Reality Check For COVID Vaccines: Caution Moderna, BioNTech, Novavax

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Source: abc news

Vaccines take time to develop because they need to be very safe and also effective. It comes as no surprise (especially for coronavirus vaccine development) that the path to development will involve some findings that need careful consideration. Hence news that the AstraZeneca (NYSE:AZN)/Oxford University Phase 3 trial has been paused is a reality check. Some will be dismayed because this was perceived to be a front runner for a vaccine.

The summary is that expecting to have a vaccine approved (even under a EUA) before November 3 is an impossible task, unless the rules are torn up. We are in uncharted territory here, but as I explain below, forcing through approval might backfire in terms of combating the pandemic. Investors hoping for big gains from vaccine approval may need to calm down for a bit.

Perceived FDA interference raises problems

There have been recent instances of apparent political interference in the activities of the FDA, involving FDA approvals in spite of expert concern.

Convalescent plasma: Notwithstanding that convalescent plasma has been used to treat more than 70,000 COVID patients, in the absence of trial data it is no surprise that there was expert pushback from the recent FDA EUA (Emergency Use Approval) for use of convalescent plasma to treat COVID-19. There is a long history in drug/vaccine development showing the need for randomised trials to prove effectiveness and safety.

Indeed a randomized trial involving 464 moderately ill COVID-19 patients in 39 Indian hospitals has concluded that convalescent plasma provided no benefit in reducing 28-day mortality or progression to severe COVID-19. This study indicated that only two randomised clinical trials on convalescent plasma have been published. One from China was halted due to inadequate enrolments, while a Dutch study was halted because of the need for redesign based on interim findings. Neither of these studies provided any mortality benefit at the time they were halted.

In the US, there is an indication that a group of hospitals might take things into their own hands and seek to sponsor proper trials rather than making use of the EUA. Whether the EUA sabotages such a move remains to be seen. There is no substitute for rigor when making life and death decisions about treatments.

Remdesivir : Experts have been unsure that use of remdesivir for hospitalised but less sick COVID-19 patients has sufficient basis for FDA EUA approval.

The above actions to provide a basis for “solving” the COVID pandemic before November 3 are understandable in the fevered political landscape.

Vaccines need wide public confidence to be effective

Perhaps it is not clear to those involved in seeking to say “problem solved” if a safe and effective vaccine is developed, the likely impact on public acceptance of a COVID vaccine if the FDA is perceived to be acting on political instruction rather than on scientific conclusions. Vaccines only get traction if there is wide acceptance and in the US this requires public trust in the approving body (the FDA). I regard the above as a significant setback as the independence of the FDA is now clearly in question.

This issue is being taken seriously by the big pharma companies seeking to develop a COVID-19 vaccine. The CEOs of nine significant pharma companies have taken the unusual step of stating that vaccines will only be submitted to the FDA for approval if they have a package showing safety and efficacy. They have specifically stated that they will uphold the integrity of the scientific process and that the safety and well-being of vaccinated individuals is their top priority. The companies involved are Moderna (NASDAQ:MRNA), AstraZeneca, Pfizer (NYSE:PFE), BioNTech (NASDAQ:BNTX), Merck (NYSE:MRK), GlaxoSmithKline (NYSE:GSK), Johnson & Johnson (NYSE:JNJ), Sanofi (NASDAQ:SNY) and Novavax (NASDAQ:NVAX).

The above is an unusual step for Pharma CEOs, but there is a context, with massive work going on to have a vaccine being shipped by November 1. The consensus of scientists is that the haste reflects a political will that is seeking to get ahead of science. FDA Commissioner Stephen Hahn may have inadvertently encouraged the Pharma CEO statement after indicating that the FDA would consider an approval application based on preliminary data from a Phase 3 trial.

The influential Bio (Biotechnology Innovation Organization) has released an open letter to the Biopharmaceutical Industry which articulates 5 principles surrounding how drug and vaccine developments for COVID-19 should be managed. These say that the developments need to follow the evidence, which should be made available and that the FDA needs to maintain its historical independence as the gold-standard international regulatory body. A major point is that political considerations should be set aside and that the evidence of safety and effectiveness should be adhered to.

AstraZeneca/Oxford University Phase 3 trial paused

In news is that the Phase 3 trial of one of the leading COVID-19 vaccine candidates (AstraZeneca/Oxford University) has been paused due to an unexplained illness of a UK person who received the vaccine.

