Pfizer Shares: Rising Cancer Rates Will Boost Revenues (NYSE:PFE)

Preamble

A little over a year ago, I wrote a successful article Pfizer (New York Stock Exchange: BFI) titled; Don’t rely on mRNA vaccines. It made it clear that the company would fail to reach its revenue targets with its mRNA Fabrications. in Fourth quarter 2022 report, the company expects sales of approximately US$10 billion for Comirnaty (about 100 million doses * approximately US$100 per dose). Unfortunately for Pfizer investors, Exact figure for vaccine revenues for the fourth quarter of 2023 The period was about half of what management had expected. As a result, the stock has lost a lion’s share of 30% since publication, however, there are signs of a slowdown in the downtrend.

The thesis of this article is that the company’s oncology drugs will see increased demand over the coming years due to the unfortunate rise in cases of cancers around the world.

There are many confirmations of the upward trend in the diagnosis of this deadly disease. For example, according to Yale University Medicine, there has been an alarming rise in cases of “early onset” cancer. These are cancers that are diagnosed between the ages of 18 and 49 years. What is even more disturbing is that the article continues to report this; “Another difference is that some cancers, such as breast cancer, tend to be more aggressive in younger adults.”

Professor Emeritus and senior researcher in epidemiology at Yale University, Harvey Reisch, MD, has made the controversial claim that many cancers diagnosed these days are so aggressive that they can be appropriately described as “turbo” cancers.

Why this happens among millennials is anyone’s guess. Excessive consumption of highly processed foods and alcohol or perhaps lack of exercise may be the cause. Without forgetting that there are more and more new chemicals that we are exposed to in the modern world.

The result is that Pfizer is ideally positioned to meet the demand for effective treatments for this expanding sector of medicine. Given Pfizer’s well-established reputation in oncology, the path is clear for the company to significantly increase its revenues in the coming years.

Global oncology market

The global oncology market is on the cusp of exponential growth, with forecasts estimating a rise from $222.36 billion in 2023 to a staggering $521.6 billion by 2033. This translates to a healthy CAGR (excuse the pun) of 8.9%.

In 2023, North America holds the top spot in the oncology segment with a market share of 48%. While this unenviable situation has a poor outlook in terms of outcomes, this can likely be attributed to factors such as advanced healthcare infrastructure, high cost of treatment, as well as high prevalence of cancer diagnosis within the region. However, Europe stands out as another part of the world showing high cancer incidence rates and thus has the potential for rapid growth in the market.

When it comes to certain types of cancer, lung cancer currently holds the dubious crown in the market. This can be explained by its high prevalence and, unfortunately, high mortality rate. However, breast cancer is expected to be the fastest growing sector, with diagnoses likely to surpass lung cancer diagnoses in the coming years.

According to reports, the introduction of favorable reimbursement policies for various cancer surgeries performed in hospitals is expected to further impact the industry outlook in a positive way.

Pfizer cancer treatments

Pfizer has a growing portfolio of cancer therapies, but it is important to note that its focus has intensified recently due to strategic acquisitions; Trillium Therapeutics in 2021 and Seagen in 2023

Proven cancer treatments:

• Ibrance (palbociclib): This is a targeted therapy drug used to treat certain types of hormone receptor-positive breast cancer.
• Xtandi (enzalutamide): This medication is used to treat castration-resistant prostate cancer.
• Inlyta (axitinib): This treatment is used with other medications to treat advanced renal cell carcinoma and other types of cancer.
• Camptosar (Irinotecan Hydrochloride Injection): This is a chemotherapy drug used to treat different types of cancer, including colorectal cancer.
• Elis (Epirubicin Hydrochloride Injection): This is another chemotherapy drug used for different types of cancer, including breast cancer.

Focus on expansion:

Pfizer’s recent acquisitions highlight its strategic intent to expand its cancer treatment offerings.

• Acquisition of Seagen (December 2023): This acquisition brings Pfizer a broad portfolio of antibody drug conjugates (ADCs), a promising class of targeted cancer therapies. These drugs combine an antibody that seeks out specific cancer cells with a cytotoxic agent (cell-killing poison) to deliver a targeted attack.
• Acquisition of Trillium Therapeutics (August 2021): This acquisition gives Pfizer access to Trillium’s immuno-oncology portfolio, focusing on drugs that harness the body’s immune system to fight cancer.

Overall, while Pfizer has some well-established cancer treatments, its recent acquisitions position it for significant growth in this area. They are actively expanding their portfolio to include innovative therapies such as anti-cancer drugs and immuno-oncology drugs.

New cancer treatments

Pfizer’s latest quarterly report gave a glowing picture of the company’s most advanced oncology therapies, with revenue up 19%.

The company has an excellent pipeline of new therapies in pivotal stages of development.

Finance

The first quarter results were not pretty for investors, primarily due to weak sales of Comernaty.

However, there were a number of positives. Initially, there was an upward revision to the EPS forecast for this year (from $2.05 to $2.25 to the new upper range of $2.15 to $2.35). Considering that Comirnaty’s sales have likely bottomed out, and that sales of the company’s oncology drugs are, as previously mentioned, rising at such a rapid rate, it certainly seems like a new upper range is achievable.

