Please ensure Javascript is enabled for purposes of website accessibility

Will Johnson & Johnson Win Authorization for Its COVID-19 Booster?

By Keith Speights and Brian Orelli, PhD – Oct 16, 2021 at 6:01AM

Key Points

  • Johnson & Johnson is seeking Emergency Use Authorization (EUA) for its COVID-19 vaccine booster.
  • The company's data supporting boosters appear to be solid and will likely lead to EUA.
  • Over the long term, boosters could add significantly to J&J's profits.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's highly likely.

A U.S. Food and Drug Administration (FDA) advisory committee has reviewed Johnson & Johnson's (JNJ 0.38%) data supporting boosters of its COVID-19 vaccine. The FDA gets the final say in the matter, though. In this Motley Fool Live video recorded on Oct. 6, Motley Fool contributors Keith Speights and Brian Orelli discuss J&J's prospects for authorization of boosters.

10 stocks we like better than Johnson & Johnson
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and Johnson & Johnson wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks


*Stock Advisor returns as of September 17, 2021


Keith Speights: On Tuesday, yesterday, Johnson & Johnson filed for Emergency Use Authorization for boosters for a single-shot vaccine. The company had already released data about booster shot a couple of weeks ago that looked really good.

What do you think J&J's chances of winning EUA for a booster are, first of all. Then with a company as big as Johnson & Johnson, will authorization of boosters even matter for this stock?

Brian Orelli: Yeah. I think it's highly likely to get Emergency Use Authorization from the FDA.

The phase 3 study with the booster shot was called Ensemble 2, and it showed that it provided 100% protection against severe COVID-19. That compares to 74% with one dose in the original Ensemble trial. The weird thing about the booster study was that it provided 75% protection from symptomatic disease globally. But then if you looked at the U.S., there was a 94% protection from symptomatic disease. Ninety-four percent in the U.S. versus 75% globally. The FDA's certainly going to want to understand that discrepancy.

Presumably it can be explained by disease levels in different areas where the clinical trials were performed, but it's shockingly different. I think the FDA's probably going to want to understand that before they provide the Emergency Use Authorization for the booster. But I think presumably Johnson & Johnson has the data that can explain why that's the case, although they haven't really come out publicly as far as I can tell.

Then to your question of are boosters important, I think they could be. Remember that Johnson & Johnson has said that it won't profit during the pandemic, so long-term boosters are basically the only way the company's going to actually benefit. It's going to have to wait until the pandemic's over and then it can charge enough to make a profit.

If Johnson & Johnson could sell 2 billion in boosters annually, that would be about a 4.5% boost to revenue. But Johnson & Johnson's a large company, any major blockbuster is still going to provide something to the top-line growth. Then presumably, they will come at higher margins because presumably you're not going to do much marketing for a booster. I think that to the bottom line, it might even be bigger than 4.5% boost. I think that boosters can certainly help Johnson & Johnson.

All that said, we don't know what a third booster would do, and I think really a third booster is what we'd probably need to show that it helps even more and it's needed because that would be the only thing that would be out of the pandemic. Maybe by the time we have a third booster, certainly by the time we have a fourth booster, and so that would be the booster you'd be looking for for profits for Johnson & Johnson.

The immune system might start reacting to the adenovirus that delivers the vaccine. Remember, this is a virus that injects DNA, that codes for the coronavirus and then expresses part of the coronavirus protein and then your immune system reacts to that protein. If our immune system starts working on attacking the adenovirus, then later boosters might actually not work as well. We'll have to wait and see what that provides.

Then the other thing that you should be looking out for if you're a Johnson & Johnson shareholder is that that mix-and-match clinical trial that the government is running. Everybody who had different boosters and the different initial shots from different companies, and then they split those people up and gave them the same booster, same company's booster or a different company's booster.

Obviously, that'll be key to whether Johnson & Johnson's can provide a market in the booster range if their booster on top of Pfizer's initial vaccine or Moderna's initial vaccine can provide better than doing the same vaccine. Then obviously, that'll open up their market substantially because Johnson & Johnson has a very small percentage of the U.S. market right now.

Speights: The good thing, I think, if you're an investor looking at either buying Johnson & Johnson shares or you already owned Johnson & Johnson. These boosters are an extra. Johnson & Johnson's going to probably be just fine without the boosters.

But if it does get them, as you said, Brian, it could provide, say a little extra. A substantial extra revenue, although not necessarily a huge percent for Johnson & Johnson, but still it would be a nice plus. You can win either way with this stock.

Keith Speights owns shares of Pfizer. The Motley Fool recommends Johnson & Johnson and Moderna Inc. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.