Two races are currently taking place in our backyard: rich countries are fighting to secure a large volume of vaccine for its population and pharmaceutical companies are sprinting to the phase 3 finish line to get their drug approved. The different news coming from the situation of each candidate have large effects on the stock markets.
How a vaccine gets approved in Europe
Different phases of a vaccine trial (Source: World Health Organization)
Vaccines need to pass different tests before they are publicly available and safe to use. During the pre-clinical stage the injection is meant to be tested on animals to see if it triggers an immune response. The next step is to try it on a small group of humans to assess the vaccine’s safeness and further test immune response. Lastly, in phase 2 and 3, a larger sample of test people is used to examine dosage, verify effectiveness and discover potential side effects. Usually a vaccine takes approximately 10 years to be developed and commercialized, we are now trying to squeeze it all in one year or less.
mRNA versus traditional vaccine
Usual vaccine work by giving your body a mild, inactive form of the virus in your body to train its immune system to identify and create the appropriate antibodies.
On the other hand, mRNA vaccines fool your body to create a small number of the viral protein, using messenger RNA (the molecule responsible of putting DNA instructions into action). The mRNA are made into a lab and then injected into the body. The human cells reads the instruction, creates the protein ( in the same way the virus does), and directly identifies it as viral. The viral identification then triggers a defensive response into your body.
Another advantage of mRNA vaccines is that they are easier and faster to develop than conventional vaccines. However, they are not yet approved as they are fairly new and several questions still need to be answered: Will the immune response be sufficient? Are the targeted proteins the correct ones? How long will the immunity last?
If mRNA vaccines get approved, they could become the next popular form of vaccination.
Countries securing doses
Leaders of rich countries have been under pressure to secure vaccines for their population and try to limit the spread of the virus in their economy.
The US, country most hit by the crisis has committed a sum nigh to $10 billion to secure 700 million doses of injections. The amount is spread as so :
|
Company |
Deal sum |
Number of doses |
|
AstraTeneca |
$ 1.2 billion |
300 million |
|
Moderna |
$ 1.5 billion |
100 million |
|
Pfizer & BioNTech |
$ 1.9 billion |
100 million |
|
Sanofi & GlaxoSmithKline |
$ 2.1 billion |
100 million |
|
Novavax |
$ 1.6 billion |
100 million |
The UK has adopted another strategy, they had already booked 250 million doses from different stakeholder (4x the UK’s population!) and secured another 90 million doses from Johnson & Johnson, recently phase 3 approved. [2] After a disastrous summer, one can understand the strategy to place large amounts of money on the most promising vaccines.
On the other hand, Russia is already using its Sputnik V shot and has sold some to Vietnam, but the scientific community has doubts about its efficiency.
Every event sends the stocks rising or falling
Stocks like Regeneron took 7% after president Trump was announced to have received a dose of the firms antibodies. Moderna saw a gain of 20% on May 18, when it was first to disclose positive data from clinical trial on the corona virus.
In the last few months, COVID-19 related stocks have mostly been driven by retail investors reacting to headline news and limited data disclosure. Volatility could be due to investors having limited knowledge about the steps a vaccine needs to pass before it is released or the way medical news has lately been released. Indeed, the medical sector has been under great pressure to publish updates about the research, leaving less time for proofreading.
The SPDR S&P Biotech Exchange-Traded Fund XBI saw a gain of 7.8% since the beginning of the year, making it a top ETF performer
Lastly it is not sur that the vaccine will be the main earning driver, as some companies such as Gilaed plan to offer the vaccine on a not for profit basis.
Sources:
https://www.ft.com/content/1e928cb6-57fb-4384-9c2c-9000c44eacc0
https://horizon-magazine.eu/article/five-things-you-need-know-about-mrna-vaccines.html
https://www.dw.com/en/coronavirus-vaccine-nationalism-covid-19-us-germany-gavi/a-54634662
https://www.euronews.com/2020/08/13/will-europe-win-the-race-to-secure-a-covid-19-vaccine
https://www.marketwatch.com/story/why-virus-stocks-are-driving-market-volatility-2020-05-29
