Moderna, Pfizer: Expect vaccine stock volatility in 2022, Oppenheimer analyst says

Oppenheimer analyst Hartaj Singh joins Yahoo Finance Live to predict what vaccine stocks Pfizer and Moderna will do in 2022.

Video Transcript

BRIAN SOZZI: Moderna has been a key player on the COVID-19 vaccine front all year long, but oddly, its stock price has plunged 35% in the past three months. Let's check in with Oppenheimer's senior biotech analyst, Hartaj Singh, who covers Moderna. Hartaj, always nice to see you. Thanks for joining us. Perhaps you could break down for us what is happening with Moderna shares here.

HARTAJ SINGH: Yeah, thank you Brad. Thanks, everyone, for having me, and I apologize again. My connection is not optimal phone connection. You know, the thing with Moderna is really simple. It's been going on since the second quarter, you know, since the second quarter call where people are looking at the forward estimates, you know, off the stock, and thinking about what they're going to do in revenues in 2022 and 2023, and when that tails off or how much will the tail off be.

Also the new variants are causing concerns because, you know, vaccine efficacy is sort of going down. The prime boost, which is a two shot regimen, and then you give up a third shot, which is now called the booster, that's holding up, but that's causing concern to investors. And then finally, you know, there's stuff like IP concerns, competition from Pfizer where Pfizer's team's been-- and BioNTech-- have taken a step forward on the commercial side. So all of that is leading to, I would say, a lack of visibility in 2022 and 2023, and the pipeline is still not there to support, you know, the COVID-19 franchise.

So I think because of that, the stock has been kind of range bound, right? So since it kind of has come down after the second quarter call. It's been range bound in that 250 or 350 range, but that's essentially what's been going on.

JULIE HYMAN: Hartaj, do you think the clock is ticking on Moderna to come out with the next-- the next thing on this platform? I know they've been developing a flu vaccine on the RNA platform. How much time do you think investors will give them to start to roll out more products?

HARTAJ SINGH: You know Julie, I think that's honestly, in some ways, going into 2022, the critical question, right? So we keep on looking at the pipeline, but you know, we have what I would call a bullish neutral holding, and that's our rating on the stock, and we just kind of gently remind people-- of course, we're not, you know, we don't have a buyer [INAUDIBLE]-- but we gently remind them, even as a neutral, that this is one of only two large scale mRNA players out there, right?

So yes, we are waiting for the pipeline. The second half of this coming year, 2022, we'll probably see some material catalysts, maybe earlier, but most likely the second half, flu, cytomegalovirus. But there's a scarcity value that's attached to assets that really there's nothing else like Moderna out there other than [INAUDIBLE], right? So not from a strategic or an M&A perspective, it's that the platform that can be rolled out and the future revenues that, you know, long term shareholders, people want to own it more than one or two years, can own. Those people will support it, so yes, I agree with you, there is some pressure on the pipeline.

But I do think that that scarcity value of their platform, its scalability and its uniqueness, is something that long term investors are supporting and holding firm by.

BRIAN SOZZI: And Hartaj, you just wrote a note for looking out to next year, and you're seeing an extremely volatile environment for COVID-19 vaccine makers, but it looks like you're favoring Gilead. Why is that?

HARTAJ SINGH: You know, look, so you know, Gilead's remdesivir, which hardly ever gets talked about, is really, you know, the only drug that's actually worked against-- you know, it's working against all variants, right? And yes, its clinical results have not been spectacular, but it saved the health care system tremendous amounts of money. It reduces the time that a patient spends in the hospital, you know, by up to a third. And you know, when it's $30,000, $40,000 per patient per visit into the hospital for COVID-19, that adds up over tens of thousands of people.

So and you know, they just had a phase 3 trial in earlier stage patients that was successful, so we expect remdesivir use to continue, and they have a couple of critical oncology readouts coming out in January, February. If those work, I think this is really the stock to own, both from a COVID-19 perspective and a non-COVID-19 perspective. You kind of might get the best of both worlds with Gilead in the next few months.

JULIE HYMAN: And Hartaj, we also have not seen the end of new vaccines, right, especially in the US market. We could be seeing a Novavax vaccine here. You highlight INOVIO in your note, as well. Will we see as much upside for these new players, and conversely, will we also see maybe some damage for the existing players in the market once these new guys come out?

HARTAJ SINGH: Right, so Julie, you know, look. Here's the thing about new vaccines-- and you know, bio tech is still an idiosyncratic industry in the sense that we're 1/10, 1/15 the size of tech, right? So people are still just getting to learn it. Think about mRNA vaccines and INOVIO. They have a DNA vaccine which we believe, you know, that platform is very analogous to mRNA. Going forward, you know, you were just talking about electric cars, right? The Department of Heal-- the government looking into purchasing that.

It's not just that the electric cars are more carbon neutral, it's that they're more flexible. There's a scalability to that in terms of manufacturing. There's an ease of manufacturing there compared to, you know gas fired cars. It's the same thing in bio tech. The mRNA vaccines, the DNA vaccines are very scalable. They're very flexible. You can get new vaccines to new variants within a few months. The older platforms, you know, we don't cover Novavax. We don't cover the other companies.

Those will struggle. They will still have a niche because, you know, in a span of 8 billion people, you need all types of platforms. But I do think if the mRNA vaccines, that if INOVIO's vaccine is successful in its phase 3 trial in the first half of next year, those will really be the clear winners from a speed, scalability, and efficiency perspective, you know, in infectious diseases.