Oxford University Has a Shot at Vaccine Billions. Or Does It?

Illustration by II

Illustration by II

Inside the competitive, turbulent, and morally fraught race to capitalize on a Covid-19 vaccine.

It could’ve been the end for Oxford’s shot at a coronavirus vaccine.

Testing for the closely watched vaccine — developed by the university and its spinout company Vaccitech — had been halted after a person who took part in the U.K. trial became unexplainably ill. Such interruptions are “routine,” as Oxford’s partner, AstraZeneca, explained in a statement announcing the “temporary pause.” But they are also serious: If the vaccine were found to be unsafe, the trial could be shut down for good.

The world didn’t have to wait long to find out: Within a few days an independent committee determined that it was safe for the U.K. trial of the vaccine to continue. Oxford was back in the race.

The incident may have been only a minor setback for the Oxford–AstraZeneca vaccine, but it’s an illustration of just how fraught drug development can be for universities — particularly those without the backing of a pharmaceuticals giant like AstraZeneca. Getting academic breakthroughs out of the lab and into the world as commercial products and services has historically been challenging for universities, and this is especially true in drug development, where proving that a new medicine is safe and effective can take years — and tens of millions of dollars in investment.

“Most inventions die in that valley of death after the scientific discovery and patenting,” says Dr. Louis Falo, professor and chair of dermatology at the University of Pittsburgh School of Medicine.

Oxford has so far beaten the odds, getting its vaccine candidate into last-phase trials in record time. Before the trials were temporarily halted in September, AstraZeneca chief Pascal Soriot had said that the company is aiming to deliver the first doses of the shot before the end of this year.

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Still, the vaccine is just one of hundreds currently in development around the world, including a dozen that are either in the final stages of testing or have already been approved for limited use. The flood of potential options surely increases the chances that a viable vaccine will be discovered — but it also means that even if Oxford’s vaccine is successful, it could face a level of competition unheard of in the vaccine industry.

“There could be a lot of rivalries — a lot of companies competing to get market share,” predicts David Glickman, a health care analyst at investment firm Harding Loevner.

There’s no question that a viable coronavirus vaccine is in high demand. But whether that demand can translate into commercial success for Oxford is a lot less certain.



“It’s very rare to have a blockbuster drug,” notes Alicia Löffler, executive director of Northwestern University’s Innovation and New Ventures Office.

She would know. Northwestern scientists famously produced one such blockbuster: the non-opioid pain medication Lyrica originated in a university lab in the late 1980s, and went on to become one of Pfizer’s best-selling drugs, raking in almost $5 billion in revenue in 2018.

Northwestern ended up making about $1.4 billion total from licensing income and royalty sales — almost all of which was invested in the university’s endowment. “The president at the time, Henry Bienen, and the current president, Morty Schapiro, were very committed to the money being reinvested in the endowment to support scholarships for undergraduates and to support faculty hiring,” says chief investment officer Will Mclean. He estimates that the Lyrica proceeds make up between 10 and 15 percent of the now $11 billion fund.

But Lyrica was “a huge outlier,” according to INVO head Löffler. “Very few universities have this type of commercial success.”

Of all the U.S. universities that made money from commercial licenses in 2018, for example, only four — including Northwestern and the University of California system — earned upward of $100 million in gross licensing income, according to AUTM, a nonprofit that supports technology transfer.

Technology transfer is the process of licensing and commercializing new discoveries made by universities and other research institutions. And as AUTM chief executive Stephen Susalka attests, it’s not an easy one.

“Universities are stacked with really brilliant scientists, and they develop really incredible inventions,” Susalka says. “The challenge is getting those inventions in a format with data that is attractive to companies.” One analogy he remembers hearing: Unveiling a new invention is like getting “some flour, sugar, and milk and saying, ‘Hey, put this together, and it will make a cake.’”

He continues, “Well, that’s true, but until you actually put those pieces together in an attractive marketing package, it’s really hard to get that technology into the marketplace.”

If commercializing most inventions is like baking a cake, getting drug discoveries to market is like making a multitier wedding cake for 200 guests.

A 2018 study published in the JAMA Internal Medicine journal determined that the median cost for clinical trials was $19 million for drugs approved by the Food and Drug Administration in 2015 and 2016. But only between a quarter and a third of drugs actually make it all the way through those clinical trials, according to annual surveys by U.K. data company Informa’s Pharma Intelligence.

“For pharma companies that first proof of concept or glimmer of hope is not enough to de-risk the project,” says Dr. Toren Finkel, a professor of medicine at the University of Pittsburgh. “A lot of things get stuck between what could work and the real finished product.”

With the onset of the Covid-19 pandemic, however, universities and prospective commercial partners have become aligned with a common goal: There is an obvious, urgent need to fight the coronavirus, which as of September 23 has infected more than 31 million people around the world and killed more than 970,000, according to Johns Hopkins University of Medicine.

“This is an unprecedented time, and I’ve never been so proud to be in the profession as I’ve seen universities responding to this crisis,” Susalka says. “They’re really accelerating the rate at which those inventions are making it to market.”

In addition to the Oxford–AstraZeneca vaccine, there are vaccines in various stages of development from researchers at other universities around the world. In the U.S. these include the University of Pittsburgh, the University of Wisconsin-Madison, and the University of Virginia, among others. Numerous other schools have produced potential treatments, including Yale University and Emory University. Still others have provided other essential tools for the front lines, like face shields made by Columbia University engineers and a new sterilization technique created by Michigan State researchers that makes it possible to reuse N95 masks.

