Morgan Stanley on Pfizer, Covid vaccine succeeded beyond expectation

Morgan Stanley says the target multiple of Pfizer is at a slight discount to the peer average of 13x, which Morgan Stanley believes is warranted due to slightly lower growth prospects. Pfizer-BioNTech announced that its Covid-19 vaccine achieved >90% vaccine efficacy in preventing Covid infections based upon the first interim efficacy analysis of 94 confirmed cases, conducted on Nov 8. The efficacy is stronger than anticipated. The PR stated that "After discussion with the FDA, the companies recently electedtodropthe 32-case interim analysis and conduct the first interim analysis at a minimum of 62 cases. Upon the conclusion of those discussions, the evaluable case count reached 94 and the DMC performedits first analysis on all cases."

Pfizer plans to submit Emergency Use Authorization (EUA) in the third week of Nov, after the 2-month median safety milestone is achieved. Morgan Stanley looks forward to tolerability and safety details, which have not yet been disclosed. The trial will continue through a final analysis at 164 confirmed cases. The trial has enrolled 43538 participants to date and of these 38955 had received a second dose as of Nov 8. PR noted that there will be a new secondary endpoint evaluating efficacy based on cases accruing 14 days after the second dose. Pfizer expects to produce >50 mn vaccine doses in 2020 and up to 1.3 bn doses in 2021.

Risks to Upside:

Upside risks are Covid vaccine success, better Covid vaccine data than competitors, core business financial upside, positive pipeline developments and encouraging strategic action.

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Risks to Downside:

Downside risks are Covid vaccine failure, Covid vaccine underperforms competitors, financial shortfalls, pipeline disappointments, disappointing strategic action, and negative U.S. drug pricing developments.