Global biopharmaceutical company Sanofi (SNY 0.92%) encountered setbacks while developing its COVID-19 vaccine, and only this year reported results from late-stage clinical trials. The company missed out on the lucrative early rounds of vaccination, but now may have an edge as the world enters an endemic COVID-19 reality.
Late to the COVID-19 market
Sanofi opted for the more traditional protein-based technology for its COVID-19 vaccine, Vidprevtyn, rather than the mRNA technology of Pfizer-BioNTech's Comirnaty and Moderna's Spikevax. Both versions use a spike protein with an exact genetic match to those found on the surface of the SARS-CoV-2 coronavirus, but the difference lies in where that protein is produced. The mRNA technology delivers genetic code instructing the body's cells to make the protein, while the more traditional approach produces the protein in a lab before injecting it into the body.
Vidprevtyn uses Sanofi's protein to teach the body to detect the invading virus, combined with GlaxoSmithKline's adjuvant technology to enhance immunity. The companies believe that this combination defends against the virus as effectively as an mRNA vaccine. Sanofi is seeking regulatory approval, based on the late February phase 3 clinical trial outcome showing that a series of two doses provided complete protection against severe disease and hospitalizations.
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This outcome was good news, but not particularly surprising. Novavax released results a year ago showing that its protein-based vaccine was highly effective against COVID-19. Novavax's vaccine has been authorized for use in at least 41 countries, although struggles with its manufacturing process have delayed the final go-ahead in the U.S.
Some people may have held out for a protein-based vaccine over an mRNA version because it is a familiar, well-established technology that has been used by vaccines for many years. However, Novavax will likely capture much of this population before Sanofi's Vidprevtyn hits the market. The availability of other vaccine options severely limits Vidprevtyn's potential revenue as the first line of defense.
On pace with next-generation versions
As COVID-19 becomes an endemic disease, vaccine makers are now competing for a place in the recurring booster market. Sanofi followed up its initial study with a second stage to look at booster performance. The trial evaluated the antibody response triggered by the booster in participants who had previously received two shots of Pfizer's mRNA Comirnaty.
Sanofi tested its two leading candidates -- a version against the original parent COVID-19 strain and a next-generation version against the beta variant. At the end of May, Sanofi announced that its next-gen vaccine slightly outperformed Pfizer-BioNTech's, with 76% of participants showing a high antibody response against the original strain versus 63% after the Comirnaty booster. Sanofi's next-gen candidate was also highly effective against the omicron variant.
Of course, Sanofi is not the only company rolling out a next-generation booster. Novavax is testing an omicron-specific vaccine, while Moderna has versions against the beta, delta, and omicron strains. All three companies have bivalent versions in the works as well, which include a combination of two separate strains to give broader immunity against emerging strains.
Edge in the flu market
Further down the line, boosters may be headed toward combo vaccines aimed to prevent both COVID-19 and flu in a single shot. This technology is still in early stages, although Novavax has an early lead with a phase 2 study planned for the end of the year. This combo may offer people an efficient path to maintain immunity in an endemic scenario where new strains are constantly emerging.
Sanofi is already a well-established player in the influenza space, unlike Moderna and Novavax, and this may give the company a significant edge. Sanofi's vaccine program generated $1.1 billion in first quarter revenue, which accounted for 9% of total first-quarter revenue. The company has the infrastructure in place to develop and manufacture high-dose recombinant quadrivalent vaccines, targeting up to four new strains of flu each year. Sanofi should be able to translate some of this expertise into its COVID-19 platform. Novavax's manufacturing struggles highlight just how important this could be.
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Key Data Points
The COVID-19 booster market continues to evolve, but may shape into a decent opportunity if the disease requires an annual booster like the flu. The U.S. influenza vaccine market is expected to grow at the rapid clip of 16.1% per year, to reach $8.6 billion in 2027. Sanofi should easily capture a slice of this new market if it continues to deliver performance on par with other booster options.
Sanofi is already an attractively priced healthcare company, with a price-to-earnings ratio of 17.9 that falls at the low end of the range for big pharmaceuticals, and a promising immunology and oncology pipeline. Management projects low-double-digit earnings-per-share growth this year. A potential chunk of recurring revenue from a competitive booster vaccine just sweetens the deal.