“Activity in the first few months was incredible, because everyone wanted to use whatever technology they had to produce something related to Covid-19,” notes Northwestern’s Löffler. At Northwestern, for example, engineers started by making medical necessities like ventilators and personal protective equipment, she says. These products were then licensed for free — meaning Northwestern would not profit, at least for the duration of those licenses.

“We don’t expect any profits or revenue,” Löffler explains. “That’s not the priority.”

The same cannot necessarily be said for coronavirus vaccine developers.



Some companies in the vaccine race, like Johnson & Johnson, have pledged to produce vaccines at no profit for themselves. But others, including Moderna and Pfizer, have indicated that they do plan to make money off their vaccine candidates.

Pfizer and its partner, BioNTech, for example, have signed an agreement with the U.S. government to produce an initial 100 million doses for $1.95 billion, or about $20 per dose. The pharma company is aiming to make a total of more than 1.3 billion doses by the end of 2021.

Based on a 49 percent chance that the vaccine makes it to market — the historical average success rate for a vaccine candidate following a Phase 2/3 schedule, according to Harding Loevner’s Glickman — Pfizer stands to earn $6.37 billion for its half of the joint venture, Glickman concludes in an analyst note. This is “a not-insignificant boost for a company that, in the absence of a vaccine, is expected to earn US$48 billion in revenue in 2021,” he points out.

The prospect of drugmakers like Pfizer profiting off a pandemic is one that some don’t approve of — including several of the scientists developing the vaccines.

“I would hope that Covid-19 is not a revenue generator,” says Dr. Falo.

Falo is the co-inventor of PittCoVacc, a potential coronavirus vaccine in development at the University of Pittsburgh School of Medicine. The vaccine candidate was created using a new kind of delivery mechanism that Falo had invented to deliver chemotherapy to skin cancer patients. Instead of a traditional shot, PittCoVacc is a patch of hundreds of small needles that can be applied to the skin like a Band-Aid. According to Falo, this delivery platform also stabilizes the vaccine so that it doesn’t need to be kept frozen like other vaccines.

Although PittCoVacc is still in the preclinical phase — and therefore unlikely to be the first vaccine approved — Falo believes the delivery method has many potential applications outside of the pandemic.

“The actual vaccine should be distributed and made available to everyone,” Falo says. “The platform could go through more-traditional commercialization.”

For Oxford’s part, the university and AstraZeneca have vowed to operate on a not-for-profit basis “for the duration of the pandemic.” But Oxford and its spun-out company Vaccitech still stand to earn royalties over the long term — if their vaccine is viable.

Right now vaccine makers are predicting that people will need to get reinoculated against the coronavirus every year or two — though, as Glickman notes, there is not yet nearly enough data to know for sure, given that the virus itself has been around for less than a year. But if the experts are right, there will be continuous demand for a vaccine even long after the pandemic has been declared over.

According to a university spokesperson, Oxford plans to reinvest any royalties it receives from the vaccine back into the university and its medical research. Proceeds will also help fund a new Pandemic Preparedness and Vaccine Research Centre, which has been developed in collaboration with AstraZeneca.

All that, of course, depends on the outcome of the vaccine race.

As of September 22 the Milken Institute’s FasterCures center was tracking a total of 212 vaccine candidates at different stages of development. Eight of them, including the Oxford–AstraZeneca vaccine and an RNA-based candidate from Moderna, were in some form of Phase 3 — the last stage of clinical trials before drugs can be approved for full use.

Such numbers have never been seen before in the vaccine business, which has historically been very concentrated, according to Harding Loevner’s Glickman.

He notes that most vaccine producers have total or near monopolies in their markets, making vaccine production a fairly stable and lucrative business. Merck, for example, has cornered the market for immunization against HPV with its series of Gardasil shots.

“The typical vaccine market is usually an oligopoly or a monopoly, and those companies have pricing power and assets that are very durable, where they can be selling pretty much the same vaccine for years,” Glickman notes.

Part of the reason the vaccine market has been so concentrated up until now is the high barrier to entry: To date the fastest record for vaccine development is four years. But the Covid-19 crisis has hundreds of vaccine developers leveraging new technologies to build vaccines faster than ever before. Federal drug regulators like the U.S. FDA are prepared to give emergency authorization to these rapidly developed vaccines in order to start inoculating the public as quickly as possible.

“The bar is relatively low compared to a non-pandemic situation,” Glickman says. “The bar the FDA has set is only 50 percent efficacy — that’s about the average of the flu vaccine in any given year. Most other vaccines are in the 90 percent range.”

This means the vaccines that are currently on track to be the first approved by the FDA — including the Oxford–AstraZeneca candidate — could potentially be pushed out of the market within a few years if another drugmaker develops a vaccine that is more effective. According to Glickman, this has happened before: Merck was the first to bring a shingles vaccine to market in 2006, but it prevented only the most common types of shingles about half the time. When GlaxoSmithKlein delivered a vaccine with a 90 percent–plus efficacy rate in 2017, it quickly displaced the Merck vaccine, capturing 98 percent of the market in two years.

“How the competitive landscape may evolve in that post-pandemic, longer-term period is what matters financially for Oxford,” Glickman says.

For now, however, the health care analyst says it is still unclear what the vaccine industry will look like when the pandemic is over — and which potential vaccines will end up capturing market share.

“Ultimately, no one has Phase 3 data, so we don’t know if they’ll be able to produce a safe and effective vaccine,” Glickman says. “There are still a lot of unknowns.”

Pittsburgh School Pfizer U.K. AstraZeneca Harding Loevner
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