The great pandemic vaccine bubble, charted

Two MainFT stories today seek to recover some pandemic-era repressed memories. There’s a long read on how bets on video networking software, static bikes and online retail destroyed $1.5tn in market value, and there’s news from AstraZeneca that it’s shelving its Covid-19 vaccine.

Their common thread is that in investing, four years can be a lifetime.

It was obvious from the start that when considering the importance of Covid treatments in general, and AstraZeneca’s in particular, pharma company values were not the relevant measure. Still, it’s easy to forget how much the hopes of vaccine profiteering moved markets in the run-up to the FDA approving the Pfizer-BioNTech jab in August 2021.

A year earlier, SVB Leerink estimated that there was already $115bn of Covid vaccine value already priced into pharma stocks. To get anywhere close to that valuation would require biennial re-vaccination in perpetuity across the developed world, at a long-term list price of $30 per jab that was unaffected by competition, it said.

Instead, demand vanished as governments wound down their buying programmes. Pfizer’s first-quarter Covid vaccine revenue fell 88 per cent year on year to $354mn. Moderna’s revenue was $167mn last quarter, down 91 per cent. Both companies guide for no near-term improvement and are pinning their hopes on combination jabs that offer protection against flu and respiratory illnesses as well as Covid.

Stocks like Pfizer, J&J and Sanofi are diversified enough for falling expectations around Covid vaccines to not matter overly. For AstraZeneca, the expectation was always that its vaccine was a one-off endeavour, and the bubble had burst by the time its pledge to sell the jab at cost had expired.

The real pain was concentrated among pure-play biotechs that were overhyped on trial progress as they rapidly ran out of money. Stocks like Moderna:

But also Novavax:

Cansino Biologics:

Inovio Pharmaceuticals:

Arcturus:

Vaxart:

Ibio:

And Dynavax:

It’s not just a Covid story. Rising interest rates have destroyed all sorts of jam-tomorrow stocks by eroding the present value of potential earnings that were very far in the future, while the poor quality of biotech floats in 2020 and 2021 probably encouraged some investors to give up entirely on the sector.

Whichever way, it all adds up to an expensive reminder of the long-odds lottery nature of drug development. Let’s hope it’s forgotten by the time the next pandemic arrives.

Further reading
— Small stocks, big problems (FTAV)