In under a year, Pfizer (PFE) and Moderna (MRNA) did what usually takes drugmakers decades. But now that these coronavirus vaccine stocks have developed products that could end the Covid-19 crisis, they face an even bigger challenge: getting their medicines out to the world.
XFor shareholders of Pfizer stock and Moderna stock, the task of vaccine distribution promises to be complicated.
The obstacles can't be overestimated, experts say. The vaccine supply chain is mindbogglingly complex. It involves local, state and federal authorities as well as hospitals, pharmacies and doctors' offices.
The two most advanced coronavirus vaccines must be stored at specific temperatures and given in two doses several weeks apart. Stakeholders must keep tabs on who gets which vaccine and when. And don't forget the public perception challenges of vaccinating people with drugs that went through clinical testing at record speeds.
Experts say 60% to 80% of the world must be vaccinated to achieve herd immunity. It will be many months — or years — before that happens as vaccine makers iron out supply constraints. Besides the Covid-19 vaccine companies themselves, a raft of other parties like drug distribution company McKesson (MCK) will be involved.
If you want a coronavirus vaccine, chances are you'll have to take a number.
Coronavirus Vaccine Stocks Have A Big Job
Coronavirus vaccine stocks are riding on big ambitions. Moderna, Pfizer, Pfizer's vaccine development partner BioNTech (BNTX) and others working on Covid-19 preventive medications don't want to reach millions of people. They want to reach billions, says Greenlight BioSciences Chief Executive Andrey Zarur. Greenlight BioSciences is a privately held company working on manufacturing solutions for a Covid-19 vaccine.
"The question that you ask becomes really, really relevant when we are trying to vaccinate a couple billion people," Zarur told Investor's Business Daily. "There's no way to do that in a day. There's just not enough infrastructure to go out and vaccinate 100 million people a day. That's not going to happen. So, how do we deal with that?"
The supply chain already has had at least one hiccup at the source. Pfizer last month was forced to cut its planned vaccine production in half, to 50 million from 100 million. The company acknowledged this week one key reason for the cutback was that it took longer than expected to get the raw materials it needed to make the vaccines.
Still, in the U.S., investors in Pfizer stock and Moderna stock will see the delivery process start with the Centers for Disease Control and Prevention. The agency has overseen vaccine distribution in the U.S. for decades, including the national effort to vaccinate during the H1N1 influenza pandemic in 2009.
The coronavirus vaccination effort will probably look similar to that, says Dr. Julie Swann, department head of Industrial and Systems Engineering at North Carolina State University. She advised the CDC during the H1N1 influenza vaccination drive.
Enrolling Sites For Vaccine Distribution
First, vaccination sites will need to enroll in the CDC's Covid-19 vaccine distribution program. These sites will include doctors' offices, clinics, hospitals and pharmacies. The program ensures these locations have enough well-trained staff, the right equipment and space to vaccinate large numbers of people.
Then, the vaccination sites will request doses of the coronavirus vaccine through a state agency, Swann told Investor's Business Daily. In most cases, that will be done through the state's department of public health. That was the case in 2009 during the H1N1 influenza pandemic.
Public health officials will then confirm the vaccination site is approved. If so, the order will head to the CDC.
That's the easy part. From there, the CDC must get the vaccine to its final destination.
"The ramping up of vaccine shipments is going to be a major endeavor for storage and shipping players, testing their systems to the limits," analyst Jeylan Mammadova said in a recent report. Mammadova is the global sector lead at research provider Third Bridge.
There are several moving parts to vaccine distribution here. In August, the CDC tapped McKesson to help it distribute all coronavirus vaccines. Mammadova says McKesson could rely on UPS, DHL and FedEx trucks to help it get the job done.
Pfizer, on the other hand, has a bigger challenge. The company's coronavirus vaccine must be stored at ultracold temperatures. How cold? Penguins would find these temperatures chilly.
Moderna Stock: A Process Fraught With Fail Points
As a result, investors in Pfizer stock and Moderna stock should know the whole vaccine distribution process is fraught with fail points.
