaccines almost too good? We'd rather then they'd come in at 70%, so that way if we have more players at 70%, then it makes it easier for people to just take whatever vaccine and get their hands on.

Cardina: Yeah, that's a great point. It remains to be seen if we're going to have a choice on which vaccine we get or it's just what ends up in our area. That will definitely be interesting and I think the cold chain factor could factor in there. Could determine if you're in a more urban area perhaps you have access to the vaccine that requires ultra cold refrigeration. Some of them are more stable, so that could definitely play into things as well, I think. Of the vaccine candidates that have not yet reported any phase 3 data, are there any that you are particularly interested in?

Orelli: We have Johnson & Johnson ( JNJ 0.13% ). That one is being tested as a single-dose and so that would obviously be a huge advantage. Novavax ( NVAX -6.74% ), I think, it's probably the other major player in the phase 3 arena. That one's interesting because it's a protein-based vaccine and they make microparticles, and they put the protein on the outside of the microparticles, and then that stimulates the immune system to create antibodies. That one's completely different, so we'll have to see how that one works in terms of efficacy relative to the other two. Johnson & Johnson's is more like AstraZeneca's, where they use a virus to get DNA into the cell, and then the DNA is expressed as the protein.

Cardina: If Johnson & Johnson, if their candidate proves successful, do you think the fact that it is one dose could give Johnson & Johnson an edge?

Orelli: Sure. I don't think anybody has got an edge at this point because nobody can make enough to edge out anybody else, so at least initially it doesn't really matter because is going to sell every dose they have, so there's no real edge there. But in terms of a long-term play, yes, absolutely if Johnson & Johnson is one dose and they can get to the point where and we have to be taking it every year then one dose is obvious going to be a better choice than two doses.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Moderna, Inc. Stock Quote
Moderna, Inc.
$301.50 (-2.93%) $-9.11
Pfizer Inc. Stock Quote
Pfizer Inc.
$53.98 (-1.28%) $0.70
Johnson & Johnson Stock Quote
Johnson & Johnson
$158.28 (0.13%) $0.20
AstraZeneca PLC Stock Quote
AstraZeneca PLC
$55.10 (0.40%) $0.22
Novavax, Inc. Stock Quote
Novavax, Inc.
$179.66 (-6.74%) $-12.99

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