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A major clinical win for mid-sized biotech company Vaxcyte’s pneumococcal vaccine has put it close to Pfizer and ahead of blockbuster vaccine Prevnar 20 in a study that Mizuho analyst Salim Syed yesterday called “the best-case scenario of zero failures.”
And if a small vaccine maker without marketable assets goes up against the big pharma companies and wins, it could be a game-changer. Vaxcyte shares opened yesterday up more than 33% from Friday’s closing price, while Pfizer shares fell.
Let’s see what happened. Phase 1/2 study With Vaxcyte’s pneumococcal vaccine, VAX-31, the vaccine produced significant immune responses in patients against all 31 targeted viruses, including non-inferiority against all 20 in the Pfizer vaccine, which represents roughly 95% of the viruses that cause the disease, according to Syed’s client note.
The Prevnar franchise, which includes both Prevnar 20 and the earlier Prevnar 13, has maintained a “near monopoly” in the $8 billion pneumococcal drug market for more than two decades, Mr. Syed said in a memo last month. The vaccine generated $6.4 billion in revenue for the company last year.
The results drew praise from analysts across the board, with Mizuho’s Said hailing it as “very clean” and a “clear win,” while Cantor Fitzgerald analyst Louise Chen called it a “spectacular announcement,” and also saw significant upside potential for Vaxite’s future.
“We believe the opportunity (of the pneumococcal vaccine), combined with other vaccines Vaxcyte has in development, has the potential to increase Vaxcyte’s market cap from approximately $8 billion today to approximately $20 billion within the next few years,” Chen said in a client note yesterday.
In addition to Pfizer, Vaxcyte’s results could also disrupt Merck’s plans. Newly approved The pneumococcal vaccine Cabvaxive covers 21 different viruses, 10 fewer than VAX-31.
“Big change”
Vaxcyte CEO Grant Pickering spoke candidly to investors yesterday morning about the potential impact of VAX-31, calling the results “a major shift in the pneumococcal vaccine space” that has exceeded expectations.
“The unprecedented results from our adult Phase 2 program validate our baseline hypothesis and demonstrate the potential of VAX-31 to be field-transforming,” Pickering said. “We believe VAX-31 is positioned to establish a new standard of care with the broadest coverage and raise the bar in immunogenicity. These results give us confidence that we can avoid the trade-offs that other sponsors have had to make to pursue coverage.”
If VAX-31 is approved after a planned Phase 3 trial, Chen said, “it could receive a priority recommendation (by the CDC’s Advisory Committee on Immunization Practices), which could generate billions of dollars in sales for Vaxcyte, allowing it to compete effectively with larger competitors.”
The vaccine industry has historically been made up of pharmaceutical giants such as Pfizer, Merck, GSK, AstraZeneca, Sanofi, Johnson & Johnson and China’s Sinovac, but smaller companies have been making their presence felt in recent years, especially with the rise of new technologies.
“We believe that the opportunity (for the pneumococcal vaccine) and other vaccines Vaxcyte has in development could increase Vaxcyte’s market cap from approximately $8 billion today to approximately $20 billion within the next few years.”
Louise Chen
Equity analyst, Cantor Fitzgerald
The COVID-19 pandemic has catapulted mRNA companies Moderna and BioNTech to market, giving them the money and clout to target other infectious diseases such as influenza, which were the domain of only a few large companies decades ago, as well as emerging infectious diseases such as respiratory syncytial virus. Even companies such as CureVac, which struggled to make headway during the pandemic, are developing multiple mRNA-based influenza vaccines.
Vaxcyte’s broad-spectrum technology puts it on par with the larger companies, much like mRNA did for smaller biotech companies in the past. By incorporating protective mechanisms that keep the vaccine’s key functions in the body, the technology is “Half the protein The company says its approach is “similar to conventional vaccines” and allows it to treat more types of viruses with a single shot.
“Today marks a major milestone in our journey to potentially go beyond what anyone else in this space has achieved,” Pickering said.
