Following the positive news on Covid-19 vaccine announced by Pfizer recently, Macquarie Equities Research (MQ Research) highlighted that the vaccine’s 90% efficacy is a very impressive performance and has set a prudent expectation that the vaccine’s widespread launch should be in 2Q21. MQ Research also believes that the vaccine discovery is positive for the economy and sentiment in the near term, thus boosting market confidence in other new-generation vaccines under development.

Event

• The first COVID-19 vaccine developed by Western economies, BioNTech/Pfizer/Fosun’s BNT162b2 vaccine, reported positive interim data, providing over 90% efficacy after testing on close to 44,000 individuals (half using the vaccine, half on placebo). The pre-set threshold of efficacy after 92 confirmed cases was 63%. Thus, over 90% efficacy is a very impressive performance, and MQ Research believes this should pave the way to securing the Food and Drug Administration (FDA) Emergency Use Authorization later this year after median two-month safety data to be submitted around the third week of November. No serious safety events have been reported so far. Final analysis will take place upon 164 confirmed cases, probably in 1H21, leading to formal FDA approval. Global manufacturing capacity is 50m doses (from previous guidance of 100m) by end-2020, ramping up to 1.3bn doses in 2021. A prudent expectation of widespread launch should be in 2Q21.

• BNT162b2 vaccine belongs to a new generation of vaccine called messenger ribonucleic acid (mRNA). Instead of using inactivated or weakened virus to stimulate human immune response as in conventional vaccines, it relies on the RNA of SARS-CoV-2 virus to be transported inside human cells. The RNA then instructs the cells to produce viral proteins (spike protein) which will trigger the immune response (both antibodies and T-cell response). Hopefully, this response can generate a memory which protects against future infection. Due to the tight time schedule, the trial has only tested the efficacy 7 and 14 days after the second dose. Long-term protection will continue to be evaluated.

Impact

• This is positive for the economy, at least in terms of near-term sentiment. It is also positive for the upcoming vaccines, strengthening the market’s confidence in their potential success. According to the Milken Institute, there are 214 COVID-19 vaccines under development, with 39 in clinical trials. MQ Research counted 11 in phase 3 trial, potentially ready to submit for approval within the next 12 months, followed by another 13 in phase 2 trial, likely targeting approval in 24 months. If the first 11 in phase 3 are successful, it will be more challenging for those still in phase 2 to recruit volunteers for their trials, compete for manufacturing resources and commercialize later. It would make more sense for them to switch to developing therapeutic products.

Outlook

• Social distancing contact tracing and isolation are as important as vaccines in fighting COVID-19. Historically, it has been costly and time consuming to develop vaccines. New genomic technology shrinks the development timeline. If the vaccines are adopted successfully in conjunction with other preventative measures, we should see the light at the end of the tunnel.

Source: Macquarie Research - 11 Nov 2020