A COVID Vaccine Breakdown
Weekly updates on the innovation economy.
Drawing Capital Newsletter
December 4, 2020
Introduction
Some of the most anticipated news of the year is a COVID-19 vaccine. Efforts have been doubled-down and pharma companies have been unparalleled in their production efforts. There now seems to be a light at the end of the tunnel for combating the most severe cases of COVID-19 and for the anticipation of returning to normalcy sometime in mid-to late-2021, potentially.
Our newsletter this week covers an overview of the biotechnology being used as a viable vaccine, expected production and availability, and the financial breakdown of some major drugmakers.
How COVID Vaccines Work
There are three primary types of vaccines used to combat COVID-19. Each of the types listed below, as with any vaccine, leave our bodies with T-lymphocytes and B-lymphocytes (defensive white blood cells) that will remember how to fight the virus in the future. It does, however, take a few weeks for the body to produce sufficient T/B lymphocytes. Consequently, someone may still become infected with the virus either shortly before or shortly after vaccination because there was not enough time afforded to provide protection yet.
Although the end-result of lymphocyte production is objectively similar, there are three different categories of COVID-19 vaccines, as mentioned above:
mRNA (Moderna; BioNTech & Pfizer)
Protein-based (Sanofi, GlaxoSmithKline, Novavax)
Vector (University of Oxford & AstraZeneca; Johnson & Johnson)
mRNA Vaccines
These provide our cells with instructions to create copies of the proteins that are unique to the virus that causes COVID-19. Our bodies recognize that the protein should not be there and begin to build T/B-lymphocytes.
Protein-based Vaccines
These contain harmless pieces of proteins of the virus that causes COVID-19 instead of the entire potent germ. Once vaccinated, our immune system recognizes that these proteins should not be present and the same building of T/B-lymphocytes ensues.
Vector Vaccines
These contain a weakened version of a live virus, which has genetic pieces of the virus that causes COVID-19 when inserted inside the vector vaccine. Once the viral vector is inside of our cells, the genetic material gives our cells instructions on how to create the protein that is unique to the virus that causes COVID-19. Again, our body then builds T/B lymphocytes as a result of these copied proteins.
Drug Statistics
To give a brief overview of current vaccination statistics, let’s highlight the three drugs that are likely to be approved and available the soonest:
*During drug trials, AstraZeneca made a mistake by only administering half of the first dose. However, this led to a more positive outcome of 90% (n=2,741) efficacy versus a 62% efficacy for participants who received a full dose as their first administration (n=8,895). (2)
So, What Happens Next?
FDA Review. An FDA advisory committee will vote on which vaccines to approve.
Mid- to late-December: FDA may authorize one or more vaccines for distribution.
24 to 72 hours later: An advisory committee from the Centers for Disease Control and Prevention (CDC) will discuss prioritizing vaccines for high-risk groups.
End of 2020: Based on projections, Pfizer and Moderna are planning on providing 40 million doses (vaccination for 20 million people), by the end of the year. AstraZeneca anticipates that the first 4 million doses could be ready in December, and an additional 40 million could be delivered in the first quarter of 2021.
Anticipated Adoption Rates
The successful development and distribution of effective vaccines may seem like the green light that everyone has been waiting for to return to normal life. However, public adoption will remain the biggest determining factor, and it may not be as rosy as expected.
From 5/20/2020 - 9/20/2020, there was a dramatic decline in the number of people willing to accept a vaccine. Many of these concerns are due to the rapid progression of vaccinations, which some feel have bypassed necessary regulations resulting in the possibility of unwanted side-effects.
Concerns over side effects are not invalid, but they may be overblown. Based on both the Pfizer and Moderna trials, the firms noted that across the tens of thousands of test subjects, the trials showed no serious safety concerns.
The independent board that conducted the interim analysis of Moderna’s trial noted the severe side-effects as:
Fatigue: 9.7% of participants
Muscle Pain: 8.9%
Joint Pain: 5.2%
Headache: 4.5%
In the Pfizer/ BioNTech trial, those numbers were even less severe:
Fatigue: 3.8% of participants
Headache: 2%
Although these are higher rates of side-effects than most patients are accustomed to, in general, they appear to be unpleasant, but not dangerous.
Financial Benefit of Drug Companies
As this translates to company value, the year-to-date difference in growth between Pfizer, AstraZeneca, and Moderna is staggeringly different.
