Pfizer (PFE), BioNTech BNTX) Land Multi-Billion Dollar Order for Vaccine

For anyone who believed that the race to find a vaccine for the COVID-19 coronavirus was just a matter of public safety, it turns out there are serious consequences for the first-movers as well. Just announced, the US government has agreed to buy 100 million doses of Pfizer (NYSE: PFE) and BioNTech's (NASDAQ: BNTX) coronavirus vaccine.

A Multi-Billion-Dollar Feather in Their Cap

Pfizer and BioNTech's effort to develop a vaccine has been among the first to produce results, with Moderna (NASDAQ: MRNA) and AstraZeneca (LON: AZN) among those still closing the gap. With its efforts proving successful so far—the companies have taken their vaccine to Phase 2b/3 testing, set to begin within the next week or so at last report—the rewards of victory here will be dazzling.

The US government will purchase 100 million doses from Pfizer once the vaccine successfully concludes its human testing, and that's a deal valued at $1.95 billion. It's a safe bet that Pfizer and BioNTech will find ready customers waiting after that order is filled, and that's further good news for Pfizer, as reports suggest the original purchase order also contains an option for 500 million doses further. American citizens are slated to receive the vaccine at no charge.

As for Pfizer and BioNTech's own delivery schedules, the reports note that, if all goes as planned, the company can have that first 100 million doses ready to go by the end of the year, with around 13 times that—1.3 billion doses—ready to go in 2021.

A Ready-Made Buyer Makes for Great Corporate Conditions

This isn't the first time that the US government has made big moves in terms of purchasing remedies for COVID-19; about 12 days ago, the US government also bought out the shelves at Gilead Sciences, picking up half a million Remdesivir treatment courses for somewhere around $1.55 billion given the prices noted in the previous reports.

Now, the Trump administration has followed that up by buying up nearly sufficient vaccine to inoculate every man, woman and child in the United States twice over. Back in June, the US government also picked up 63 million doses of hydroxychloroquine, the controversial drug originally used to fight malaria that showed promise taking on COVID-19, and still does to this day.

What's Good for the American People is Great for Pfizer / BioNTech

This move by the US government is almost certainly designed to offer some leverage. It's holding enough vaccine—once it clears the trials and is actually produced—to cover the US with the stuff twice over. It's got a range of other coronavirus treatment options ready to go as well, for those who object to vaccines for one reason or another, which is a more substantial number than you might think. The general average, back in late April, says that 27 percent of Americans of all ages are against a vaccination.

With this kind of excess, not only will Americans have options, but there will certainly be extra on hand to offer up to other countries, whether free in a goodwill gesture or as a way to raise revenue.

However, the news for Pfizer and BioNTech here is nothing short of a big win. It's got a $1.95 billion purchase order on its collective desk right now. Given that Pfizer itself made $51.8 billion last year, it's a pretty sound way to ensure the company will be able to recover from any of its coronavirus-related losses. Given that Pfizer operates in Michigan—which has had some of the harshest lockdown conditions of any state—it's a safe bet that, even as an “essential business”, it likely saw some issues somewhere. BioNTech, meanwhile, comes out even better; its total revenue for the 2019 fiscal year, mostly from collaborative agreements, came in at 108.6 million Euro, roughly $125.9 million US. Assuming a 50 / 50 split, BioNTech has just made about eight years' revenue on one deal.

Of course, it's the followup that really matters here; while Pfizer and BioNTech will be able to do a brisk business in vaccines for at least the next year or two, it's what they come up with next that will really tell the story of these two heavyweights. Still, this advance is a major coup, and investors should be abundantly happy with the outcome.