Sanofi (SNY 0.23%) and AstraZeneca's (AZN +0.00%) application for the respiratory syncytial virus (RSV) vaccine candidate called nirsevimab was recently accepted for review by the U.S. Food and Drug Administration (FDA) as a protective option for all infants.
Nirsevimab is known by the trade name Beyfortus in the European Union and the United Kingdom, and the FDA expects to make an approval decision on the RSV vaccine in the third quarter of this year. How much of a lift in sales could this product provide for Sanofi?
Let's explore the phase 3 clinical trial results of the vaccine and the global RSV vaccine market to answer this question.
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Key Data Points
A vaccine for the leading cause of infant hospitalization
RSV is an extremely infectious seasonal virus that affects the lungs and respiratory tract. The symptoms of RSV can include coughing, sneezing, and wheezing.
In healthy children and most adults, the infection is relatively mild and typically resolves within a week. Groups that are particularly at risk include infants, adults older than 65 years of age, and adults with co-morbidities such as congestive heart failure or chronic obstructive pulmonary disease.
In the U.S. alone, millions of children under age 5 and older adults are infected by RSV each year. This results in an astonishing 58,000 to 80,000 hospitalizations in the former group and between 60,000 to 120,000 hospitalizations in the latter group.
Fortunately, there are several RSV vaccines currently in development from the likes of Pfizer, GSK, and Sanofi and AstraZeneca. Sanofi and AstraZeneca enrolled over 3,000 infants in a phase 3 trial to randomly receive one 50 milligram injection of either nirsevimab or placebo at the start of the RSV season. Infants in the vaccine group were 76.8% less likely to experience an incident of lower respiratory tract infection (LRTI) related hospitalization through 150 days after dosing compared to placebo.
Image source: Getty Images.
The sales potential is tremendous
It isn't a stretch to argue that nirsevimab could keep thousands of patients out of the hospital each year. But what could that mean for Sanofi's sales?
The unmet medical need for RSV is massive. This is why the investment banking firm Jefferies anticipates the drug could garner $3 billion in annual peak sales for Sanofi and AstraZeneca to evenly split. Considering the marketing and distribution power of Sanofi and AstraZeneca, this seems to be an achievable figure.
Stacked up against the average analyst revenue estimate of $48.2 billion for 2023, this would be a 3.1% lift to the pharmaceutical company's top line. Even by itself, that's a solid growth catalyst. But considering that Sanofi has dozens of other projects in different stages of clinical trials, this doesn't even scratch the surface of the company's overall potential.
That's why analysts believe that Sanofi's earnings will compound at 12.3% annually over the next five years. That is much better than the drug manufacturer industry average forecast of 6.9% annual earnings growth.
Sanofi stock is a compelling value
Sanofi is a rapidly growing business. But you wouldn't know it by looking at the stock's current valuation. Shares of the drugmaker are trading at a forward price-to-earnings ratio of 10.9, which is well below the drug manufacturer industry average of 14.9. Sanofi's combination of above-average growth prospects at a below-average valuation makes it a convincing buy for 2023 and beyond.
