Top 4 Things Traders Have to Know Today

What is happening with Meta, Paypal and Spotify?

Spotify didn’t actually issue annual guidance, which seems to have exacerbated worries about potential subscriber growth potential. All three were down by double-digits in after hours trading at one point last night.

Competition is clearly much more fierce as larger players are starting to dial it in and use the latest technology to gain better traction i.e. Visa, Mastercard, etc. I also read reports this week that Apple is diving deeper into the payment and banking space and will soon be able to offer all kinds of options via the smartphone.

In simple terms, I wonder if PayPal executives could see they had a “growth” problem and that’s why they took a look at Pinterest a few months back. I heard rumors yesterday perhaps they might be looking at Robinhood.

At the moment the stock market just doesn’t seem real forgiving to those who swing and miss. On a somewhat positive note, Facebook disclosed they purchased back +$20 billion of their own stock in the last quarter.

Bulls are hoping for solid results from Amazon and Snap today to help prevent sentiment in the tech sector from creating more fallout. I’m not holding my breath!

Data to watch

Results are also due from Activision Blizzard, Biogen, Carlyle Group, Check Point, Cigna, Clorox, ConocoPhillips, Deckers Outdoors, Eli Lilly, Estee Lauder, Ford, Hanesbrands, Hershey, Honeywell, Ingredion, Merck, Pinterest, Quest Diagnostics, Royal Dutch Shell, SnapOn, Wynn Resorts, and Xylem.

On the economic data front, Factory Orders, the ISM Non-Manufacturing Index, and Productivity and Costs are due today. Productivity and Costs has become a more closely watched report as worries about climbing wages have grown. In the third quarter, productivity fell -5.2% (the most since 1960) and labor costs rose +9.6%.

Obviously, weakening productivity and rising costs is a bad combo for corporate profits so reversing this trend is a high priority. It may be tough to find much relief in the near-term with the labor market expected to remain extremely tight.

The shortage of workers has also been exacerbated by the latest Covid wave. ADP’s private payrolls report yesterday showed a decline of -301,000 jobs for January versus the estimate for a +200,000 gain, the first reported net job less since December 2020 according ADP.

Covid issue

Most analysts blame last month’s Covid surge for the decline and expect it is just temporary. The official January Employment Report on Friday is expected to show a gain of around +150,000 jobs, though the government has warned that the data won’t be reliable due to Covid-related reporting problems. Hopefully we’ll soon stop hearing that excuse as the Omicron Covid wave does seem to be burning itself out in the U.S. Case numbers across the country are about half of what they were in mid-January.

Hospitalizations have finally started to come down, too, which experts say is a more reliable measure. I hate to mention it but health officials are currently monitoring a mutated strain of Omicron known as “BA.2″… when does it end?

The standoff between Ukraine and Russia

Also still on the radar is the standoff between Russia and Ukraine. The U.S. is now readying to send more than +3,000 troops to bases in Eastern Europe as new satellite images appeared to show an even further increase in Russian troop buildup on Ukraine’s borders. Whether or not war is a realistic threat or not, the climbing tensions continue to stoke the flames in the energy markets.

Brent crude futures are trading near $90 as OPEC struggles to meet production targets and global physical supplies continue to tighten. The 19 OPEC+ countries with quotas underperformed their production targets by -832,000 b/d in December. Russia is currently the top OPEC+ producer, so any disruption to those supplies runs the risk of shooting oil prices even higher. Take note the front-end of the natural gas market is up over +50% in the first month of the new year. It’s certainly going to be a wild ride in 2022!

 

Brace Yourself For Another Wild Month In Stock Markets

For the year, the Dow is down -6%, the S&P 500 is down just over -9%, and the Nasdaq has lost -14.7%. The previous record-holder is January 2009, an ugly moment for the economy, when the stock market fell -8.6%. In addition, the VIX – aka the CBOE Volatility Index – has actually dropped back to around 31 after topping 37 earlier this week, its highest point since November 2020.

Keep in mind, the index isn’t registering anywhere close to levels reached during other periods of “extreme” volatility. For example, the index, which is measured between zero and 100, hit its highest point of almost 83 during the financial crisis in 2008. Its most extreme point during the pandemic was around 66 in March 2020. So, by comparison, this week’s volatility has been rather mild.

Federal Reserve

Some insiders equate the wild swings in stock prices to investors, particularly “big money,” trying to establish a new baseline for stock valuations minus the Fed’s easy money policies that have driven a massive amount of cash into markets since the pandemic began in 2020.

