Pfizer, BioNTech Surge On US Gov Deal For 600M Covid-19 Vaccine Doses

Pfizer Inc (PFE) and BioNTech SE (BNTX) have agreed to provide the US government with 100 million doses of their COVID-19 vaccine candidate BNT162, after Pfizer successfully manufactures and obtains approval or emergency use authorization from the US Food and Drug Administration (FDA).

The U.S. government will pay the companies $1.95 billion upon the receipt of the first 100 million doses, following FDA authorization or approval. The U.S. government also can acquire up to an additional 500 million doses.

Shares in Pfizer are up 5% in Wednesday’s pre-market trading while BioNTech is up 6%.

“Expanding Operation Warp Speed’s diverse portfolio by adding a vaccine from Pfizer and BioNTech increases the odds that we will have a safe, effective vaccine as soon as the end of this year,” said Department of Health and Human Services’ Secretary Alex Azar.

Americans will receive the vaccine for free following the US government’s commitment for free access for COVID-19 vaccines.

The BNT162 program is based on BioNTech’s proprietary mRNA technology and supported by Pfizer’s global vaccine development and manufacturing capabilities. The BNT162 vaccine candidates are undergoing clinical studies and are not currently approved for distribution anywhere in the world.

BioNTech is the market authorization holder worldwide and will hold all trademarks for the potential product.

The Pfizer/BioNTech vaccine development program is evaluating at least four experimental vaccines, each of which represents a unique combination of messenger RNA (mRNA) format and target antigen. On July 1, Pfizer and BioNTech announced preliminary data from BNT162b1, the most advanced of the four mRNA formulations.

The early data demonstrates that BNT162b1 is able to produce neutralizing antibodies in humans at or above the levels observed in the plasma from patients who have recovered from COVID-19, and this was shown at relatively low dose levels. No serious adverse events were reported. On July 20, the companies announced early positive update from German Phase 1/2 COVID-19 vaccine study, including first T Cell response data.

If ongoing studies are successful, Pfizer and BioNTech expect to be ready to seek Emergency Use Authorization or some form of regulatory approval as early as October 2020. The companies currently expect to manufacture globally up to 100 million doses by the end of 2020 and potentially more than 1.3 billion doses by the end of 2021.

Shares in Pfizer are down 6% year-to-date, while BioNTech has exploded over 170%. Looking forward, analysts take a cautiously optimistic Moderate Buy consensus on both stocks. However, due to the recent rally, BioNTech’s average analyst price target of $77 now indicates 16% downside potential from current levels.

Mizuho Securities analyst Vamil Divan has a buy rating on Pfizer and $38 price target (4% upside potential). That’s slightly under the stock’s average analyst price target of $41 (13% upside potential).

“We had several discussions with investors today on the back of the initial data, with much of the discussion focused on the commercial potential for a successful SARS-CoV-2 vaccine” the analyst wrote.

“The company has mentioned that it will look to price a potential vaccine in line with other commercially-available vaccines, suggesting to us a potential blockbuster commercial opportunity, depending on the vaccine’s clinical profile and the ultimate competitive landscape” he told investors, after the release of ‘encouraging’ early data. (See Pfizer stock analysis on TipRanks)

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