Morningstar's Guide to the Development of a Coronavirus Vaccine

Around the world, researchers are racing to develop an effective and safe vaccine or treatment for coronavirus, with eyes on clinical trials as well as Wall Street.

While once prosperous industries crumbled under the pressure of the pandemic, the healthcare sector rose to the challenge, and many pharmaceutical companies became household names this year. Typically, vaccines and treatments require years of testing and production before coming available at scale, however, several companies report that they are on track to have something available as early as the second half of 2020.

These companies not only possess the most potential to discover a vaccine or treatment but will also play an integral part in how the world will recover from the coronavirus.

This guide explores outlooks from our analysts, research and trials conducted by the leading pharmaceutical companies, and the most recent updates on developments for a coronavirus vaccine or treatment. Moderna Dominates COVID-19 Vaccine Manufacturers, at Least for Now The global COVID-19 vaccine market is currently dominated by mRNA firms, but competitors are gaining strength. U.S. Herd Immunity Could Be Coming by End of June Limited vaccine supply in other countries could make global immunity tougher to achieve, though. Moderna's Innovation Still Building a Moat The company's COVID-19 vaccine has shown the vast potential of its mRNA technology. J&J's COVID-19 Vaccine Shows Rare Events We expect the pause to be temporary because of the rarity of the adverse events—six cases among the more than 6.8 million doses administered in the U.S. BioNTech Reports Solid Fourth-Quarter Results We intend to modestly raise our fair value estimate based on this near-term strength as its its COVID-19 vaccine was the highlight of the quarter. Astra Posts Solid U.S. Phase 3 Data for Vaccine The wide-moat firm's vaccine showed a solid 79% efficacy level in preventing symptomatic COVID-19, which was better than we had expected. JNJ's COVID-19 Vaccine Receives FDA Authorization This adds support for U.S. herd immunity by summer. J&J Releases COVID-19 Vaccine Data The data doesn't significantly alter our valuation or U.S. herd immunity forecast. COVID-19 Sales Have No Major Impact on Drug and Vaccine Manufacturers We Cover However, the biopharma industry's ability to adapt and innovate to treat disease reinforces our moat ratings. Biopharma Companies With COVID-19 Treatments See $10 Billion Market in 2021 We expect quickly declining sales potential after that, however. COVID-19 Vaccine Distribution and Herd Immunity to End Pandemic Successful vaccine development and rollout will boost industry goodwill and reduce ESG risk, but we're keeping our valuations steady. Eli Lilly Provides Strong Outlook and Positive Updates The wide-moat firm continues to show significant innovation. We plan to increase our fair value estimate. FDA Supports EUA for Pfizer-BioNTech's COVID-19 Vaccine The FDA provided emergency use authorization, or EUA, for Pfizer and partner BioNTech's COVID-19 vaccine BNT162b2 on Dec. 11. However, we are not changing our fair value for either Pfizer or BioNTech as the EUA was largely expected. Regeneron Authorized to Use Anti-Body Cocktail We're maintaining our $500 fair value estimate for the narrow-moat drug manufacturer. Astra and Oxford Report Strong COVID-19 Vaccine Astra's vaccine looks potentially easier to transport with only mild temperature requirements as compared with the other vaccines. Pfizer/BioNTech Report 95% Efficacy Rate for Vaccine After reporting strong final data, we expect emergency authorization of Pfizer and BioNTech's vaccine by early December. Pfizer and BioNTech Report Strong COVID-19 Vaccine Data With the vaccine's efficacy over 90% and no major safety issues observed, we believe Pfizer and BioNTech's vaccine is set up for emergency use in late 2020, followed by full approval in 2021 pending supportive final data. After Disappointing Data, We Lower FVE for Gilead We lowered our fair value estimate for Gilead to $77 per share. Roche, Regeneron FVEs Hold After New REGN-COV2 Data Based on the data, we've increased our assumed probability of approval for the REGN-COV2 antibody cocktail to 100% from 60%. AstraZeneca's Pause on Vaccine Raises Uncertainty Despite the hold on vaccine development, we are not changing our fair value estimate or moat rating for the company. A Coronavirus Vaccine, or Three, Could Be Available by Year-End We expect multiple approved vaccines by early 2021 with wide vaccine distribution in developed markets by mid-2021. Slow Burn Likely Until Coronavirus Vaccines Are Widely Available Resurgences in outbreaks make it clear that ending the pandemic will require more than diagnostic testing, contact tracing, and social distancing. J&J Strengthens Pipeline With Momenta Acquisition This acquisition reinforces the intangible assets supporting J&J's wide moat, and we plan to raise our fair value estimate for Momenta. Maintaining our $85 FVE for Gilead Following Steady Q2 Management raised its product sales guidance for 2020 by a range of $1.2-$2.8 billion after incorporating coronavirus headwinds and highly uncertain sales assumptions for remdesivir. This guidance fits with our assumption of $2 billion in remdesivir sales in 2020, and we're maintaining our $85 per share fair value estimate for the firm. We Raise Our Fair Value for BioNTech Vaccine Profits We have added the firm's vaccine candidate to our model with a 60% probability of success. Drug Pricing Executive Orders Not Likely to Affect FVEs We don't expect these actions by President Trump to significantly affect our fair value estimates or moat ratings due to limited details, challenging implementation, and only minor impacts.

Timeline Accelerates for COVID-19 Drug Development Three new vaccines for coronavirus look poised for emergency use authorization in the U.S. this fall.

Pfizer, BioNTech COVID-19 Vaccines Fast-Tracked by FDA We expect no-moat BioNTech and wide-moat Pfizer to move one of the test candidates into the next phase, planned to start as early as this month.

3 Reasons Healthcare Is Showing Fit Performance And what we expect to see moving forward.

BioNTech and Pfizer Report Good News From Vaccine Trial A long road lies ahead as the trial continues, but we are maintaining our fair value estimates for the two healthcare firms.

Gilead Prices Remdesivir Above Our Expectations We are raising our fair value estimate for the wide-moat firm after its pricing announcement.

Undervalued Pfizer Remains Poised for Growth Strong cash flows support drug development and a dividend that yields above 4%.

Early Moderna Data Supports Vaccine by 2021 We're not expecting any changes to our fair value estimates for vaccine manufacturers, however, as most of the firms in our coverage with vaccine candidates have already stated that selling prices would be at a not-for-profit level.