Pfizer and Moderna used a new technology to develop their coronavirus vaccines. The tech is based on the body's mechanism for creating proteins known as messenger RNA. Their drugs trick the body into thinking it has seen the infamous spike protein covering the virus known as SARS-CoV-2. The body then launches an immune response.
Pfizer is the first coronavirus vaccine stock to gain approval for a vaccine using messenger RNA technology. On Dec. 2, U.K. regulators authorized the Pfizer and BioNTech drug. The Moderna vaccine has yet to receive approval.
But the technology comes with some drawbacks. Specifically, both drugs must be kept cold.
Moderna's vaccine can live in a standard refrigerator for 30 days. It can also be frozen for six months. Once thawed, providers must administer the vaccine within 12 hours — or toss it out. That creates a logistical challenge for transportation.
"Moderna will be heavily reliant on external suppliers," Mammadova said. "It will be using companies like CryoPort (CYRX), Stirling Ultracold and CH Robinson (CHRW) to work out cold chain logistics plus storage and shipping management."
Moderna officials did not respond by press time to a request for comment.
Pfizer Stock And The Trouble With Keeping Its Vaccine Icy
Pfizer's vaccine is even more complicated and struggled with supply-chain demands even before its first deliveries.
Along with its supply-chain problems, Pfizer's vaccine needs to be stored at -94 degrees Fahrenheit. That's colder than an average winter day on the South Pole.
That means vaccine distribution will be a major challenge, says Seth Denson, president of consulting firm GDP Advisors. Pfizer has developed a special shipping container that can store the coronavirus vaccine for 10 days unopened, according to a Pfizer fact sheet.
Pfizer says it can use road and air transportation to ship its coronavirus vaccine anywhere in the U.S. "within a day or two," according to the fact sheet.
The vaccine can be stored in an ultracold freezer for up to six months. It can stay in the shipping container for up to 30 days when replenished with dry ice every five days. Or, the drug can be stored for five days in a standard refrigerator.
Denson says the strict storage requirements limit where Pfizer's vaccine can be used. Those ultracold freezers cost about $20,000 apiece, he says. Some academic institutions and hospitals have them.
"This is the largest logistical challenge of our time," Denson told IBD.
Third Bridge's Mammadova says Pfizer is investing heavily in freezer farms across the U.S.
Pfizer officials did not comment further.
Tracking Who Gets Coronavirus Vaccine
Then comes the challenge of tracking who gets which vaccine and when.
Both vaccines require two shots given several weeks apart. That requires buy-in from the participant. The challenge is even greater for some rural communities that might not be able to store the vaccine.
"You need two doses and that's going to be a problem," Greenlight's Zarur said. "Imagine getting one dose to Appalachia, a rural community. Now imagine having to come back and making sure everyone who got the first dose also gets the second one. That's a challenge."
Pfizer says it's confident in its cold supply chain expertise in vaccine distribution. Swann, though, says it's likely the Pfizer vaccine will go to more populous locations with cold-storage capabilities. Coronavirus vaccine stock Moderna will probably send its drug to more rural communities.
Throughout that process, it will be important to keep track of each vaccine vial, says Nina Deka, a senior research analyst for index, advisory and research firm Robo Global. Both vaccines have specific refrigeration and freezing standards. Once outside those parameters, the coronavirus vaccines begin to break down.
"This upcoming distribution is also going to lend itself to crime, fraud and counterfeit," she said in an interview. The vaccination sites need a "way to ensure the integrity" of the vaccines, she said.
More Covid-19 Vaccines Needed
Also key is eventual approval of next-generation coronavirus vaccines, Greenlight's Zarur says.
He sees the Pfizer/BioNTech and Moderna vaccines as first-generation drugs. Others are on the way.
AstraZeneca (AZN) and the University of Oxford have a first-generation Covid-19 vaccine that proved to be, on average, 70% effective in an interim look at midstage testing. Moderna's vaccine proved to be more than 94% effective while Pfizer's is 95% effective.
Notably, AstraZeneca said one regimen of its coronavirus vaccine was 90% effective in clinical testing. Participants received a half dose of the vaccine followed by a full dose a month later. But this particular dosing regimen was the result of a manufacturing error and requires more testing.
