According to a recent CNN poll, only one in two Americans plans to get a coronavirus vaccine once approved. And there are reasonable reasons to doubt it. Before the pandemic, the fastest vaccine in history was the mumps vaccine, which took four years. At the same time, the fact that we launched the vaccine to the market in less than 12 months has caused many Americans to worry about its quality and long-term safety, which cannot be evaluated by current clinical studies.
Investors can worry AstraZeneca (Nasdaq: AZN)After a series of unexplained adverse events occurred in the research evaluating its messenger RNA (mRNA) COVID-19 vaccine. Are these security issues legal or exaggerated?
Should investors be worried?
More than a month has passed since AstraZeneca stopped the third phase of the coronavirus vaccine test. First, a clinical trial participant suffered from an unexplainable disease that caused the study to be suspended in early September. Second, a participant in Brazil died on October 21 during the study.
Although the news looks bad on the surface, investors shouldn’t make a comprehensive change yet. Because the clinical trial is so large-with more than 30,000 participants, it is almost inevitable that at least one participant will get sick during the study, regardless of whether the vaccine causes the disease. According to new reports, it seems that the deceased Brazilian volunteers did not receive any dose of experimental vaccine, which should alleviate some safety risks.
In addition, Moncef Slaoui, chief consultant of Operation Warp Speed (OWS), said in an interview on October 21 that AstraZeneca’s vaccine research will resume soon. Late-stage data on the experimental vaccine is likely to be released before December.
If approved, AstraZeneca will supply up to 300 million doses of coronavirus vaccine to the U.S. government, 400 million doses to the European Union, and 84 million doses to the New Zealand government. Completing 784 million orders in just a few months is not an easy task.
AstraZeneca has one of the largest production capacities among coronavirus vaccine developers.Potential vaccine competition champions, such as modern (Nasdaq stock code: MRNA) with Pfizer (New York Stock Exchange: PFE) If approved, they may produce 1 billion to 1.3 billion doses of vaccine each year after 2021. At the same time, by 2021, AstraZeneca is expected to produce up to 2 billion doses of vaccine each year, depending on the success of clinical trials. Assuming the price of each dose is US$4, then the potential annual revenue is US$8 billion.
Considering that AstraZeneca’s non-vaccine revenue should reach around US$25 billion this year, the US$8 billion market opportunity is very important. In the first half of 2020, the company’s revenue increased by 14% year-on-year due to a surge in demand for its pharmaceutical products driven by the US$12.36 billion COVID-19 headwind. At the same time, the company increased its adjusted earnings per share (EPS) to US$2.01, a 26% increase from the first half of 2019.
During the same period, the company’s revenue from new drugs, oncology therapies, cardiovascular, renal and metabolic (CVRM) drugs, and respiratory and immunology (R&I) therapies increased by 45%, 31%, 11% and 7%, respectively. . The best-selling drugs during this period were the company’s lung cancer treatment Tagrisso and its ovarian cancer drug Lynparza, which together brought in new revenues of $1 billion.
Last year, the company reinvested $6 billion of its revenue in research and development (R&D) of new drugs. The result is a R&D expenditure profit margin of 25.7%, which explains why AstraZeneca can still increase its sales by a double-digit percentage while maintaining a huge market value of $134 billion.
More importantly, once the patent protection is lost, there are enough candidates in AstraZeneca’s product line to replace the core product. The company currently has 17 drugs in phase 3 clinical trials. In addition to the data of its coronavirus vaccine candidates, it is expected that there will be multiple data read out next year. Whether investors are waiting for the vaccine price to rise or intend to hold the stock for a long time, investors interested in biotechnology have every reason to be confident in AstraZeneca’s potential.