The SARS-CoV-2 virus that causes COVID-19 mutates -- and its newest variant, omicron, mutates a lot. Scientists report there are over 30 mutations affecting the spike protein. And that might be a problem as the COVID vaccines with the highest efficacy rates -- from Moderna (NASDAQ:MRNA), Pfizer (NYSE:PFE), and Novavax (NASDAQ:NVAX) -- all target the spike protein.
On the flip side, it might not be a problem at all. Mutation can sometimes work in our favor, by making a variant much less likely to transmit, for instance. The market crashed earlier this week when the first omicron case in the U.S. was reported in California. A man who caught the variant in South Africa brought it with him to the U.S., yet all the people with whom he had close contact tested negative for COVID-19. Also, the man had only mild symptoms. In fact, in South Africa (where the variant first was identified), hospitalizations did not spike. So maybe this new variant is less deadly than either the original coronavirus strain or the delta variant.
Still, for investors (and the general public), vaccines are our best bet. The original vaccines still provide T-cell immunity to those who are vaccinated. And vaccine boosters are an important option as well. Here's why three contributors are bullish on Pfizer, Moderna, and Novavax.
In Bourla I trust
Patrick Bafuma (Pfizer): When it comes to taking on the virus in 2022, Pfizer is in a class by itself. First off, the pharma giant struck gold with its COVID-19 vaccine with partner BioNTech. Despite logistical issues of having to store Comirnaty at subzero temperatures, the company still anticipates the vaccine will generate fiscal year 2021 revenue of approximately $36 billion. And much like the flu, COVID-19 is very likely to require boosters, be it from waning immunity or new variants.
Now imagine what Pfizer CEO Albert Bourla can do with an easily distributable tablet against this virus. Here's a hint from a previous blockbuster: In its first full year on the market, cholesterol drug Lipitor had sales of $7.2 billion; it later became the first drug with $10 billion in annual sales. For its COVID-19 oral antiviral candidate, Paxlovid, Pfizer already has an agreement with the U.S. government for 10 million treatment courses by the end of 2022, adding up to $5.29 billion in revenue. And the megapharma believes it has the capacity for 80 million courses of treatment in 2022 -- $40 billion dollars worth of product, which would be another record.
While this oral treatment has not yet been given Emergency Use Authorization by the U.S. Food and Drug Administration (FDA), recent trial data seems to show that it's more effective than Merck's molnupiravir and potentially less toxic. With even Uncle Sam agreeing to purchase 80% fewer courses of molnupiravir than Paxlovid, all signs point to Pfizer's treatment being widely prescribed and wildly successful. There is no stated FDA advisory committee date for Pfizer's treatment yet, though speculation that it will be before the end of 2021. If Paxlovid is approved, there does not seem to be significant competition in this space, and if anyone knows distribution for blockbuster drugs, it's Bourla's company.
But what about omicron? What if it evades our current vaccines? That means a few months without vaccine-provided protection -- and possibly infection numbers like in the 2020 holiday season. That means bigger sales for Paxlovid since it would be our best nonmask defense. Not to mention, there would need to be a fresh round of vaccines, where Pfizer has a massive head start and nearly unlimited resources. And one must think that Bourla had already realized that the next variant would come someday. Put it all together, and believing anyone other than Pfizer is going to dominate the 2022 COVID-19 market is just wishful thinking.
A race to beat the omicron variant
George Budwell (Moderna): The omicron variant is rattling U.S. stock markets at the moment. Fortunately, Moderna thinks it has a couple of viable solutions to deal with this highly mutated form of the novel coronavirus.
First off, the biotech said earlier this week that it ought to have a booster shot for omicron ready to put into arms as soon as March 2022. This forthcoming booster shot will contain genes targeting the mutations unique to this variant.
In a separate press release, Moderna said that it is also developing a multivalent vaccine that would provide immune protection against four different coronavirus variants, including omicron. And if these two initial strategies fail to provide adequate protection against this latest iteration of the novel coronavirus, the company plans on moving forward with the development of an entirely new mRNA vaccine tailor-made for it.
While this omicron-specific mRNA vaccine will likely take months to develop, trial, and get a regulatory OK on, Moderna at least has a battle plan in place to address this emerging threat to public health. All that being said, CEO Stéphane Bancel did issue a stark warning this week about the possibility of a sharp decline in the effectiveness of these first-generation COVID-19 vaccines.
The long and short of the situation is that omicron could evade the immune protection conferred by these original vaccines, and it may take a few months for biotech companies like Moderna to deliver a viable solution on the vaccine front. Moderna, though, does appear to be hard at work on this issue, which should reassure investors that the world isn't about to revisit the early days of the pandemic due to the emergence of a problematic new variant.
Novavax will spike higher
Taylor Carmichael (Novavax): Like the vaccines from Moderna and Pfizer-BioNTech, Novavax's focuses on the spike protein. And that is why the efficacy levels of these vaccines are so high. So, theoretically, if there are many mutations in the spike protein, the original COVID-19 vaccines won't be as effective.
Nonetheless, Novavax is confident that it will find a vaccine candidate for this new threat. The biotech is now testing its original vaccine, CoV2373, against the omicron variant to see what kind of protections vaccinated people might expect. The company says it will have lab data on that question in a matter of weeks.
Simultaneously, Novavax has initiated development of an omicron-specific construct of its spike protein antigen. First steps are underway, and the company says it will start manufacturing the antigen in January.
Because it's not an mRNA drug but a protein-based vaccine, many experts believe the Novavax vaccine is an ideal booster shot. In a recent article in Nature, the authors concluded that the protein vaccines have a superior safety profile to the mRNA vaccines.
Of course, most of Novavax's COVID-19 shots will be used to vaccinate people abroad. Nonetheless, the U.S. has already acquired 100 million doses of its vaccine candidate. So if there's a demand for boosters next year, Novavax investors should do really well.