A big clinical win for mid-sized biotech Vaxcyte’s pneumococcal vaccine is giving Pfizer a run for its money, besting the blockbuster shot Prevnar 20 in a study that Mizuho analyst Salim Syed yesterday called “the best case scenario with zero misses.”
And when a little vaccine maker with no marketed assets faces a pharma giant — and wins — it’s enough to spur a change in fortunes. Shares of Vaxcyte opened yesterday up more than 33% from Friday’s close, while Pfizer’s stock took a dip.
Here’s what happened: In a phase 1/2 study of Vaxcyte’s pneumococcal shot called VAX-31, the vaccine gave patients a significant immune response for all 31 types of the virus it addresses. That included non-inferiority to all 20 of the types Pfizer’s shot contains, according to Syed’s note to clients, which is about 95% of those causing disease.
The Prevnar franchise, which includes both Prevnar 20 and the earlier Prevnar 13, has held a “near-monopoly” on the $8 billion pneumococcal space for more than 20 years, Syed said in a note last month. Last year, the vaccines made $6.4 billion in revenue for the company.
The results have garnered acclaim from analysts across the board, touted as “super clean” and a “clear win” by Mizuho’s Syed and a “grand slam readout” by Cantor Fitzgerald analyst Louise Chen, who also saw massive upside for Vaxcyte’s future.
“We think the [pneumococcal vaccine] opportunity, along with other vaccines in Vaxcyte’s pipeline … could increase Vaxcyte’s market cap from about $8 billion today to about $20 billion within the next several years,” Chen said yesterday in a note to clients.
Besides Pfizer, the results from Vaxcyte could also throw a wrench into Merck & Co.’s plans for its newly approved pneumococcal vaccine Cabvaxive, which covers 21 types of the virus, still 10 fewer than VAX-31.
‘A profound shift’
Vaxcyte CEO Grant Pickering didn’t mince words when it came to VAX-31’s potential impact as he spoke to investors yesterday morning, calling the results “a profound shift for the pneumococcal vaccine category” that exceeded expectations.
“The unprecedented results from the … adult phase 2 program validated our underlying hypothesis and set the stage for VAX-31 to potentially transform the category,” Pickering said. “We believe VAX-31 is positioned to set a new standard of care with the broadest coverage and to raise the bar on immunogenicity — these results give us confidence we can avoid the tradeoffs that other sponsors have required to make to chase coverage.”
If VAX-31 is approved following a planned phase 3 trial, it “has the potential to receive preferential recommendation by the [CDC’s Advisory Committee on Immunization Practices], which could translate into billions of dollars of sales to Vaxcyte, and this would allow Vaxcyte to effectively compete with its larger counterparts,” Chen said.
While the vaccine industry has historically comprised pharma giants like Pfizer, Merck, GSK, AstraZeneca, Sanofi, Johnson & Johnson and China’s Sinovac, smaller companies have been making more of a mark in recent years, particularly with the rise of new technologies.
"We think the [pneumococcal vaccine] opportunity, along with other vaccines in Vaxcyte’s pipeline … could increase Vaxcyte’s market cap from about $8 billion today to about $20 billion within the next several years."
Louise Chen
Stock analyst, Cantor Fitzgerald
The COVID-19 pandemic boosted mRNA companies Moderna and BioNTech to the stratosphere, and they now have the capital and clout to chase other infectious targets like flu that were monopolized by only a few of the bigger players in decades prior, or newer ones like RSV. Even those who fell short during the pandemic, like CureVac, have multiple flu vaccines in the works using mRNA.
Like mRNA did for those once-smaller biotechs, Vaxcyte’s broad-spectrum technology has allowed the company to get in the ring with the heavyweights. By incorporating a protection mechanism that preserves the crucial action of the vaccine in the body, the technology does the job with “half as much protein as conventional vaccines,” according to the company. This approach also allows them to fit more virus types into one shot.
“Today marks a major milestone on the path toward potentially going beyond what any other company has done in this field,” Pickering said.
