Six companies are currently evaluating COVID-19 vaccine candidates in the final stage of testing. Johnson & Johnson (NYSE: JNJ) not one of them.
J&J was one of the first to commit resources to the massive effort to fight COVID-19. It established a partnership with the US government very early on to develop a new coronavirus vaccine. It is the largest healthcare company in the world, with enormous resources. However, Johnson & Johnson lags a lot behind many competitors, both large and small.
However, do not devalue J&J’s outlook. The health care giant’s COVID-19 vaccine candidate could have an ace in the hole and could make it the biggest winner of all.
One and complete
Johnson & Johnson released results from a preclinical study of its top vaccine candidate, Ad26.COV2-S, on July 30. You may not think pre-clinical results. will be a big deal. After all, several J&J competitors in the COVID-19 vaccine development race have announced results from early-stage human clinical studies.
The company reports that their experimental vaccine induces a strong immune response in non-human primates. In particular, the Ad26.COV2-S vaccination resulted in the production of high levels of neutralizing antibodies, which were able to prevent coronavirus infection. J&J notes that their vaccine candidate provided “complete or almost complete protection in the lungs from the virus” in animals in the preclinical study.
All that is great news. But what really makes these preclinical results stand out is the impressive immune response obtained with a single dose of Ad26.COV2-S. Vaccine candidates COVID-19 were far more distant in clinical trials that required two doses.
There are several main reasons why “one-shot” vaccines take precedence over vaccines that require multiple doses. First, the one-dose vaccine is cheaper. Second, people will be more likely to receive a single dose of the vaccine than to receive both doses of vaccine requiring two doses.
However, it is still early. J&J is evaluating both single- and double-dose regimens of Ad26.COV2-S in phase 1 / 2a clinical studies. The company also plans to include both dosing regimens in its planned phase 3 study. It is possible that testing could prompt J&J to follow a two-dose approach. However, if single-dose vaccination is as effective in humans as in non-human primates, Johnson & Johnson could easily move from lagging to leader in the COVID-19 vaccine space.
Play long game
Johnson & Johnson is believed to remain the underdog in the COVID-19 vaccine development race. Although the company is expected to begin final-stage research on the Ad26.COV2-S in September, it still lags behind several other drug manufacturers. You may also be surprised that so far, J&J has only had massive regulatory approval for a single vaccine. And that approval was launched last month, with Europe’s approval for the company’s Ebola vaccine.
But J&J seems to be playing a pretty good long game with development of its COVID-19 vaccine. It has spent more time identifying a candidate that is likely to be used with just one dose. The company is also charging much lower fees for vaccines compared to leading competitors. Last week, J&J reached an agreement with the US government to provide 100 million doses of Ad26.COV2-S for about $ 1 billion. For comparison, Pfizer and BioNTech is providing 100 million doses to the US with a value of 1.95 billion USD.
Valuing lower with less required dosage doesn’t seem like a smart strategy. Can J&J make more money selling a two-dose vaccine regimen at a more competitive price than its competitors? Sure. Healthcare stocks may even rise than so far if it applies this method.
However, a single-dose vaccine will be much more attractive to governments around the world. And J&J is likely to sell it at a high price while the pandemic is underway. After the pandemic ends, expect the company to raise prices.
Do you remember Aesop’s fable about the tortoise and the rabbit? It appears that Johnson & Johnson could be the tortoise in the race to develop COVID-19 vaccine. The tortoise can win real-world races – just like it did in the fable.