gglobal biopharmaceutical company Sanofi (NASDAQ: SNY) encountered setbacks in the development of its COVID-19 vaccine and only released results from late-stage clinical trials this year. The company missed the first lucrative vaccine rounds, but may now have an edge as the world enters a rampant COVID-19 reality.
Late to market COVID-19
Sanofi opted for the more traditional protein-based technology for its COVID-19 vaccine, Vidprevtyn, rather than the mRNA technology of Pfizer–BioNTech‘s Comirnaty and Modernit’s Spikevax. Both versions use a spike protein with an exact genetic match to those found on the surface of the SARS-CoV-2 coronavirus, but the difference lies in where that protein is produced. mRNA technology provides genetic code instructing cells in the body to make the protein, while the more traditional approach produces the protein in the lab before injecting it into the body.
Vidprevtyn uses Sanofi’s protein to teach the body to detect the invading virus, associated with GlaxoSmithKlineadjuvant technology to enhance immunity. The companies believe this combination protects against the virus as effectively as an mRNA vaccine. Sanofi is seeking regulatory approval, based on Phase 3 clinical trial results in late February showing that a two-dose series provided complete protection against serious illness and hospitalization.
This result was good news, but not particularly surprising. Novavax published results a year ago showing that its protein-based vaccine was highly effective against COVID-19. Novavax’s vaccine has been licensed for use in at least 41 countries, although difficulties with its manufacturing process have delayed the final green light in the United States
Some people may have preferred a protein-based vaccine over an mRNA version, as this is a familiar and well-established technology that has been used in vaccines for many years. However, Novavax will likely capture a large portion of this population before Sanofi’s Vidprevtyn hits the market. The availability of other vaccine options severely limits Vidprevtyn’s potential revenue as a first line of defense.
In line with next-gen versions
As COVID-19 becomes an endemic disease, vaccine makers are now vying for a place in the recurring recall market. Sanofi continued its initial study with a second stage on the performance of the boosters. The trial assessed the antibody response triggered by the booster in participants who had previously received two injections of Pfizer’s Comirnaty mRNA.
Sanofi tested its two main candidates – a version against the original parent strain COVID-19 and a next-generation version against the beta variant. In late May, Sanofi announced that its next-generation vaccine slightly outperformed Pfizer-BioNTech’s, with 76% of participants showing a high antibody response against the original strain compared to 63% after the Comirnaty booster. Sanofi’s next-generation candidate was also highly effective against the omicron variant.
Of course, Sanofi isn’t the only company rolling out a next-gen booster. Novavax is testing an omicron-specific vaccine, while Moderna has versions against beta, delta and omicron strains. All three companies also have bivalent versions in the works, which include a combination of two separate strains to give broader immunity against emerging strains.
Advantage in the flu market
Further down the line, recalls may be directed to combination vaccines aimed at preventing both COVID-19 and influenza in one shot. This technology is still in its infancy, although Novavax has a head start with a phase 2 study scheduled for the end of the year. This combo can offer people an effective route to maintain immunity in an endemic scenario where new strains are constantly emerging.
Sanofi is already an established player in the flu space, unlike Moderna and Novavax, which could give the company a significant advantage. Sanofi’s vaccine program generated $1.1 billion in first-quarter revenue, or 9% of total first-quarter revenue. The company has the infrastructure to develop and manufacture high-dose recombinant quadrivalent vaccines, targeting up to four new influenza strains each year. Sanofi should be able to translate some of this expertise into its COVID-19 platform. Novavax’s manufacturing difficulties show how important this could be.
The COVID-19 reminder market continues to evolve, but can turn into a decent opportunity if the disease requires an annual reminder like the flu. The US flu vaccine market is expected to grow at the rapid rate of 16.1% per year, reaching $8.6 billion in 2027. Sanofi should easily capture a share of this new market if it continues to supply comparable performance to other callback options.
Sanofi is already an attractively priced healthcare company, with a price/earnings ratio of 17.9 which is at the lower end of the range for big pharma, and a promising immunology and oncology portfolio. Management expects low double-digit growth in earnings per share this year. A potential portion of recurring revenue from a competitive booster vaccine only sweetens the deal.
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Natalie Forbes has no position in the stocks mentioned. The Motley Fool recommends GlaxoSmithKline and Moderna Inc. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.