Among Pfizer’s massive cash pile of about $12 billion, the company announced plans to invest $2.5 billion in internal research and development projects. That’s a big number in my book.

Moreover, it must be admitted that the numbers look favourable. For example, the company has a P/E of 12.6, which is eye-catching for a number of reasons. To begin with, Pfizer’s P/E is low compared to the S&P as a whole, and compared to the industry average (19.79). Furthermore, given the thesis of the article, the company is on a clear growth path for the reasons explained here.

Let’s not forget the attractive 5.7% yield.

Risks

While things appear quiet on the Western Front, so to speak, there are potential challenges on the horizon, which include a variety of legal issues as well as some troubling evidence about potential issues with mRNA vaccines in general.

Legal problems

Texas Attorney General Paxton has accused Pfizer of misleading the public about its COVID-19 vaccine. It is alleged that Pfizer exaggerated the effectiveness of the vaccine. Specifically, “the pharmaceutical company’s widespread claim that its vaccine had 95% efficacy against infection was deeply misleading.” Additionally, Paxton criticizes Pfizer for failing to disclose data limitations and promoting the vaccine as a way to protect others, despite a lack of evidence to prevent transmission.

One can only wonder what the consequences might be for Pfizer and its shareholders if Ken Paxton succeeds in proving his case.

However, it must be said that Pfizer is a company with deep pockets and not without influence at the top. Therefore, we can assume that the company will vigorously defend its product with a group of lawyers and experts. Therefore, it is by no means certain that Ken Paxton will succeed in his lawsuit.

In the unlikely event that legal action against Pfizer is successful, one can only guess what costs the company will incur. However, the company has a large cash balance, so any financial penalties are unlikely to sink the company.

In fact, there is a recent example of a product being recalled as a result of its harmful effects. In 2004, Merck was forced to withdraw Vioxx, a popular painkiller, from the market after studies linked it to an increased risk of heart attacks and strokes. The controversy surrounding Vioxx led to a series of costly awards and a decline in the company’s stock price, which did not fully recover for about 8 years.

research

Messenger RNA is a single molecule built from nucleotides linked together. Each nucleotide contains a sugar (ribose in mRNA), a phosphate group, and a nitrogenous base. Bases are key players in mRNA structure and function. There are four main types of bases in mRNA; Adenine, guanine, cytosine and uracil.

For the purposes of summarizing the new research, we need to understand what uridine is. It is a single nucleotide whose nitrogenous base is uracil and is coupled to a ribose ring. The key point to note is that uridine is present in natural mRNA.

However, in mRNA vaccines, synthetic uridine is used, which does not exist in nature. One benefit of using synthetic uridine is that it makes vaccine mRNA more difficult to degrade and therefore remains active longer. Unfortunately, this synthetic uridine potentially has a number of adverse effects, including, but not limited to, temporarily disrupting interferon signaling.

Interferon signaling

Research accepted for publication in May of this year provides evidence that vaccination with mRNA vaccines leads to profound impairment of interferon signaling, leading to harmful and unpleasant consequences for human health. Researchers have identified potential far-reaching interference, for example, in cancer monitoring resulting from issues with disturbed interferon signaling.

In short, interferon is like a security system for your cells. It’s a group of proteins your body naturally makes when it detects a threat, such as a virus or rogue cell.

The disorders described in the paper likely have a causal relationship to a variety of conditions including tumorigenesis. The term oncogenesis is a fancy way of saying how a tumor first starts in the body.

Needless to say, if the body of evidence showing a link between mRNA vaccines and impaired interferon signaling grows, it will not be a good look for Pfizer. In fact, one could describe these circumstances as a public relations disaster and who knows what effect they will have on Pfizer. After all, many medical professionals have had to receive mRNA vaccines, and I think they would be upset to learn about these links between impaired interferon signaling and mRNA vaccines.

a race

Cancer treatment is a very crowded market, and Pfizer faces stiff competition from larger players. For example, their newly acquired platform developed by Seagen for producing ADCs will compete with companies like AbbVie for market share. AbbVie recently acquired ADC specialist ImmunoGen, significantly strengthening its ADC portfolio.

Daiichi Sankyo is another major force that has its own ADC technology platform and several certified ADCs on the market. The company is collaborating with Astra Zeneca to develop and commercialize ADCs.

summary

Pfizer, while not anticipating revenue from its COVID-19 vaccine, is bracing for growth in cancer treatments. Cancer diagnoses are on the rise globally, especially aggressive “turbine cancers” in young people.

Pfizer has existing cancer treatments such as Ibrance and Camptosar, but recent acquisitions, Seagen and Trillium Therapeutics, have significantly expanded their offerings.

While Pfizer’s first-quarter financials were weak due to weak vaccine sales, there were positives. The company raised its full-year earnings forecast, plans to invest heavily in research and development, and has a strong cash position.

However, legal challenges related to the effectiveness of Pfizer’s COVID-19 vaccine and new research on the potential side effects of synthetic uridine in mRNA vaccines pose immeasurable risks.