💉 Pfizer gets $2B for a 2020 vaccine

Thursday, July 23, 2020 by Robinhood Snacks | Disclosures

"Operation Two-Sided Marketplace" streaming soon

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Hey Snackers,

The best thing to ever come out of a blown-out tire: Shaq showing up to the rescue. The NBA legend pulled over to assist when he saw a car stranded on the highway, staying with the family until sheriffs arrived. MVP in every sense.

The market ticked up slightly on a big government deal for a COVID vaccine candidate. More on that below.

1. Pfizer will get $2B from the US for 100M COVID vaccine doses by 2020

Secure the doses... American big pharma Pfizer and German biotech BioNTech (creative) have been working on four mRNA COVID vaccine candidates. Unlike OG vaccines (which use a weakened virus), mRNA ones teach cells to destroy the virus (hardcore). No mRNA vax has ever been approved for human use, but the US government is clearly optimistic:

  • $1.95B: What the US will pay Pfizer/Bio to make and deliver 100M doses of their vaccine to Americans by the end of 2020 (if it gets approved).
  • 1.3B: The number of doses Pfizer/Bio expect to manufacture by the end of 2021. The 1st small testing round showed promising results. Larger, late-stage tests will take place this month.
  • $0: Americans will get the vaccine at no cost since the government's paying. If the vax wins approval from the FDA, the US gets dibs on the 1st 100M doses (and 500M extras, if necessary).

Putting money on every horse... This big bet in the vaccine race is part of the Trump admin's Operation Warp Speed. Vaccines usually take 6-10 years from development to approval. Remember the Ebola outbreak of 2014? The vaccine was just approved in December. The US is investing in a "portfolio" of vaccines to up the odds that Americans will have at least one ASAP. Other big vax horses the US has funded:

  • NovaVax got $1.6B to achieve 100M US-reserved doses by January.
  • AstraZeneca got $1.2B to produce 300M doses by this fall.
  • Johnson & Johnson got $486M to ramp up production to 300M doses.
  • Moderna got $456M to power production of its mRNA candidate.


There's the scientific challenge, then the ethical one... Once a company gets an approved vaccine, ethical considerations around profits and distribution come into play. AstraZeneca and J&J said they'll sell hundreds of millions of doses at price that just breaks even, aka not seeking a profit. On the other hand, Moderna explicitly said it's planning on profiting. Governments will feel obligated to distribute vaccines to their own citizens first if they're being manufactured domestically. That could mean poorer countries get it later.


Better have my money... Universal Music Group is the major label that reps Rihanna, T. Swift, and hundreds of other musical A-Listers. For years, Spotify has been coughing up cash to the world's largest record company for the right to stream its artists' tunes. It's a one-sided relationship in which Spotify pays UMG for each song stream.

  • Spotify hasn't been consistently profitable since most of its revenue goes to paying music labels (since they actually own the music being streamed). Case in point: UMG made almost $4B from streaming sales in 2019.
  • But Spotify has some leverage, too... Streaming sales now make up over half of UMG's revenue, and Spotify has around 35% of global streaming market share. So...

Spotify's making it "two-sided"... Spotify just signed UMG onto its "two-sided marketplace." Under the new licensing agreement, UMG could eventually be paying Spotify for marketing, data, and analytics.

  • Right now UMG is just an experimentation partner. Spotify thinks its tools will be valuable enough to hook the label into shelling out big bucks. That's because...
  • Spotify thinks it knows more about your music tastes than anyone: Last year, it intro'd the ability for labels to pay to send targeted push notifications for new music. Universal saw huge success pushing the Weeknd’s “After Hours.”

Spotify isn't embraced as "true tech" because of 1 thing... High marginal costs. the purest software companies pay for engineers and cloud storage, but besides that don't incur much additional cost for each customer they add. It didn't cost Google anything to show 1 more person that CBD oil ad, but it did make Google more money. For Spotify though, the more a song is streamed, the more it has to pay labels. Spotify’s marginal costs make it less profitable, but new revenues like the "two-sided marketplace" help.


Don't judge a pear by its blotches... Sometimes the imperfections are what make things fruitiful. Misfit Market sells "ugly" or somewhat unfortunate-looking (but still perfectly edible) organic produce. Think: weirdly shaped avocados and dented apples that supermarkets won't sell. It just raised $85M to ship its "Always fresh, sometimes normal" fruit to your door. The value prop:

  • Cheaper than stores: Misfits' funny-looking goods can be up to 40% cheaper than grocery store prices, since stores can't (or won't) sell them.
  • Reduces food waste: According to Misfits, 40% of all produce harvested in the US goes to waste. Misfits and competitors like Imperfect Foods are finding mouths for some of that rejected food.

Expand the niche... Misfits identified a market of people who find value in its mission-driven business model. While many are happy paying for obscene-looking squash to reduce food waste, Misfits wants to expand its biz to a wider audience. To do that, it's increasing its "imperfect" offerings to products like: olive oils with upside-down labels and nut butters with erroneous sell-by dates.


Opportunities are born out of market inefficiencies ... One business’ market inefficiency is another business’ business. Uber went mainstream because the market inefficiency was available cars and available driver time with a need for you to get from A to B. Misfits' ability to grow depends on just how much the inefficiency it is capitalizing on affects consumers.

What else we’re Snackin’
  • Electrifying: Tesla has its 4th straight quarterly profit, notching its 1st full profitable year — now it could be included in the S&P 500 index (BTW: the $1B Cybertruck factory is coming to Austin).
  • Eventful: Microsoft reports 13% sales growth while Slack accuses it of anticompetitiveness for bundling Teams with the Office suite.
  • Moway: Fiat Chrysler and Alphabet's Waymo sign an exclusive deal to develop self-driving commercial vehicles.
  • Cocky: NBCUniversal's new streamer Peacock got 1.5M app downloads in its first 6 days (Quibi is jelly).
  • Power: The CEOs of Facebook, Amazon, Google, and Apple will testify at Congress' big antitrust hearing on Monday (grab the popcorn).

🍪 Thanks for Snacking with us! Want to share the Snacks? Invite your friends to sign up here.

Snacks Daily Podcast

You can tell how close we’re getting to peak sharing economy by how intimate the things we’re sharing are...

  • First, it was cars with Uber.
  • Then, it was homes with Airbnb.
  • Now, it’s swimming pools with... Swimply.

Tune into our extra digestible 15-min pod to hear why renting your neighbor's swimming pool is CDC-approved.


Disclosure: Authors of this Snacks own shares of Microsoft, Spotify, Alphabet, Amazon, and Slack

Correction: In our Eurozone story yesterday, we said "19 of the EU's 17 countries share the Euro as a common currency." We meant: "19 of the EU's 27 countries." 🙄

ID: 1255101

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