J&J Investors Are Fixated on Vaccines Like Everyone Else
(Bloomberg Opinion) -- The world just got another reminder that vaccine development isn't easy. Johnson & Johnson announced Monday that it was pausing the 60,000-person trial of its Covid-19 vaccine three weeks after it started because of an unexplained illness in a participant. The news comes a month after AstraZeneca Plc announced its own pause for a similar reason. That vaccine has yet to resume its trial in the U.S., though studies have restarted in other countries.
The news cast a shadow on J&J's third-quarter earnings Tuesday, which showed an otherwise improving business. A better-than-expected recovery for medical devices, the unit hit hardest by Covid-related care slowdowns, helped it beat Wall Street expectations for quarterly sales and raise full-year guidance. The vaccine news seems to have outweighed that in investor’s minds, though it didn't entirely overwhelm it, with J&J shares falling 2% in morning trading.
The pause could be brief if the illness proves unrelated to the vaccine, and it may be a few days before there’s more information, according to the company. Whatever the case, the halt may prove concerning because it’s the second potential safety issue involving a similar kind of vaccine. Both J&J and AstraZeneca are developing shots that use a common cold virus engineered to be harmless to deliver material that prompts a protective response. It's also the second pause among the four vaccines furthest down the road to U.S. approval, so at a minimum, the trial halt increases the chances of a vaccine supply crunch.
J&J's share drop might be an overreaction; the company does not plan to profit on its vaccine during the pandemic and profits plenty elsewhere. The broader market, though, might have more trouble getting over this second setback.
The worst-case scenario, discovering that adenovirus vaccines carry a higher risk of rare side effects, is unlikely. But the risk needs to be ruled out, and the long U.S. pause for AstraZeneca's vaccine suggests that regulators are taking safety issues seriously. Further delay is possible for both programs, especially if enrollment is slow upon restart. That may have implications for the recovery. AstraZeneca has signed contracts to provide more doses worldwide than any other drugmaker, and J&J's supply could be rolled out faster and go further than others since the company is pursuing a single-dose regimen.
The world may have to rely more at first on the other two vaccine front-runners — Moderna Inc. and the partnership between Pfizer Inc., and BioNTech SE. The two groups began final stage trials in late July with vaccines that use the body’s mRNA messaging system to prime the immune system, and they hope to have around 120 million doses between them by the end of the year. That's enough for 60 million people, because both require two shots. Supplies will ramp next year, but it's going to take time to vaccinate enough people to control the pandemic even if both are highly effective and hit manufacturing targets. Final-stage trials of the next batch of prominent candidates, from Novavax Inc. and a partnership between Sanofi and GlaxoSmithKline PLC, have yet to begin.
J&J executives said the recovery of its device business is owing to an increase in procedures worldwide, suggesting that the world is finding better ways to keep things like essential non-Covid related medical care going even as outbreaks keep coming. The company’s guidance suggests it expects that trend to continue, and its drug and consumer units also performed well. Other businesses and many people are likely to have a harder time should the pandemic stretch longer, however.
Businesses, individuals, and governments must take a realistic view of the likely difficulties of the months to come. Holding out for immediate shot salvation will likely bring disappointment.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Max Nisen is a Bloomberg Opinion columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.
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