The global COVID-19 case count has already exceeded 60 million, while the death count is fast approaching the 1.5 million mark.
Unsurprisingly, coronavirus vaccine manufacturers are being seen as the light at the end of the dark tunnel. Investors are closely following Pfizer (PFE -0.52%), Moderna (MRNA -2.13%), and AstraZeneca (AZN 0.65%), after the companies released favorable efficacy results for their phase 3 vaccine candidates. Novavax (NVAX -3.02%) has also become the darling of the stock market, with shares up an eye-popping 3,072% so far this year.
Johnson & Johnson's coronavirus vaccine candidate may prove to be the most profitable one in the long run. Image source: Getty Images.
However, contrary to popular belief and despite being late to the party, it may very well be Johnson & Johnson (JNJ -0.15%) which ends up winning this coronavirus vaccine race. Let's find out why this big pharma company is best-positioned to launch the most profitable COVID-19 vaccine.
High probability of favorable efficacy results
Although Johnson & Johnson has yet to release efficacy results for its Phase 3 adenoviral-vector-based COVID-19 vaccine candidate, the chance of a favorable announcement remains pretty high. Like AstraZeneca's, Johnson & Johnson's coronavirus vaccine candidate uses adenoviruses to deliver DNA instructing human cells to form coronavirus spike protein. This helps the immune system identify and protect the body in case of actual invasion by the COVID-19 pathogen.
On Nov. 23, AstraZeneca and its partner, the University of Oxford, announced interim efficacy results for their coronavirus vaccine candidate, AZD1222; they highlighted an average efficacy of 70%. Although the results were encouraging, they paled in the face of the 90%-plus efficacy results reported by Pfizer and Moderna for their coronavirus vaccine candidates.
However, there is a caveat here. In one dosing regimen, which involved giving half a dose followed by a full dose after one month, the efficacy was as high as 90%. What pulled down the overall efficacy result was the second dosing regimen of two full doses of AZD1222 given a month apart; this regimen resulted in an efficacy of just 62%.
Immunology may explain such a wide difference in outcomes of the two dosing regimens. It could be that after the first full dose of AZD1222, patients on the two-full-dose regimen developed a significant number of antibodies to the adenoviral vector itself. Hence, it's possible that the second dose was rendered ineffective by the body's immune system.
Johnson & Johnson has been testing two different dosing regimens for its coronavirus vaccine: a single dose and a two-dose schedule. The company's single-dose vaccine regimen will most likely not face immunology-related problems. Hence, the overall efficacy for this vaccine candidate may come out higher than that reported by AstraZeneca.
Adenoviral-vector vaccines may prove safer
Adenoviral-vector vaccine technology has been tested in a greater number of people than the mRNA vaccine technology deployed by Pfizer and Moderna in their coronavirus-vaccine development efforts. Although adenoviral technology is not a widely commercialized approach, there is at least one marketed rabies vaccine based on it that's used to immunize wild animals, and an Ebola vaccine by Merck that was approved by the Food and Drug Administration. Hence, at least on paper, adenoviral technology seems to be safer than mRNA vaccine technology, a factor which is quite important in large-scale immunization programs. In early October 2020, Johnson & Johnson also reported favorable efficacy, safety, and tolerability results for a single-dose regimen of JNJ-78436735, its coronavirus vaccine candidate.
Economical to store and distribute
Johnson & Johnson is confident about manufacturing 1 billion doses of its COVID-19 vaccine in 2021. If the vaccine proves to be safe and effective, the possibility of the company pricing this one-dose vaccine at $10 could make it a preferred choice compared to Pfizer's two-dose regimen at $38 or Moderna's two-dose regimen at $25 to $37.
Besides, Johnson & Johnson's vaccine candidate can be stored at normal refrigeration temperatures safely for three months, unlike Pfizer's, which requires ultracold temperatures for storage and distribution. Johnson & Johnson may emerge as one of the preferred vaccine providers especially in developing markets, owing to lower cost and ease of storage and distribution.
Compared to other COVID-19 vaccine players, Johnson & Johnson would need to manufacture half the number of doses to vaccinate the same number of people. A single-dose regimen would also reduce overall visits to healthcare providers, resulting in additional cost savings.
Johnson & Johnson is much more than a COVID-19 vaccine play
While there are decent chances of Johnson & Johnson proving to be a leading COVID-19 player, the company is a fairly good investment even in absence of a vaccine. The company boasts a broad presence across multiple therapeutic areas, product segments, and geographic markets, and has extensive brand power. In addition, any global launch of an effective COVID-19 vaccine, even from a competitor, would help boost sales in Johnson & Johnson's medical device and consumer health segments. Johnson & Johnson is a member of the S&P Dividend Kings list (comprising companies that have increased their dividends for at least 50 consecutive years), and has a solid dividend yield of 2.7%.
Some skeptical investors are more worried about involvement of the company in myriad lawsuits related to opioid abuse, faulty hip implants, and the presence of carcinogenic asbestos in baby powder and talc products. While there's no denying that the legal risks are significant, the many pros for the company should not be ignored. The expected success of its COVID-19 vaccine candidate further consolidates Johnson & Johnson's strong long-term growth story.
