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0525 Vax stocks
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Next wave of COVID vaccine developers could yet capture market share, with room for shares to run

Uncertainties and opportunities abound in next wave of vaccine plays

Investors in the next wave of vaccine plays will need to navigate uncertainties around booster shots, a fast-changing regulatory environment and the state of the global vaccine rollout. 

May 25, 2021 | 11:35 PM GMT

Investors will need to sort through uncertainties around COVID-19 booster shots and global vaccine rollout to determine whether a second wave of vaccine developers still have room for their share prices to run once they reach the market, or whether they’re already valued with all of their future opportunities in mind.

A handful of biotechs will be looking for ways to position their vaccines in a changing environment that could offer ways to find a niche beyond the market carved out by the first vaccines to gain authorization.

The first two mRNA-based vaccines have dominated in the U.S. But there may yet be space in the market for developers of other vaccine types, particularly for annual boosters or in the developing world.

Omega Funds’ Otello Stampacchia told BioCentury the COVID-19 vaccine marketplace may be “underestimated in its persistence” across the coming years. He pointed to uncertainties around variants, manufacturing and supply constraints, and the size of the most vulnerable population as factors that could prolong the need for vaccines, including those beyond mRNA-based ones.

Investors will also need to calibrate for a regulatory environment that is evolving — at times rapidly. For example, the agency announced Tuesday that it may limit its review of emergency use authorization requests for COVID-19 vaccines to those developed by sponsors that have been working closely with the agency.

With that in mind, the stocks of companies such as Novavax Inc. (NASDAQ:NVAX) and CureVac Inc. (NASDAQ:CVAC), both of which are conducting pivotal studies of their vaccine candidates, may yet have upside. Beyond COVID-19 products, smaller biotechs could further dent the market share of the biggest entrenched players as they advance vaccines against other infectious diseases and cancer.

Stampacchia pointed out that prior to the pandemic, consolidation had left a small group of pharmas in control of the overall vaccine marketplace. They include GlaxoSmithKline plc (LSE:GSK; NYSE:GSK), Sanofi (Euronext:SAN; NASDAQ:SNY), Pfizer Inc. (NYSE:PFE) and Merck & Co. Inc. (NYSE:MRK).

All of that has changed with the rapid development of mRNA vaccines for COVID-19, however. Moderna Inc. (NASDAQ:MRNA) is likely to post 2021 sales of its vaccine that will dwarf last year’s figure from the entire vaccine segment of GSK, the largest among those pharmas’. Pfizer will benefit from sharing rights with German biotech BioNTech SE (NASDAQ:BNTX) to the other FDA-authorized mRNA vaccine.

And while Stampacchia emphasized that mRNA appears to have established itself as the best vaccine technology, with advantages in speed to market, branding, scalability and adaptability for re-programming against new variants, opportunities will remain for other developers to gain a foothold, either in the developing world or in a marketplace for boosters in the developed world.

“Developing countries are running about two years behind, and that’s a problem,” Stampacchia said.

Stampacchia mentioned Novavax and CureVac as the most likely to have differentiated products with strong data behind them. He noted Novavax’s ability to scale in particular.

“People realize it’s not an industry where incumbents can maintain market share forever,” he said.

Also in contention will be Valneva SE (Euronext:VLA; VSE:VLA), which started a Phase III trial last month of its inactivated, whole-virus vaccine candidate. The biotech is participating in the U.K.’s Cov-Boost trial of booster shots as well.

Stampacchia found that data from some others, including China-based CanSino Biologics Inc. (HKEX:6185; Shanghai: 688185), were not quite as compelling.

Novavax is awaiting final data from a Phase III trial of its NVX-CoV2373 this quarter, and CureVac anticipates an interim readout this quarter from its pivotal Phase IIb/III study of CVnCoV. 

-Gunjan Ohri contributed to this report.

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