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Could These 2 Challenges Derail the AstraZeneca Vaccine?

By Adria Cimino - Mar 23, 2021 at 9:00AM

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AstraZeneca faces hurdles before entering the U.S. market.

AstraZeneca (AZN 1.05%) has had a rough couple of weeks. Several European countries including France and Germany suspended use of the company's coronavirus vaccine. They cited risk of dangerous blood clots. But AstraZeneca's situation improved in recent days. The countries reversed their decisions -- and resumed vaccinations with the AstraZeneca product. In more good news, AstraZeneca reported positive results from its phase 3 U.S. trial. The company now says it's preparing to request Emergency Use Authorization (EUA) in the U.S.

But two elements may upset the AstraZeneca vaccine's future in the U.S. market. Let's take a closer look at each -- and what all of this means for investors in this big pharma stock.

A nurse draws coronavirus vaccine into a syringe.

Image source: Getty Images.

1. Words of caution from a U.S. health agency

First, a summary of the trial results. AstraZeneca this week said its vaccine candidate showed 79% efficacy in preventing symptomatic COVID-19. And the investigational vaccine was 100% effective in preventing severe disease. The company also highlighted the fact that its vaccine was 80% efficacious in people age 65 and older. That's key, since older people have been more vulnerable to the virus. These data are based on 141 cases of coronavirus among the 32,449 participants in the U.S. trial. AstraZeneca also reviewed blood clotting events and didn't find an increased risk in vaccinated individuals.

Following the trial report, the National Institute of Allergy and Infectious Diseases (NIAID) issued a statement. The Data and Safety Monitoring Board, an independent panel evaluating the study, alerted NIAID about the following.

The board "expressed concern that AstraZeneca may have included outdated information from that trial, which may have provided an incomplete view of the efficacy data," according to the NIAID statement. The NIAID advises the company to work with the monitoring board to review the data and make adjustments as needed.

It's crucial that data submitted to the U.S Food and Drug Administration are accurate and clear. Right now, the NIAID announcement represents a setback from a timeline standpoint. But if this additional review results in lower efficacy figures, AstraZeneca could face a bigger problem: a weaker trial report to present to the FDA.

2. Strong vaccination rollout in the U.S.

President Joe Biden has purchased enough vaccine doses from Pfizer and Moderna to vaccinate the entire population. And he's vowed to vaccinate all adults who want a vaccine by the end of May. The administration also said it would order an additional 100 million doses from Johnson & Johnson -- the company to most recently enter the U.S. vaccine market.

That means there isn't much near-term vaccine demand left in the U.S. In fact, the U.S. may send its stockpiled AstraZeneca doses to Mexico and Canada. It's working on the plan right now. It's clear the AstraZeneca vaccine -- even if authorized -- won't be a big player in the U.S. market in the near term.

That doesn't mean AstraZeneca won't eventually carve out U.S. market share. No one knows how often people will need coronavirus vaccination. But a study in the journal Immunity showed antibody production in recovered coronavirus patients lasted five to seven months after infection. So, it's likely vaccination will be recurrent to produce a similar result. And that's when AstraZeneca and other latecomers to the U.S. market may gain ground.

What does this mean for investors?

The answer is simple. Late entry in the U.S. market isn't a major problem for AstraZeneca. For two reasons.

First, AstraZeneca isn't taking a profit on vaccine sales during the pandemic. So, the idea of selling a vaccine post-pandemic in the U.S. market is better from an earnings perspective. Second, AstraZeneca is a big company with a vast array of products -- including eight blockbuster drugs. That means it won't rely on vaccine sales for growth.

And all of this means investors shouldn't spend too much time focused on AstraZeneca's coronavirus vaccine. Instead, attention should be on growth in the company's current blockbusters. And if the coronavirus vaccine joins them down the road, that's icing on the cake.

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Stocks Mentioned

AstraZeneca PLC Stock Quote
AstraZeneca PLC
$67.40 (1.05%) $0.70
Johnson & Johnson Stock Quote
Johnson & Johnson
$181.09 (0.91%) $1.63
Pfizer Inc. Stock Quote
Pfizer Inc.
$53.91 (-0.15%) $0.08
Moderna, Inc. Stock Quote
Moderna, Inc.
$147.66 (8.73%) $11.86

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