This trial involves 30,000 participants, with an estimated primary completion date of December 2, 2020, and study completion due October 5, 2022. This vaccine AZD1222 is a weakened harmless virus to which has been added the SARS-CoV-2 Spike glycoprotein. If the Phase 3 trial shows the vaccine to be safe and effective, initial treatments could be available in early 2021, although all results won’t be examined in that time frame. It has recently been expanded to include up to 30,000 US citizens. The US trial will include diverse racial and ethnic groups and also those with underlying medical conditions, including HIV and who are at increased risk of SARS-CoV-2 infection.

When it becomes clear what has caused the illness in the UK vaccine recipient, this will give some indication about how the Phase 3 trial will progress. This finding isn’t unexpected as a new vaccine gets tested on a bigger range of adults, although exclusion criteria for the initial (not US) component exclude people with confirmed or suspected immunosuppressive or immunodeficient state, and those with significant disease. Hence the UK Phase 3 trial excludes people who might have been more susceptible to an adverse event in being exposed to the vaccine.

An initial report from someone familiar with the trial indicates that the affected person in the UK presented with transverse myelitis, which is an inflammatory condition affecting the spinal cord and which may be triggered by viral infections or immune system disorders. Other vaccine trials are looking at their patient data to see if there is evidence of this condition with other vaccine trials, which are also mostly focused on the SARS-CoV-2 spike protein. AstraZeneca has not commented on whether the condition may or may not be related to the vaccine, although it has said “in large trials, illnesses will happen by chance but must be independently reviewed to check this carefully.”

Investment impact for vaccine companies

Big pharma companies have lots of value drivers, so the uncertainty resulting from a pause in the AstraZeneca/Oxford Phase 3 trial may not have a material impact on their stock prices, at least not until there is more clarity as to whether there is a problem (or not) with progress towards a COVID-19 vaccine. Having said that, in pre-market trading on September 9 in the US, AZN stock was down 2.1%. Upcoming trading will tell how seriously the market views this. It is too early to see what impact this will have. Any investor who thinks that this means that the AstraZeneca/Oxford vaccine is out of the game and that therefore others are better positioned (e.g., Moderna) is not understanding what is going on. The key active ingredient for most of the SARS-CoV-2 trials is the spike protein, although the way it is delivered in the vaccine is different in different vaccines.

Above I’ve addressed what little is known about the cause of the pause in the AstraZeneca/Oxford trial.

I suggest that the situation is different (and much more volatile) for biotech companies whose future is closely linked to the COVID-19 vaccine outcomes. The developments in the BioNTech (program with Pfizer), Moderna and Novavax programs have revolutionary and as yet unproven vaccine technology at their core. Success with a COVID-19 vaccine is built into their stock prices and so any hint that this might be delayed or not happen is going to negatively impact their share prices. This is already becoming apparent with share price declines for all 3 already in September, perhaps due to realisation that no vaccine program has yet produced a safe and effective vaccine and nor is this likely to happen quickly. Also it is becoming apparent that there are multiple vaccine programs under development in parallel. However, Wednesday pre-market, there seemed to be irrational exuberance for several other COVID vaccine programs (other than the AstraZeneca/Oxford University program). Moderna, Novavax, and BioNTech were up 4.6%, up 5.9%, up 4.9%, respectively, pre-market. It will be interesting to see if this will be sustained in this week’s trading.

Moderna stock priceNovavax stock priceNovavax stock price


This report is a return to reality for the COVID-19 vaccine programs, which have been progressing as if the vaccines have already been shown to be safe and effective. Neither safety nor efficacy has been demonstrated for any of the COVID candidate vaccines.

It could be that the pause in the AstraZeneca/Oxford trial may help restore some sanity into the vaccine programs, with the realisation that release of a vaccine in the next 2 months would be a political rather than a scientific statement about the possibility of a successful vaccine for COVID-19.

If so there will be two outcomes. Firstly, notwithstanding possible rises forthcoming, I suspect that there may be further reversal in the share prices of companies pioneering the most radical programs (BioNTech, Moderna and Novavax) until there is more clarity about which (if any) of the programs might produce a successful vaccine. Secondly, this may force realisation that we are still in an uncertain territory with the pandemic and that preventative actions are not going away. There might be more focus on social distancing, testing, contact tracing, prevention and treatment.

I am not a financial advisor, but I have a background in biotech both from a technical and also investor perspective. If my commentary helps you and your financial advisor to think about whether you want to invest in companies involved with the COVID-19 pandemic, please consider following me.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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