Pharmaceutical company Pfizer, Inc. (NYSE: PFE) announced that it has entered a new research, development, and commercialization collaboration agreement with next-generation immunotherapy company BioNTech SE (NASDAQ: BNTX) for the development of a potential first mRNA-based vaccine to prevent shingles (herpes zoster virus, or HZV).
Shingles is a painful disease that impacts about one in three individuals in the United States during their lifetime. Shares of Pfizer rose 2% to close at $55.63 on Wednesday.
The collaboration follows the companies’ success in developing the first approved and widely-accepted mRNA vaccine to help prevent COVID-19. Markedly, this is the third partnership between Pfizer and BioNTech in the infectious diseases field. The companies previously collaborated on the influenza vaccine in 2018 and on the COVID-19 vaccine in 2020.
Terms of the Agreement
As per the terms of the new collaboration agreement, Pfizer’s proprietary antigen technology and BioNTech’s proprietary mRNA platform technology used in the companies’ COVID-19 vaccine will be leveraged to develop the vaccine, with costs shared by both companies.
Further, Pfizer will have the rights to commercialize the potential vaccine globally, excluding Germany, Turkey, and certain developing countries where BioNTech will enjoy commercialization rights. Gross profits will be shared by the companies from the commercialization of any product.
Additionally, Pfizer will pay an upfront amount of $225 million, which includes $75 million in cash and an equity investment of $150 million. Additionally, BioNTech will receive up to $200 million in milestone payments. Notably, BioNTech will pay $25 million to Pfizer for its proprietary antigen technology.
Official Comments
BioNTech CEO Ugur Sahin said, “The collaboration aims to develop a new mRNA-based vaccine against shingles, leveraging the expertise and resources of both companies. Adults aged 50 years and older as well as vulnerable populations like cancer patients are at an increased risk of shingles. Our goal is to develop an mRNA vaccine with a favorable safety profile and high efficacy, which is at the same time more easily scalable to support global access.”
Other Developments
Biohaven Pharmaceutical Holding (NYSE: BHVN) and Pfizer have completed their collaboration transaction, entered in November. The agreement, which includes Pfizer’s commercialization of rimegepant and zavegepant outside the U.S., have become effective post receipt of all regulatory approvals. Biohaven will retain the rights to the U.S. market and will continue to lead research and development globally.
Analyst Recommendations
Yesterday, Bank of America Securities analyst Geoff Meacham upgraded Pfizer to a Buy from a Hold and increased the price target to $70 (25.83% upside potential) from $59.
Meacham’s move on Pfizer is based on “expectations of a dramatic rollout of Paxlovid (an oral Covid-19 therapy) in 2022 and significant investments in the pipeline.”
“Since 2020, investors have focused squarely on Pfizer’s success in battling COVID-19, namely through vaccines and now oral agents,” the analyst added.
The rest of the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 8 Buys and 10 Holds. The average Pfizer price target of $58 implies 4.26% upside potential from current levels. Shares have increased 56% over the past year.
Smart Score
Pfizer scores a “Perfect 10” from TipRanks’ Smart Score rating system. This makes it one of TipRanks’ Top Stocks and implies that the stock has strong potential to outperform market expectations.
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