Moderna announced on Monday its coronavirus vaccine is 'highly effective'. ClearBridge Investments Healthcare Analyst Marshall Gordon joins Yahoo Finance to discuss how more pharmaceutical companies are close to developing a potential vaccine.
AKIKO FUJITA: Let's bring in Marshal Gordon. He is a ClearBridge Investments Healthcare Analyst. And Marshall, you know, this news coming out today, as well as last week, certainly even more promising, when you consider this most recent wave that we had seen of these COVID cases taking hold of all 50 states. How are you processing the news today?
MARSHALL GORDON: Well, look, I think it is very promising. And what we've seen now is a validation of the mRNA platform for making vaccines. And this is really consistent with what we've been thinking all along, which is that you will see emergency use authorization soon, probably in December. But it's not full approval. And you know, you will probably, by the year end, see the first people start to be vaccinated, which is a really exciting prospect, hopefully, you know, bringing us steps closer to a greater normalization of activity here in the States.
ZACK GUZMAN: And when we look at some of these other competitors out there-- obviously, we got Pfizer news last week, and now Moderna. But also, there are plenty of other companies working on vaccines themselves. I'm looking at shares of Novavax today. That's off close to 10%. I'm curious to get in your mind what kind of pressure some of these other vaccine candidate companies out there might be feeling. As we get 90% and 94% efficacy, how much pressure is now building on some of these other competitors?
MARSHALL GORDON: Well, I think it sets a high bar for certain. But what we don't know is how well tolerated a lot of these vaccines will be in different populations, as well as whether or not they'll work in, perhaps, older people, or even if we could get programs that offer vaccines that are only a single shot, rather than two shots. So I think what's really important to watch is continuing how many of these vaccines are going to make it to market. And that will also set a competitive environment as well. And that will be important for things like pricing, as we move down the line.
AKIKO FUJITA: I mean, having said that, Marshall, you know, from an investment standpoint, you say this is not the time to really be chasing the vaccine stocks. But if you look at the sector as a whole, it really comes down to fundamentals. So when you look at a name like Pfizer, like Moderna that where we have seen this big pop on the back of some positive vaccine news, how are you looking at that from an investment standpoint?
MARSHALL GORDON: So I think expectations that are built into vaccine stocks are actually pretty high. I think the market has generally set an expectation that everyone is going to require any annual vaccination with one of these vaccine candidates. I think with the strength of the responses and the strength of the efficacy that we've seen so far, I'm not so sure that that's the right assumption.
I think it's certainly possible that we might get greater durability out of the vaccines. And what that means is it's actually potentially an even smaller economic opportunity. And as you all pointed out earlier, there are a number of vaccine competitors following the Pfizer's and Moderna's of the world. And to the extent that we have a large number of competitors eventually out there, I think there'll also be questions around pricing. So I'm much more likely to sell some of these stocks, where I see relatively high expectations on the good news, rather than chase them here.
ZACK GUZMAN: Yeah, I'm glad to hear you're mentioning pricing here. Because obviously, we've kind of gone through this. When we first got the Pfizer news, a lot of people were wondering, Operation Warp Speed. Who was getting big money from the government here? And what does that look like, in terms of pricing? I mean, Moderna did take money for R&D here. Pfizer did not. But when you look at some of the purchases for these candidates, it generally works out to about $19.50 a dose coming from Pfizer, $24.80 per dose coming from Moderna here. So what kind of pressures are you seeing, in terms of pricing, since we know both these companies have talked about profiting off these vaccines before?
MARSHALL GORDON: Well, look, we don't have any long-term commitments on pricing. I think the way I'm looking at it is that the initial prices are probably going to be the highest we'll see. And I would expect prices to come down from here, particularly if we find that other vaccines are efficacious, as well as the initial ones, such as those from Pfizer and Moderna.
AKIKO FUJITA: So when you look at these names that we've been talking about that have been in the vaccine developments, who do you think is best positioned from the investment standpoint? You know, we know the efficacy now of two of the drugs that have been developed. But to bring it back to where the markets are right now, how do you think that investors watching at home should be viewing these names?
MARSHALL GORDON: So as I said-- well, first of all, I think it's important to realize that, you know, while we see some effectiveness, we don't really have comparisons between the vaccines yet and may never really have comparisons between them. So it will be hard to determine whether one is truly better or not than another. But in terms of investment in the specific programs, the way I look at it is that I'm actually turning my attention sort of back to the fundamentals of the companies, underlying, you know, the fundamentals of Pfizer, the fundamentals of Moderna, outside of the vaccines. Because I think the opportunity for the vaccines is largely priced into-- the economic opportunity is largely priced into each of these companies in the leads, the Pfizer's and Moderna's of the world.
ZACK GUZMAN: Yeah, we've been hearing that from a few health care analysts, who that noted the run-up here has really been a result of that, kind of, excitement around the progress being made by some of those companies. But one of the key questions now, I guess, turns to rolling these things out. And I mean, we can compare some things already from the announcements that we've gotten.
It sounds like Moderna at least has one advantage, in terms of the cold chain and not necessarily needing to keep their vaccine candidate at as low of temperatures for as long a time as Pfizer's here. So when you talk about the distributional question marks that still remain, how big does that loom, in terms of actually getting this to the people that need it?
MARSHALL GORDON: I mean, I think there is enough capacity throughout the system, as well as enough focus amongst those who participate in the supply chain, the distributors, as well as the government, to make sure that these vaccines get out quickly and safely. So I am not anticipating a large challenge that won't be met anyways, in terms of getting these vaccines out and into the arms of patients, so to speak. I think that, perhaps, as we move further down the line, and if, in fact, people do need booster shots, beyond the initial round of two, that those types of concerns, around the formulations, around the storage and handling characteristics of the vaccines, then that becomes, perhaps, more important. But I would also assume that the companies, like Pfizer and Moderna, don't stand still, and that they are going to also continue to enhance their vaccines-- if nothing else, the formulations-- to make them easier to transport, and use, and disseminate widely.
AKIKO FUJITA: Marshall Gordon, Healthcare Analyst with ClearBridge Investments. Good to talk to you. Thanks so much for your time.