The controversy over vaccine safety reignites, causing a decline in U.S. biotech stocks; Citigroup issues a cautious outlook

According to the Zhitong Finance APP, reports last Friday indicated that health officials from the Trump administration plan to present claims related to COVID-19 vaccines and the deaths of 25 children to a key vaccine advisory committee under the Centers for Disease Control and Prevention (CDC) this week. It was reported that the relevant claims are included in a report that health officials from the Trump administration plan to submit to the Advisory Committee on Immunization Practices (ACIP) this week. This committee plays a critical role in determining vaccine acquisition as it reviews immunization data and makes recommendations on who is eligible for vaccination and whether insurance companies should cover them.

As a result of this news, U.S. biotech stocks plummeted across the board last Friday, with BioNTech (BNTX.US), which is developing a COVID-19 vaccine, falling 7.26%. Its COVID-19 vaccine development partner, Pfizer (PFE.US), dropped 3.98%, while Moderna (MRNA.US) and Novavax (NVAX.US), also developing COVID-19 vaccines, fell 7.40% and 3.62%, respectively.

In response, Citigroup released a research report stating that the stock prices of related biotech companies are under pressure due to the reports, highlighting the volatility risk once again. The bank added that while it will take until this week to make a judgment, it is necessary to emphasize that COVID-19 vaccines have been supported by a large amount of robust research and data generated from billions of doses administered. Overall, given the ongoing news volatility, the bank remains cautious about sentiment towards companies related to COVID-19 vaccines.

Here are Citigroup's ratings for companies related to COVID-19 vaccines.

1. BioNTech

Citigroup has rated BioNTech's stock as "Buy," with a target price of $140. The bank considers the stock to be "high risk" due to the typical volatility of biotech stocks and the uncertainties/risks in clinical trials and late-stage drug development.

Citigroup pointed out that BioNTech faces downside risks including: the COVID-19 vaccine market not stabilizing as expected, leading to a rapid decline in revenue; the data from its ADC (antibody-drug conjugate) product portfolio failing to demonstrate durability, jeopardizing the possibility of accelerated or traditional approval; the OS (overall survival) data from its immuno-oncology product portfolio failing to prove superior to current treatment standards; and the FixVac and iNEST platforms failing to produce compelling data.

2. Moderna

Citigroup has rated Moderna's stock as "Neutral," with a target price of $30. The bank also considers the stock to be "high risk," with downside risks including: the COVID-19 vaccine market not stabilizing as expected, leading to a rapid decline in revenue; difficulties in market penetration for RSV (respiratory syncytial virus) (two existing giants + no re-vaccination guidance from ACIP yet); the CMV (cytomegalovirus) vaccine failing to meet the minimum 50% efficacy standard; delays in the accumulation of CMV events; and unexpected resistance faced by rare disease assets.

However, Citigroup added that the stock faces upside risks including: market penetration rates for the two already launched respiratory vaccines exceeding expectations; improvements in the vaccine policy environment; and the CMV vaccine demonstrating >50% efficacy 3. Novavax Pharmaceuticals

Citigroup has rated Novavax Pharmaceuticals' stock as "Sell," with a target price of $6. The bank stated that the upside risks facing the stock include: an unexpected recovery in the COVID-19 vaccine market leading to faster market acceptance; the high efficiency, success, and market adoption of Sanofi's flu + COVID-19 combination vaccine using Novavax Pharmaceuticals' Matrix-M adjuvant, which may bring in higher-than-expected royalty income.

4. Pfizer

Citigroup has set a target price of $26 for Pfizer. The bank pointed out that the upside risks facing the stock include: sales of newly acquired ADC drugs exceeding expectations; clinical pipeline results better than expected; and sales of growth products exceeding expectations. Additionally, the stock faces downside risks including: sales of the breakthrough breast cancer drug Ibrance falling below expectations due to competition; downward revisions of sales estimates for Padcev due to intensified competition in the bladder cancer field; value-destructive mergers and acquisitions; and disappointing pipeline data that may negatively impact the target price