Pfizer and BioNTech’s Combo Vaccine Missed Target. Time to Sell?

Pfizer (NYSE: PFE) And BioNTech (NASDAQ: BNTX) have recently fallen behind in their race with Modern (NASDAQ: ARNm) to develop new vaccine combinations that could represent billions of dollars in annual sales. Early results from an experimental flu and COVID-19 vaccine aren’t a complete disaster, but there’s not much room for error when it comes to vaccine development.

A last-minute clinical trial failure is bad news, but it doesn’t necessarily mean selling shares of Pfizer or BioNTech is a good idea right now. Here’s what shareholders of both companies need to know before making a hasty decision based on a single clinical trial result.

Pfizer and BioNTech miss their flu shot

Pfizer and BioNTech have enrolled more than 8,000 healthy adults in a Phase 3 trial of an mRNA vaccine candidate designed to protect against influenza and COVID-19. The combination vaccine contains the partners’ COVID-19 vaccine, which has already been administered to millions of people, as well as Pfizer’s investigational mRNA influenza vaccine.

As expected, those who received the combination vaccine had immune responses that were as good as or better than those to the partners’ COVID-19 vaccine. The experimental combination vaccine was even effective against an approved influenza vaccine for influenza A infections. However, it failed to demonstrate non-inferiority for protection against influenza B strains.

Pfizer is not the first mRNA vaccine developer to have problems with influenza B. Last April, CureVac and his partner GSK reported that immune responses to their candidate were lower than those to an approved vaccine.

Moderna also hit a hurdle in 2023 with its seasonal flu vaccine. Unfortunately for Pfizer and BioNTech, Moderna has already taken responsibility and announced in June the successful completion of the Phase 3 non-inferiority trial of its combined flu and COVID-19 vaccine.

What’s next for Pfizer and BioNTech?

Pfizer reported that sales of Comirnaty, the COVID-19 vaccine approved by its partners, fell 87% in the second quarter from a year earlier, to just $195 million. That’s not a big deal for Pfizer, which has been reinvesting past profits into an industry-leading lineup of new products. Ignoring losses from foreign exchange, Comirnaty and Pfizer’s COVID-19 antiviral treatment, second-quarter sales were up 14% from a year earlier.

Pfizer shares offer a whopping 5.9% dividend yield at recent prices and likely much higher in the years ahead. Last December, the company increased its quarterly payout for the 15th consecutive year.

The story continues

Pfizer expects adjusted earnings this year to be in the range of $2.45 to $2.65 per share. That’s more than the company needs to cover its dividend commitment, currently set at $1.68 per share per year, and increase it further.

Both partners had hoped that adding Pfizer’s flu vaccine to Comirnaty could boost flagging demand for the COVID-19 vaccine. But that’s much more important for BioNTech, which still relies on the vaccine for 56% of its total revenue.