BioNTech (NASDAQ:BNTX) CEO Uğur Şahin thinks that new COVID-19 vaccines could be needed by the middle of 2022. In this Motley Fool Live video recorded on Oct. 6, Motley Fool contributors Keith Speights and Brian Orelli discuss Şahin's reasoning and how vaccine stocks could be affected if he's right.
Keith Speights: Speaking of BioNTech, the company's CEO, Uğur Şahin, told The Financial Times earlier this week that a new COVID-19 vaccine could be needed by the middle of next year. What was his reasoning behind this prediction, and if he's right, how would this potentially shake up vaccine stocks?
Brian Orelli: The theory is that mutations in the virus will develop that allow it to escape the immune system's reaction to the vaccines. I'm not really sure I buy this argument.
The coronavirus isn't the next influenza virus because they change in a different way. Coronavirus mutates primarily through point mutation. While it's copying its DNA or RNA, it creates some mutations. Some are negative and that molecule ends up not being viable. Some don't matter at all, and some end up being positive and that's how we end up getting variants. But their changes are one at a time.
The reason why we need to have influenza vaccines every year is because the influenza virus changes by recombining with other influenza viruses. Someone gets infected with two different influenza viruses and then they recombine to make a new virus. That's the reason why the influenza virus is constantly changing and the reason why we have to constantly get it a new booster vaccine every year.
If the coronavirus vaccines create good enough memory B cells, maybe a three-dose regimen, so two and a booster are able to protect us against the slow mutation rates and we're creating antibodies from those vaccines that don't just bind to one spot on the virus, they bind to a whole bunch of different spots in the virus. One mutation on one part of the virus isn't necessarily going to escape the immune system.
In theory, maybe you get enough mutations and maybe there's one that escapes. But for the most part, I think as long as people are getting vaccinated, I don't think this is going to be a major problem and I'm not 100% convinced that we're going to need annual boosters and we're going to need to change the vaccine every year to keep up with the virus.
That said, if he's right and I'm wrong, then the impact on the vaccine stocks is obviously going to be pretty large. If they can sell, let's say 10 billion in annual sales, and I think Moderna's (NASDAQ:MRNA) looking at 20 billion right now so if they can cut that in half, I think that can justify the current market caps, especially BioNTech, which is around 60 billion and maybe even getting into Moderna's, which is more double than that. But obviously, they have a larger percentage of the vaccine that they're taking home and profits.
Speights: Any time I hear a prediction from a CEO of one of these companies, in this case BioNTech, but it could've been Pfizer's or Moderna's CEO as well, two things go through my mind. One, when they make a prediction, they're the CEO of a company, and they want that company's revenue to go up. It's usually going to be that prediction is in favor of what will benefit the company.
But the second thing that does come to my mind is, admittedly, these individuals have more access to some data that the public doesn't have yet and maybe they can have some things that we don't know yet. But there are two conflicting things going on here when you see a prediction like this.
Orelli: In theory, maybe he knows something that we don't but I agree with you. I think that you have to balance that with the fact that he obviously wants to sell more vaccine because that's the way their company is making money right now.