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Pausing of AstraZeneca's Coronavirus Study Aids Pfizer, Moderna

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Shares of leading coronavirus vaccine-makers including Pfizer (PFE - Free Report) , BioNTech (BNTX - Free Report) and Moderna (MRNA - Free Report) as well as other coronavirus vaccine developers rose as AstraZeneca (AZN - Free Report) halted late-stage studies on its coronavirus vaccine candidate.

Earlier this week, AstraZeneca voluntarily paused all global late-stage clinical studies on its coronavirus vaccine candidate for an indefinite period, following an unexplained illness of a study participant in the United Kingdom. An independent committee will review the safety data from the study. The company stated that the pause is a routine action in a clinical study whenever there is a potentially unexplained illness and reflects its commitment toward providing a safe vaccine.

We note that AstraZeneca and eight other coronavirus vaccine-makers have signed a pledge to pursue approval for their vaccine candidates only upon meeting efficacy and safety criteria in their late-stage clinical studies. Other companies are Moderna, GlaxoSmithKline, Johnson & Johnson, Merck, Novavax, Pfizer, BioNTech, and Sanofi.

The temporary pause in AstraZeneca’s late-stage clinical studies across the globe is likely to impact the timeline for its vaccine development. The company is trying to minimize the impact on timeline and planning to restart the study as early as possible.

Stocks of AstraZeneca’s competitors gained following its setback due to an anticipated decrease in competitive pressure in the field of coronavirus vaccine development that has attracted several players. Vaccine developers that saw a gain on Wednesday in the stock market include Moderna, Pfizer, BioNTech, Novavax, J&J, Glaxo, Vir Biotechnology and Sanofi that were up 4.7%, 0.7%, 4.2%, 6.5%, 1.7%, 2%, 5.2% and 2.5%, respectively.

A delay in AstraZeneca’s vaccine development may bode well for its competitors, especially the leaders in the field — Moderna and Pfizer/BioNtech —whose COVID-19 vaccine candidates are in late-stage development. Any company that will develop a safe and effective coronavirus vaccine first will have an advantage due to significant demand amid the pandemic. Moderna’s bull run so far this year has been primarily based on potential revenues from the sale of its coronavirus vaccine, following its anticipated approval or emergency use authorization in the fourth quarter of 2020.

We note that the pause in AstraZeneca’s clinical studies may have implications on strategy for other ongoing coronavirus vaccine studies. However, vaccine candidates of Moderna and Pfizer/BioNtech use mRNA-based technology, different from the mechanism of AstraZeneca’s vaccine candidate, which uses a recombinant viral vector technology. Hence, any negative outcome from review of safety data from AstraZeneca’s study will likely have a limited impact on stocks of these two leading players. However, investors must wait for any update from their ongoing late-stage clinical studies. They also must exercise caution while investing in biotechs engaged in developing coronavirus vaccine as several of them are trading at massive valuations based on potential revenues, majorly from COVID-19 vaccine. Any developmental setback or missing of commercialization expectations will weigh heavily on these stocks.

All the leading coronavirus vaccine makers — AstraZeneca, Moderna, Pfizer and BioNTech — carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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