The clearest way to evaluate companies that make vaccine candidates – and the financial gains that are likely to follow – is to compare those candidates. How are they supposed to work? Do you work? When will they be available? And how important is a successful vaccine to a company’s financial prospects?
How they work
Some of the leading candidates use the adenovirus approach. A genetically modified virus like the common cold is used to transport a gene from SARS-CoV-2 into the body. There, cells are triggered to produce the spike proteins that are a characteristic feature of the coronavirus. These should trigger an immune response and offer some protection against the coronavirus.
One of the leading candidates of its kind was developed by Johnson & Johnson (NYSE: JNJ)and another is from Oxford University with which he works AstraZeneca (NYSE: AZN). But if these two candidates work in a similar way, how can one judge which stock is the better stock for investors keen to capitalize on the possibility of a successful vaccine?
Do you work?
The AstraZeneca vaccine demonstrated its immunogenicity in Phase 1 and 2 studies. One month after inoculation, this resulted in a quadruple immune response in 95% of recipients. T cells – white blood cells that “remember” an antigen and can rest until needed to fight an infection – were present two months after the injection. The company’s vaccine is tested on 50,000 to 60,000 people worldwide.
The Johnson & Johnson vaccine will be studied in two age cohorts, a group aged 18 to 55 and a group aged 65 and over. This is noteworthy as members of the latter group are most at risk of severe COVID-19 cases.
The biggest difference between the Johnson & Johnson vaccine candidate and most of the others is that a single dose is used instead of a double dose. This would greatly increase the number of people who could initially be vaccinated. It also removes the risk that would be inevitable with other vaccines – that people receiving a dose might skip the required booster dose. (Some clinical trial participants receive a second dose of the vaccine from Johnson & Johnson for research purposes.)
The Johnson & Johnson vaccine also showed strong immunogenicity in both age groups during the Phase 1 and 2 studies. In fact, 99% of the participants showed an immune response. Phase 3 trials began in early September and will enroll 60,000 volunteers in 200 locations.
When will they be ready?
Unfortunately, both companies’ clinical trials are currently on hold in the United States. The hiatus for Johnson & Johnson occurred this week, and not much is known about the circumstances yet. One of the participants in a clinical study developed an unexplained disease. In such cases, the studies are halted to allow doctors and an independent committee to assess whether the patient’s condition is in any way related to the vaccine being tested.
Assuming the vaccine would prove sufficiently safe and effective, Johnson & Johnson had expected to sell it in early 2021. Management expected to produce enough of it to vaccinate 1 billion people a year.
More is known about the circumstances that halted the US arm of AstraZeneca’s clinical trial for more than a month. Study participants in the UK experienced two neurological events that raised concerns that they were serious side effects of the vaccine. All trials for the candidate outside the US have restarted, including in Brazil, Japan and South Africa, as well as the United Kingdom. According to a federal official, the U.S. trial could resume as early as this week. It actually took the US Food and Drug Administration (FDA) a month to get the required data from the company because the data formatting was different between the records and the European regulator records. In September, the company said its vaccine could still get approval this year if regulators acted quickly. Sure they don’t.
How important is it to the company?
Both Johnson & Johnson and AstraZeneca have agreed to sell their vaccines for no profit, only during the pandemic. In April, Oxford University offered to donate the rights to its COVID-19 vaccine candidate to each drug manufacturer to make the vaccine free or cheap. A few weeks later, the university reversed course and signed an exclusive contract with AstraZeneca for sole rights with no price restrictions. However, some patents for this candidate are held by Vaccitech, a for-profit spin-off 50% owned by Oxford and 5.25% owned by two researchers with Oxford.
AstraZeneca is committed to providing 2 billion doses to governments and other agencies, including 400 million doses to the European Union. It has also signaled that its vaccine may only cost “a few dollars” per dose, which would still have a significant impact on ROI. The company had sales of just over $ 24 billion in 2019.
Johnson & Johnson, on the other hand, has an incredibly diversified drug, medical device, and consumer products business, with sales of $ 82 billion last year. The blue chip company is widely considered to be one of the safest investments you can make. The U.S. Department of Health has already signed a contract to purchase 100 million doses of Johnson & Johnson’s coronavirus vaccine for $ 1 billion, if approved, with an option to order an additional 200 million. While this would be significant revenue, it would not have a material impact on the company’s overall performance.
Which to choose
With so many vaccine candidates studied, the landscape is confusing to say the least. However, two of the largest and most stable pharmaceutical companies in the world are offering investors the opportunity to benefit from a potential COVID-19 vaccine without the success of those programs being critical.
While AstraZeneca and Johnson & Johnson don’t turn out to be big winners in developing a coronavirus vaccine, investing in both should be safe. That begs the question: which is a better coronavirus population?
Johnson & Johnson shines in this comparison thanks to its manufacturing capacity, single-dose advantage and lack of complicated financial arrangements. The plan is to produce hundreds of millions of cans, and any profits made from it will not be shared with the research partners – they will go directly to the Janssen subsidiary. Although both vaccine trials are currently on hold in the US, Johnson & Johnson is better positioned to make a financial return on its potential coronavirus vaccine.
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