Coronavirus vaccine stocks Johnson & Johnson (JNJ), Novavax (NVAX) and Inovio Pharmaceuticals (INO) are also working on drugs. Some next-generation vaccines might have more favorable storage conditions and might work with just one shot.
"That second generation will give us options," Greenlight's Zarur said.
Can We Vaccinate Everyone?
In November, the CDC outlined a two-phase plan for vaccine distribution. The first people to receive the shots will be health care workers and at-risk adults. Over time, that will open up to include a broader population of people.
When will healthy, younger Americans get their shots? There's a wide array of guesses.
Brad Loncar, chief executive of Loncar Investments, expects the lion's share of the country to have access to a coronavirus vaccine by next summer. Loncar provides the index for two exchange traded funds focused on biotech stocks.
Two key factors in the rollout speed are how many people opt to become vaccinated and how many coronavirus vaccine stocks gain approval.
"You create herd immunity by vaccination," Loncar told IBD. "It will take 60% of society to be vaccinated for this to go away. A major factor determining that is, do enough people sign up for the vaccine?"
Pfizer Stock, Moderna Stock And The Public Health Challenge
Therein lies a public health challenge, Robo Global's Deka says. Many people don't regularly get an influenza vaccine every year. Some don't want their children vaccinated. Others worry about the speed in developing these vaccines.
So far, in final-phase testing, Pfizer, BioNTech and Moderna have noted few adverse events related to their drugs. Most side effects were mild or moderate in severity.
Of those who experienced severe side effects, 3.8% of participants reported fatigue and 2% experienced a headache after receiving the Pfizer/BioNTech vaccine.
In Moderna's study, 2.7% of volunteers reported severe injection site pain after the first dose. After the second dose, 9.7% reported fatigue, 8.9% reported muscle pain, 5.2% experienced joint pain, 4.1% experienced general pain and 2% reported injection site pain or redness.
"I don't know that everyone around the U.S. is unified in terms of whether they want a vaccine," Deka said. "And not everyone will have access to one right away."
She expects vaccine distribution to include the wider population in 2021-22.
"But I don't think we're going to get everyone," she said. "There will always be someone who doesn't want it."
Will Moderna Stock, Pfizer Stock Profit?
There's definitely money awaiting coronavirus vaccine stocks.
Mizuho Securities analyst Vamil Divan expects Pfizer to generate $875 million in coronavirus vaccine sales in 2020 and $7.25 billion in 2021. Eventually, that will trend down to $700 million to $800 million each year, depending on how often people need booster shots of the vaccine.
Loncar Investments CEO Loncar also expects the coronavirus vaccine stocks to eventually realize a "revenue stream that will last for years, if not decades."
A doctor interviewed by SVB Leerink analyst Geoffrey Porges disagrees, however. He doesn't see Covid-19 becoming endemic like the flu or common cold. Instead, he says Covid-19 is more like measles, mumps, rubella, smallpox, chickenpox and some strains of the flu.
The doctor "explained that there have only been a very small number of documented cases of Covid reinfection which, given the high case count globally, points to strong natural immunity," Porges wrote in a report. He "pointed out that even with measles you don't see 100% immunity from reinfection, but instead upwards of 99%, which means there are some examples of reinfection."
Reaping PR Goodwill
GDP Advisors' Denson sees the companies reaping profit in public relations goodwill. Such was the case for Pfizer stock in early November. Shares surged above a buy point out of a flat base after the company said its vaccine succeeded in an interim analysis of final-phase testing. Pfizer stock didn't hold onto that gain, according to MarketSmith.com.
Moderna stock, for its part, rocketed nearly 641% in 2020, as of the Dec. 3 close, on excitement over its coronavirus vaccine. On Nov. 30, Moderna asked the Food and Drug Administration to authorize its coronavirus vaccine for emergency use. It trailed Pfizer and BioNTech by just 10 days. (Learn if Pfizer stock or Moderna stock is a buy now.)
"The drugmaker that gets this thing out first, they'll see a massive influx of (value) to their brand," Denson said. "Overnight, Pfizer becomes one of the most loved brands in America. It's the McDonald's (MCD) of the pharma industry."
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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