Pfizer shows that its research and development is powerful. It makes the stock a good long-term bet.

Two years ago, Pfizer (ticker: PFE) CEO Albert Bourla asked investors to make a big bet on the R & D business that Dorsten had rebuilt over a decade. The bet looks smarter than ever.

Bourla has abolished Pfizer’s unpatented pharmaceutical division and the last consumer health product, leaving a pure biopharmacy company that uses the power of Dorsten’s science to decide whether to live or die.

of November 2019 cover story, Barron’s Bourla and Dorsten claimed they could pull it off.

New antiviral data from Pfizer Barron’s Made two years ago. However, continuing to benefit from pandemics poses new risks as criticism of global inequality in vaccine distribution grows. Low-income countries account for less than 1% of the more than 7 billion doses administered worldwide. If Pfizer’s antiviral distribution continues to favor wealthy countries, company stocks can eventually suffer.

Pfizer’s share price surged 10.9% on the day the data was released, marking the highest daily in at least 20 years. Still, current stock prices are changing at around $ 50, and investors continue to underestimate the company. Investors have set Pfizer’s price at 12 times the expected earnings next year, which is cheaper than its peers.

Johnson & Johnson

(JNJ) and

Eli Lilly

(LLY).

Pfizer’s discounts could be due to concerns about the patent cliffs that pharmaceutical companies face at the end of the decade. The company will lose the monopoly on a handful of drugs that generate billions of dollars in annual revenue.

The worries are justified, but Pfizer’s scientific coup should give investors confidence that the company’s science can safely overcome the cliff. It may take some time for the market to catch up, but it is a promising opportunity for long-term investors.

The success of antivirals is the best ever example of Pfizer’s scientific capabilities.

While Pfizer’s Covid-19 vaccine emerged from the German biotechnology lab

BioNTech

(BNTX), a new Covid-19 antiviral, was launched by what Dorsten called the “dream team” of scientists in Pfizer’s own lab in the northeastern United States.

In the early days of the pandemic, Pfizer split its efforts between working with BioNTech on vaccines and the quest for Covid-19 pills. Vaccine efforts have been carried out on a large scale. Dorsten called it a “megateam” across the Atlantic.

The antiviral project was a much smaller undertaking. A group of Pfizer experts was working with the resources left behind in the promotion of the vaccine.

“Small molecules were like an agile, laser-focused, high-end team with fairly modest resources,” says Dollsten.

Dorsten has brought together some of Pfizer’s most experienced scientists to work on an antiviral project that includes Charlotte Alerton, who is responsible for its medical design. Scientists began with a study that Pfizer did a few years ago on a type of antiviral drug. Called a protease inhibitor..

However, Pfizer library protease inhibitors were given intravenously and did not work well when given orally. The team needed to understand how to adapt the drug to oral administration. This is a lot of work.

“They really had to create a lot of new chemistry,” Dorsten said. Scientists have created 600 compounds to identify the right drug. This process can usually take years and was completed in a few months. “Here, four years are now four months,” he said.

Pfizer began testing pills on humans in March. Currently, Phase 2/3 of the drug, including those targeted at high-risk patients, those targeted at non-high-risk patients, those exposed to the virus but not exposed to the virus, etc. We carry out many tests. I’m still sick.On the first read, the drug appeared to be substantially more effective than the Covid remedy from.

Merck

(MRK).

“It definitely helps to prove that point. [Pfizer’s] Pharmaceutical research and development is better than people thought, “said Louise Chen, an analyst at Cantor Fitzgerald.

Chen says investors aren’t expecting to get closer to her thinking until the durability of the sale of Covid-19 vaccines and pills becomes clearer and the rest of the pipeline is proven.

“There is no event that I think will trigger a stock revaluation at the next level,” she says. “I don’t think it will happen until they work.”

It makes betting on Pfizer a long-term play.In the meantime, experience

modern

(MRNA) Over the last few weeks, vaccine manufacturers have highlighted the possibility of scrutiny of unequal distribution of vaccines.

Biden administration officials are increasingly frustrated with Modana and are calling on companies to increase production so that they can offer higher doses to low-income countries at non-profit prices. One chief executive is calling on the company to “step up.”

Moderna’s share has declined by more than 40% in the last three months.

As the pandemic continues, Pfizer risks damaging the enormous credit gained when it introduced the Covid-19 vaccine about a year ago. Earlier this month, Pfizer CEO Bourla said low-income countries blamed the unfair distribution of vaccines. Barron’s It was their fault that they didn’t order. Pfizer is selling a billion doses of vaccine to the United States at a non-profit price to donate to poor countries, with at least two billion doses of vaccine next year.

When it comes to antivirals, Pfizer only states that it will offer gradual pricing to poor countries with the same approach adopted for vaccines.

This is in contrast to Merck’s plan to make its own Covid-19 pill available to poor countries. Merck has signed a contract with a UN-backed group. This allows pills to be licensed globally without paying royalties to Merck.

According to Dorsten, Pfizer is considering licensing tablets using a mechanism similar to Merck. “We will consider those options,” he said. “We never said we would do anything different. We just want to ensure that the people involved have the advice and skills to do this.”

Such a step could not come immediately. At the end of last month, activists protested outside Bourla’s house, calling on Pfizer to share vaccine-making technology and accept orders from low-income countries rather than wealthy ones.

Aggressive plans to share that antiviral will help stop such criticism, keep Pfizer in Washington’s relatively good grace, and allow its impressive science to continue to grow inventories. ..

Write in Josh Nathan-Kazis at [email protected]