The reasons behind this massive gap in performance are 3-fold:
Profit split - both Pfizer and AstraZeneca partnered with another organization in order to bring a successful vaccine to market. BioNTech with Pfizer and the University of Oxford with AstraZeneca. Moderna, on the other hand, developed and produced the vaccine end-to-end allowing them to capture 100% of the profits.
Size. Pfizer and AstraZeneca were both much more established companies than Moderna prior to the existence of COVID-19, with market caps of $220 billion and $140 billion, respectively. As of 12/3/2020, Moderna has a market cap of $62 billion, so the size of its vaccine contracts massively increases the revenue of their business relative to its pre-COVID market cap.
mRNA platform development. Through its COVID vaccine, mRNA-1273, Moderna hopes to dramatically expand its mRNA platform in the years to come. Once their mRNA technology has been approved for use, Moderna has an additional 12 mRNA vaccines in their pipeline and anticipates that this amount could grow to 50. Comparatively, if AstraZeneca receives regulatory approval for its COVID vaccine, they do not have any additional vaccine candidates that utilize the same technology.
Closing Thoughts
The widespread availability of a COVID vaccine is possibly the most anticipated moment of 2020. We’ve all had to adjust our way of life, how we work, and consciousness of day-to-day health risks. With recent reports of positive efficacy rates from Pfizer/ BioNTech, Moderna, and AstraZeneca/ University of Oxford, and with many others to follow, there now seems to be a light at the end of the tunnel - likely in Spring to Summer of 2021, granted high adoption rates and success rates for patients.
Although many of the behaviors we were forced to adopt in 2020 may become a distant memory, we predict that a portion of COVID’s impact will be here to stay: work-from-home optionality for some companies, migration of certain residents from densely populated cities to suburban areas, and digital adoption and efficiency across every sector, to name a few. As new daily cases and hospitalizations start to trend lower, we should also see an adjustment in financial markets to the sectors that have suffered many losses this year. For those who are actively involved in managing financial assets and investments, we feel that a rebalancing to reflect these changes to come is absolutely essential.
References:
“The coronavirus vaccine frontrunners are advancing quickly. Here's where they stand.” https://www.biopharmadive.com/news/coronavirus-vaccine-pipeline-types/579122/. Accessed 2 Dec. 2020.
“Understanding How COVID-19 Vaccines Work.” https://www.cdc.gov/coronavirus/2019-ncov/vaccines/different-vaccines/how-they-work.html?CDC_AA_refVal=https%3A%2F%2Fwww.cdc.gov%2Fcoronavirus%2F2019-ncov%2Fvaccines%2Fabout-vaccines%2Fhow-they-work.html. Accessed 2 Dec. 2020.
“Covid-19 vaccine: Efficacy results are not enough.” https://www.vox.com/21575420/oxford-moderna-pfizer-covid-19-vaccine-trial-biontech-astrazeneca-results. Accessed 2 Dec. 2020.
“AZD1222 vaccine met primary efficacy endpoint in preventing COVID-19.” https://www.astrazeneca.com/media-centre/press-releases/2020/azd1222hlr.html. Accessed 2 Dec. 2020.
“Moderna's Work on a COVID-19 Vaccine Candidate.” https://www.modernatx.com/modernas-work-potential-vaccine-against-covid-19. Accessed 2 Dec. 2020.
“What you need to know about the AstraZeneca, Moderna and Pfizer vaccines.” https://www.washingtonpost.com/health/2020/11/17/covid-vaccines-what-you-need-to-know/?arc404=true. Accessed 2 Dec. 2020.
“Moderna to submit Covid-19 vaccine to FDA; full results show 94% efficacy.” https://www.statnews.com/2020/11/30/moderna-covid-19-vaccine-full-results/. Accessed 2 Dec. 2020.
“‘Absolutely remarkable’: No one who got Moderna’s vaccine in trial developed severe COVID-19.” https://www.sciencemag.org/news/2020/11/absolutely-remarkable-no-one-who-got-modernas-vaccine-trial-developed-severe-covid-19. Accessed 2 Dec. 2020.
“U.S. Public Now Divided Over Whether To Get COVID-19 Vaccine.” https://www.pewresearch.org/science/2020/09/17/u-s-public-now-divided-over-whether-to-get-covid-19-vaccine/. Accessed 2 Dec. 2020.
“Public needs to prep for vaccine side effects.” https://science.sciencemag.org/content/370/6520/1022. Accessed 2 Dec. 2020.
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