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Could Johnson & Johnson Be a Big Winner in the Flu Vaccine Market?

By Keith Speights and Brian Orelli, PhD - Apr 14, 2021 at 6:09AM

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Maybe, but there's a long way to go.

Johnson & Johnson (JNJ 0.09%) hasn't been a major player in the vaccine market in the past, but that's changing. The healthcare giant is already marketing its COVID-19 vaccine. It's now seeking to develop a flu vaccine through a recent deal with small biotech Cidara Therapeutics (CDTX 10.31%). In this Motley Fool Live video recorded on April 7, Motley Fool contributors Keith Speights and Brian Orelli discuss whether or not J&J could become a big winner in the flu vaccine market.

Keith Speights: Johnson & Johnson is spending $27 million upfront in a deal ultimately to be valued at maybe around $780 million. They're gaining access to Cidara Therapeutics' lead antiviral conjugate CD388. Cidara thinks this candidate could treat all flu strains with a single dose. What do you think about this deal, Brian, could Johnson & Johnson be a big winner in the flu vaccine market down the road?

Brian Orelli: Johnson & Johnson isn't risking that much here for this preclinical asset, so $27 million upfront is a pretty small amount. The big question is, how easy will it be for Cidara to get that $780 million total so the other $753 million is tied to some milestone payments, that as is typical weren't disclosed.

The tech seems interesting. It's essentially an antibody that binds to the flu virus and they think they found an area that's conserved among different strains of the influenza virus, and so they think that one antibody will be enough to deal with any influenza virus. Then the antibody is designed to attract the immune system, so not only is it blocking the virus, but it's also directing immune system which can then react to the virus.

It's probably not a multi-billion-dollar opportunity, but a billion dollars doesn't seem out of the question. There's 650,000 influenza deaths worldwide, and I'm not sure this is something that you would get if you just got the regular old flu and were in bed for a day or two. But if you're getting into the hospital because your symptoms are that bad, I think this is definitely something that you could see patients being given.

Speights: It seems to me, Brian, that the COVID-19 pandemic has really spurred quite a few companies to announce plans to jump into the flu vaccine development space. Of course, Pfizer and BioNTech were already working together to develop messenger RNA flu vaccines. Moderna has jumped into the arena. Novavax has stated they already have a flu vaccine candidate that has looked really good in late-stage testing. They're looking at the potential for doing a combo vaccine with COVID and flu.

There may be others. I don't know if you know of others, but why do you think that's the case, that COVID has spurred these efforts for everybody to jump into flu?

Orelli: I think for the vaccines, it just makes sense because you can combine them and have one shot cover both the flu and the coronavirus, if we're assuming that the coronavirus is eventually going to be a seasonal issue, and so we'll be given a booster every year, in terms of this is a treatment, I imagine Cidara was probably already developing this as a treatment, maybe even before the pandemic started.

I think maybe they're just looking for cash basically and Johnson & Johnson figures it's a relatively cheap bet and if it works, they're obviously going to pay a lot more, but then they'll know it works and that'll be good.

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Stocks Mentioned

Johnson & Johnson Stock Quote
Johnson & Johnson
$178.30 (0.09%) $0.16
Pfizer Inc. Stock Quote
Pfizer Inc.
$52.75 (2.15%) $1.11
Novavax, Inc. Stock Quote
Novavax, Inc.
$63.54 (-1.17%) $0.75
Moderna, Inc. Stock Quote
Moderna, Inc.
$159.56 (2.58%) $4.02
BioNTech SE Stock Quote
BioNTech SE
$160.20 (-0.52%) $0.83
Cidara Therapeutics, Inc. Stock Quote
Cidara Therapeutics, Inc.
$0.53 (10.31%) $0.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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