by Joseph V. Amato, President and Chief Investment Officer—Equities, Neuberger Berman
We think there may be some market-moving news coming our way in November.
The White House? Sure, the U.S. election is going to be important for investors.
But let’s remember that the primary market-mover this year has not been politics, trade or taxes, but rather the coronavirus and our efforts to contain and defeat it—and the next 10 weeks could deliver some game-changing developments in that story.
Persistence
Right now, the coronavirus news isn’t very good. There is a better situation across much of Asia and elsewhere, and we have generally lower hospitalization and fatality rates than we endured back in March and April, but Europe and North America are still enduring new waves of coronavirus infections.
We believe the persistence of the disease means all eyes remain on three key initiatives: antibody treatments, antiviral treatments and vaccines.
Terri L. Towers, PhD, our Senior Research Analyst for the biotech and pharma sector, has been providing us with her latest thinking on these initiatives.
Antibody and Antiviral Treatments
News on treatments has been somewhat of a mixed bag.
Encouragingly, robustly positive results have been reported from the use of recombinant antibody treatments from Regeneron and Eli Lilly in the earlier stages of COVID-19. That is likely to lessen stress on the hospital system and makes these likely to become meaningful therapies against COVID-19.
However, Terri believes a broader role for these treatments remains an open question as we await data from prevention studies (in household contacts and nursing home contexts, for example) and also from treatment of hospitalized COVID-19 patients with more severe cases of the disease. The recent pausing of a combination study of Eli Lilly’s antibody and Gilead’s antiviral, Remdesivir, over safety concerns, supports our apprehension about employing recombinant antibody therapy in such advanced patients.
Beyond Remdesivir, Terri is also disappointed by the lack of antiviral drug development in general. One of the other leading candidates is an oral drug from Merck whose clinical data is scarce and whose efficacy in animal models was mixed.
Vaccine News
That all puts the spotlight on vaccine news, which we think is much brighter.
First up is likely to be news on the mRNA-based vaccine from Pfizer and BioNTech, where pivotal efficacy and safety data could be available as early as this week. The U.S. Food and Drug Administration has mandated at least 50% efficacy for regulatory approval and Terri thinks Pfizer may be shooting for a more solid 65% or greater. That could delay the report until mid-November, but if the vaccine works, Pfizer says it could apply for emergency use authorization (EUA) in early December or even late November.
Moderna is looking at a similar timeframe for its own mRNA-based vaccine. Data from its large clinical trial is due early next month and the firm says it expects to produce around 200 million doses this year and a billion doses in 2021, with EUA coming in December.
We believe both are likely to show at least a 60% efficacy benefit, and while durability of effect and long-term safety will remain unknown for the time being, these two mRNA vaccines have passed most safety hurdles. That appears to put them in better shape than the nonreplicating viral vector vaccines from Johnson & Johnson and AstraZeneca, the latter whose development has been paused due to potential safety concerns—although even here, the good news is that the trials look set to restart imminently.
In the worst-case scenario in which these leading mRNA-based and nonreplicating viral vector vaccines fail, Terri says she is most confident in the traditional protein subunit vaccine programs being run by a Sanofi and GSK partnership, and by Novavax. Data on these efforts is not expected until the first half of next year, however.
Consequential
In short, we believe there is a high probability that decisive news on an effective coronavirus vaccine could hit the wires through November and early December.
Producing and administering a vaccine at scale is a whole other challenge, of course. Nonetheless, we estimate broad dissemination to those most at risk in the U.S. by the first quarter of next year, with mass vaccination possible by the second quarter. On global distribution, we do take note when the CEO of BioNTech, for example, speaks of the challenges of ramping up vaccine production and building a global logistics network to get these drugs where they are needed.
The battle against coronavirus will not be won in a day, but financial markets are forward-looking. An effective vaccine would be the first clear signal that we are on a path to overcoming it and can begin to think about returning to something like normal economic life, which could be favorable to riskier assets.
Set aside the election noise for a moment: Over the coming weeks, we believe coronavirus and vaccine news is likely to be the more important factor for investors. If anything is going to move the market needle, it’s likely to be, well…needles.
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