Respiratory syncytial virus, or RSV, is a common illness, but it has proved quite challenging to treat. It remains one of the few major infectious diseases without a vaccine. U.K.-based pharmaceutical GSK (GSK 1.51%) formally known as GlaxoSmithKline, has delivered mixed results from its pivotal clinical trials, but recent news tips the race in its favor.

GSK delivers breakthrough news

RSV symptoms are typically mild, limited to a runny nose, cough, and fever. But two populations are particularly at risk for severe complications such as bronchitis or pneumonia. About 58,000 children under the age of five and 177,000 adults over the age of 65 are hospitalized with it each year in the U.S.

GSK has been targeting both of these at-risk populations with its RSVPreF3, a recombinant protein vaccine. Separate studies were initiated to dose adults over 60 and pregnant women who would then pass protective antibodies against RSV to their newborn infants. But the company put a stop to its trial in the maternal cohort in February, without providing details as to why the trial was halted.

Fortunately, the company has fared better in the older adult category. Mid-June, the company announced strong performance against both the RSV A and B strains during an interim analysis of the ongoing phase 3 trial. The trial will continue to test annual boosters and also see whether the protection from a single shot lasts several years. In the meantime, however, the results were sufficiently promising that the company will proceed with a regulatory submission this year.

Hotly contested race to bring a vaccine to market

With this announcement, GSK becomes the first company to release promising phase 3 results in the older age group. But Pfizer, Johnson & Johnson, and Moderna also have vaccine candidates in late-stage trials and are expecting results soon.

Pfizer's RSVpreF vaccine may be most similar to GSK's, as it also carries a protein subunit to trigger an immune response against the RSV protein. Moderna has taken the same messenger RNA (mRNA) approach as its coronavirus vaccine, while J&J includes a combined DNA and protein vaccine that simultaneously delivers protein synthesized in the laboratory along with an adenovirus vector to stimulate protein production in the body. 

All three competitors started their trials last fall and should release preliminary results later this year or next year. Pfizer may be the closest, with interim results expected imminently from studies in both elderly and maternal groups.

First-mover windfalls

Since the market is wide open for a working treatment, RSV offers a substantial opportunity to the first entrant. Even after a one-time sales boost in dosing a large group of unvaccinated people, the vaccine could generate significant recurring revenue because of a continuously aging population and the likely need for boosters to maintain protection as the immune system naturally weakens with age. 

Some analysts expect that combined revenue from RSV vaccines could exceed $6 billion by 2025 and grow to $10 billion by 2030 and that GSK will capture roughly one-quarter of the market. For its part, GSK estimates a peak revenue of $3.5 billion from its vaccine.

This is a sizable chunk compared to GSK's full-year sales of $41.3 billion last year, but will become even more significant after the company spins off its consumer health segment later this summer. After removing the $11.6 billion generated by soon-to-be Haleon, the vaccine could boost GSK's sales by 12%. This may be one factor contributing to management's guidance of high-single-digit growth over the next five years.

GSK certainly looks on pace to receive a nice bump in sales and is trading at a price-to-earnings of 15.4 which is on the low end for pharmaceutical stocks. On the other hand, GSK still needs regulatory approval to launch its RSV vaccine, and the major upcoming restructuring will cause the company to lose its steady, albeit low-growth income coming from the consumer health segment. Management plans to cut the company's generous 4.6% dividend after the spinoff. 

Overall, the positive RSV results are good news for GSK's future, but probably aren't a stand-alone reason to buy the stock right now.