Vaccine Stocks: Will Johnson & Johnson's Coronavirus Vaccine Undercut Pfizer, Moderna - Investor's Business Daily

Johnson & Johnson (JNJ) is expected imminently to release test results for its coronavirus vaccine in a move that could rock vaccine stocks Pfizer (PFE) and Moderna (MRNA).

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Dow Jones pharmaceutical giant J&J is the only one of six U.S. government-backed efforts testing a single-shot coronavirus vaccine. But Johnson & Johnson will have to overcome a huge bar. Pfizer's and Moderna's two-injection coronavirus vaccines are 95% and 94.1% effective, respectively.

In order to gain traction, a new coronavirus vaccine must have a benefit over those drugs, Brad Loncar, chief executive of Loncar Investments, told Investor's Business Daily. Loncar provides the indexes for two biotech-focused exchange traded funds.

"We always knew the mRNA vaccines — from a first-generation standpoint — wouldn't be perfect because we always knew they would need two doses," he said. "But we also assumed the (effectiveness) would leave room for improvement. It was shocking how great their (effectiveness) was."

On today's stock market, J&J stock rose 1.5% to 165.98. Pfizer stock jumped 2% to 37.28. Moderna shares soared 12.2% to 147 after the company said its vaccine generated neutralizing antibodies against variants of the coronavirus in the U.K. and South Africa.

Vaccine Stocks: Will J&J Top Existing Drugs?

It's easy to see how a single-injection drug from vaccine stock Johnson & Johnson could offer a benefit over double-dose regimens from Pfizer with development partner BioNTech (BNTX), and Moderna.

State officials — in charge of distributing coronavirus vaccines — must keep tabs on people following their first dose to ensure they receive a second. The vaccination program must also have buy-in from the recipient.

On top of that, the Covid shot from vaccine stocks Pfizer and BioNTech must be transported and stored in ultracold temperatures. Moderna's is stable in a standard refrigerator for up to 30 days.

So, if Johnson & Johnson can't beat these vaccine stocks on effectiveness, it must do so through an easy route of administration or through better stability. J&J says the technology behind its one-shot vaccine is stable for two years at -4 degree Fahrenheit and in a standard refrigerator for three months.

For that reason, Loncar says Johnson & Johnson's one-shot strategy "has much more wiggle room." If the coronavirus vaccine is 70%-80% effective, "that would definitely be a win," he said.

AstraZeneca Has A High Bar

The same can't be said for vaccine stock AstraZeneca (AZN), however. AstraZeneca is running a late-stage test of its coronavirus vaccine in the U.S. Its vaccine is being developed in partnership with the University of Oxford and requires two doses.

In late December, AstraZeneca said its coronavirus vaccine was 70.4% effective, on average, across two dosing regimens. That was enough to gain authorization for emergency use in the U.K. and several other countries. But the Food and Drug Administration requires a Phase 3 test in the U.S.

Loncar is less hopeful for the AstraZeneca effort.

"If AstraZeneca is in the low 70% or below (effectiveness), which I think is realistic, then that one is in big trouble," he said. That's because it's a two-shot regimen — like Pfizer and Moderna — but could be less effective. So, developed nations are less likely to use it.

Other Vaccine Stocks Could Have Results

News from vaccine stocks Johnson & Johnson, AstraZeneca and Novavax (NVAX) — all in Phase 3 testing now — will inevitably have an impact on Pfizer and Moderna, Needham analyst Alan Carr says.

"If it looks like those are underperforming, then that would be a plus for Pfizer and Moderna," he told IBD. "Pfizer and Moderna can't immediately add to the volume (of vaccines) produced. But it would extend the revenue stream out further."

Pfizer has said it expects Covid vaccines to be a "durable" part of its business. The demand for coronavirus shots is likely to outstrip supply for a long time, Loncar said. Pfizer and Moderna have the benefit of being first to market with highly effective drugs, he said.

In the future, countries will pit coronavirus vaccines against the mRNA vaccines, he said. J&J's looming Phase 3 result will help answer a key question.

"The biggest thing is: Are Moderna and Pfizer going to be the only game in town?" Loncar said.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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