Pfizer(NYSE: PFE) and Moderna(NASDAQ: MRNA) were rockstars on the stock market a few years ago. Both companies developed successful coronavirus vaccines, efforts for which they were being handsomely rewarded, financially and on the stock market. However, as the pandemic has subsided, both companies have lost their appeal in the eyes of many investors. Their shares have significantly lagged the market over the past couple of years.
Is there any hope that Pfizer and Moderna will bounce back? The answer is yes. These companies could even deliver excellent returns to patient investors over the next decade.
1. Pfizer
Although Pfizer hasn't performed well recently, it's important to point out that if the company hadn't made several important moves in recent years, its business would be substantially worse off. Pfizer's management opted to spin off the company's off-patent drug unit Upjohn, which had become a dead weight on its bottom line. Of course, there is also Pfizer's decision to team up with BioNTech to develop a COVID-19 vaccine.
This all happened as Xeljanz, one of the company's growth drivers, stopped being one partly because regulators discovered some safety issues with the medicine. If not for the revenue it generated thanks to its coronavirus portfolio, and the decision to spin off Upjohn, Pfizer would have performed even worse. All of these moves will pay off more than they already have. Pfizer's revenue in the second quarter grew by 2% year over year to $13.3 billion, marking the first time in a while that the company's sales moved in the right direction.
The drugmaker earned several important approvals last year and is still developing important medicines. Pfizer's investigational GLP-1 weight loss drug, danuglipron, posted positive results in a mid-stage study.
The company also recently reported positive phase 2 results for ponsegromab, a potential medicine for cancer cachexia -- cachexia is a condition that can cause significant weight and muscle loss in patients with certain diseases. During the study, ponsegromab led to statistically significant increases in weight and muscle mass in patients with lung cancer, pancreatic cancer, and colorectal cancer. Further, the medicine's safety profile seemed reasonable.
Cachexia is a life-threatening condition that affects about 9 million patients worldwide, but there are no treatments approved by the U.S. Food and Drug Administration for it. Could ponsegromab become the first? Maybe. The important thing is that Pfizer has an exciting pipeline that features 113 programs. The company will earn more approvals and label expansions over the years while its COVID-19 lineup will stop negatively affecting its top line. As Pfizer's financial results recover, it could deliver solid returns through 2034.
2. Moderna
Although it had performed pretty well this year, Moderna's shares recently plunged after it announced a pair of news. First, the biotech now projects that it will break even, at least on an operating cost basis, in 2028. Moderna had previously said it would break even by 2026. Second, the company said it would decrease its R&D expenses by about $1.1 billion by 2027 No vaccine developer can be successful without spending a fair amount on R&D.
There is no magic number, but the market felt that Moderna decreasing its R&D budget was a bad sign. That said, the company has made significant progress over the past couple of years. Moderna earned approval for mRESVIA, a vaccine for the respiratory syncytial virus. It reported positive phase 3 results for a combination coronavirus/influenza vaccine, an area where Pfizer's competing candidate failed.
Its stand-alone flu vaccine for seniors also aced a late-stage study.
Moderna remains a leader in the COVID-19 vaccine market. In the second quarter, it reported revenue of $241 million although that was a decrease of $344 million compared to the year-ago period. Moderna expects much more in revenue with the fall and winter seasons fast approaching -- that's peak vaccine season. It projects net product sales between $3 billion and $3.5 billion for the year.
Besides its candidates recently posting positive late-stage results, Moderna has a couple more products in phase 3 studies that could earn approval within three years. They include Moderna's personalized cancer vaccine and a potential vaccine against the cytomegalovirus. Moderna is already showing that its success in developing a coronavirus vaccine wasn't a fluke. The stock still looks attractive for long-term biotech investors.
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends BioNTech Se and Moderna. The Motley Fool has a disclosure policy.
