Pfizer’s vaccine candidate works, but has problems

As the excitement ends Pfizer (NYSE: PFE) and BioNTechof (NASDAQ: BNTX) The announcement of the vaccine falters, some harsh realities have started to set in. The vaccine candidate – while a wonderful scientific feat – has some hurdles to overcome if it is to deliver on the promise of helping end the global pandemic.

Beyond regulatory approval, there are manufacturing, logistics and efficiency issues to be addressed. With the world on hold, there is no doubt that human ingenuity will prevail. But offering this vaccine to billions of people may not be the way the markets seem to assume. Let’s take a look at a few issues that the potential Pfizer vaccine will need to overcome to reward shareholders and save lives.

Approval

Pfizer seems to have crossed the most difficult technical barrier; the company has developed a vaccine that appears to be 95% effective in preventing COVID-19. However, this is only an interim analysis – a first look. While there were over 40,000 participants in the overall trial, this reported efficacy is based on 170 people. I’ll be curious to see if the efficiency rate holds up when more data is revealed.

We also do not know how long this vaccine will remain effective. Although vaccines are not normally approved unless they protect people for at least a year, these are not normal times. Pfizer has requested emergency use clearance from the FDA, which is expected to arrive in the coming weeks. Since the agency has noted that any vaccine with greater than 50% efficacy will be approved, I don’t see Pfizer having an approval problem.

Manufacturing

Messenger RNA – the method used by Pfizer’s vaccine candidate – is very unstable and no mRNA vaccine has yet been approved for human use. Creation of mRNA in specially designed stainless steel bioreactors requires sterile conditions with precise temperature and humidity. This instability is one of the reasons why the vaccine must be stored so cold.

As you can imagine, it is much easier to manufacture a small batch of mRNA for a clinical trial than it is to manufacture hundreds of millions of doses for large-scale distribution. In the distribution area, at least, Pfizer got some help. In May, the company agreed to purchase Valor glass vials, a container made by Corning (NYSE: GLW) specially designed and created for vaccines. Valor is a whole new category of glass that prevents contamination and allows high volume production lines to flow smoothly, without blockages.

Earlier in the pandemic, Pfizer faced a delay in replacing manufacturing equipment and securing more raw materials to make the vaccine. The company solved these issues and updated their production lines in the United States and Europe.

The next challenge will be the personalized bags that line the bioreactors where vaccines are produced. These bags act as liners in slow cookers; they are removed when batches are complete, eliminating the need to sterilize bioreactors after each batch. The shortage of these bags, which lasted for several weeks and is counting, was resolved in October when Operation Warp Speed ​​injected $ 31 million into the bag maker – now part of Danaher (NYSE: DHR) – to speed up production. Although funding is necessary, the constraint remains.

Distribution

Pfizer was careful to note that its vaccine candidate was not part of Operation Warp Speed, and in a similar approach, the company chose to distribute its own vaccine rather than rely on the government. Given the complex requirements, this is probably for the best. Almost everyone now knows that the Pfizer vaccine should be stored in colder temperatures than ever recorded in the United States (even Alaska!) – less than 94 degrees Fahrenheit.

To maintain the temperature while the vaccine is shipped from manufacturing sites in Wisconsin or Michigan, Pfizer developed a supercooled case. The “pizza box”, as it is called, keeps track of temperature and location at all times. Using dry ice, the vaccine is stored at the required temperature for 10 days once sealed. Checkouts can only be opened twice a day for less than three minutes at a time. Each case contains between 1,000 and 5,000 doses and may take four days to transit. This means that each site with a case would need to administer around 850 doses per day before the vaccine destabilizes. More dry ice can be added to extend the timeline, but that’s also missing.

Storage room

The types of freezers needed to store a vaccine at a negative temperature of 94 degrees Fahrenheit aren’t cheap and aren’t easy to find. Freezers can cost around $ 20,000 and the current wait is about six weeks. Renting space is an option, but cold stores only account for 2% of the overall warehouse market and the vacancy rate is less than 5%. It’s just not something that has generated a lot of investment.

While there is a sudden need for many freezers to handle many vaccines, hospitals can find it hard to spend money knowing they will never be able to use the equipment again. Add to the uncertainty of what the federal government will pay, if any, beyond the vaccine itself, and you will see the dilemma. Fortunately, Walgreens (NASDAQ: WBA) and CVS (NYSE: CVS) said they were ready and able to store the Pfizer vaccine. Given the nearly 20,000 locations between them, that fact alone can overcome most of the other hurdles the vaccine faces and ease the minds of investors.

Administration

Once the vaccine has been developed, tested, manufactured, shipped and stored, it should be administered. Once again, the Pfizer vaccine raises the bar for difficulty. The vaccine should be mixed at the administration site with a sterile liquid – usually water – and administered within six hours of creating the solution. Because the vaccine will be shipped in cases with a high volume of doses, rural communities may not have the population, or the infrastructure, to administer a case of doses while they are still cold. For this reason, residents of rural areas who want the vaccine may need to travel to a more centralized location to get it. At least in long-term care and nursing care facilities – where nearly a third of COVID deaths have occurred – there is a plan. CVS said it was ready to start administering a vaccine to these at-risk populations as soon as a vaccine is approved.

But there are reasons for cautious optimism

Earlier this year, Pfizer agreed to sell 100 million doses of its vaccine candidate in the United States, with an option for another 500 million. I am confident that the logistical challenges will be resolved and any current shortages will be resolved. Science has taken a big step forward in the creation of an mRNA vaccine, and the issues that will arise are likely to be those that have been resolved before, but perhaps on a smaller scale.

While much of the global discussion revolves around how to ensure less wealthy countries have access to the vaccine, the practical considerations span the globe. Think of Australia: although it is a developed economy, the country does not have the manufacturing capacity to create an mRNA vaccine on its own soil, as well as the cold storage chain to maintain the freezing temperatures required in the long term. If this country is to distribute the Pfizer vaccine, it will have to figure out how to get the drug from the American Midwest to the arms of its citizens in less than 10 days.

Despite the challenges, the United States is fortunate to be where we are with the vaccine. I believe Pfizer’s existing cold chain infrastructure and foresight will allow the company to deliver doses to citizens of most of the U.S. This should be enough to bolster actions and make the company one of the winners of the global vaccine race. It’s on my radar as stock to buy, but I’ll be a lot more optimistic when I see people lining up at the local clinic or pharmacy for doses of the vaccine. Only then can investors start seeing 2021 as the year life returned to normal.