At its height, the Fed was pumping as much as +$120 billion per month into the system via its asset purchase program, ballooning its balance sheet to now nearly $9 trillion.

At the same time, the Fed has held its benchmark rate at near-zero and, before that, hadn’t even attempted to raise rates since 2018, and then only briefly. The last full-cycle of rate hikes was 2015. What’s more, investors haven’t really had to factor for inflation since the early 90s and it hasn’t been this high since the 80s.

Bottom line, whatever the new “normal” ends up looking like, it will be dramatically different from the pre-pandemic investing landscape. I’ve heard several large stock traders saying it seems to be the return of Alpha instead of the race to levered Beta. I hear others on Wall Street referencing it to a bit of league recreational youth baseball team where everybody now gets an award simply for participation, but then kids run into a rude awakening when performance really starts to matter.

It feels like we are there in the stock market; every business that was coming into the market was simply being rewarded with participation points, now people are starting to keep a real scorebook and counting the strikeouts and runs scored.

Economy still roars

The good news is that the U.S. economy continues to roar. Historically, a combination of moderate inflation and moderate interest rates has led to some of the biggest boom times for U.S. Last week, the Commerce Department said Q4 Gross Domestic Product (GDP) grew at an annualized rate of +6.9%, stronger than Q3’s +2.3% and well above Wall Street expectations of around +5.7% growth.

Consumer spending climbed at a +3.3% annual pace led by a +4.7% increase in services spending. But the real stand out was private investment which rocketed +32% higher, boosted by a surge in business inventories as companies stocked up to meet higher customer demand. Rising inventories, in fact, contributed nearly +5% to Q4 GDP growth.

On the one hand, the inventory build is positive because it indicates an easing of supply chain dislocations that should in turn help with inflation pressures. On the other hand, many economists note that the big boost from retailer and wholesaler restocking is not likely to be repeated.

Companies will also likely start to unwind at least some of that inventory in the quarters ahead, which could drag overall 2022 GDP, especially if consumer spending also drops off. And investors are more closely tracking consumer behavior as inflation continues to rise.

With consumer spending accounting for about 70% of the U.S. economy, any signs that belts are tightening or moods are getting overly pessimistic will likely set off some alarm bells.

Data to watch

Turning to next week, it will be another busy one for both key economic data as well as earnings. The main economic data highlight will be the January Employment Situation on Friday. Other key data includes ISM Manufacturing, Construction Spending, and the JOLTS report on Tuesday; ADP’s private payrolls report on Wednesday; Productivity & Costs, Factory Orders, and the ISM Non-Manufacturing Index on Thursday.

Earnings wise, results are due from NXP Semiconductor and Trane on Monday; Advanced Micro Devices, Alphabet, Amgen, Chubb, Electronic Arts, Exxon, General Motors, Gilead Sciences, Match Group, PayPal, Sirius XM, Starbucks, and UPS on Tuesday; AbbVie, Aflac, Allstate, Boston Scientific, CNH, Corteva, D.R. Horton, Ferrari, Humana, Johnson Controls, Meta (Facebook), MetLife, Novartis, Novo Nordisk, Qualcomm, Siemens, Thermo Fisher, TMobile, and Waste Management on Wednesday; Activision Blizzard, Amazon, Biogen, Carlyle Group, Check Point, Cigna, Clorox, ConocoPhillips, Deckers Outdoors, Eli Lilly, Estee Lauder, Ford, Hanesbrands, Hershey, Honeywell, Ingredion, Merck, Pinterest, Quest Diagnostics, Royal Dutch Shell, Snap, SnapOn, Wynn Resorts, and Xylem on Thursday; and BristolMyersSquibb, CBOE, Phillips 66, Regeneron, and Sanofi on Friday.

Bottom line, brace for another huge week of extreme volatility.

XLV: Confidence in Medical Science at Containing Covid Is Highly Beneficial

The year 2020 was so hard for most of us as the pandemic struck bringing an unprecedented level of disruption to our lives. It’s now more than two years that the world is affected by the deadly and invisible virus with millions being infected and millions more have lost their jobs as the economies of many countries were devastated and governments were challenged into putting into place tough social distancing measures.

However, while infection rates have reached a new peak with the Omicron strain (as per the chart below in blue), the number of people who have actually lost the battle against the invisible enemy continues to fall as depicted by the death rate in the grey chart below trending lower.

https://static.seekingalpha.com/uploads/2022/1/3/49663886-16411948064843268.png

Source: Google

There are many reasons for the decrease in death rate with the most important ones being the rise in vaccination among populations worldwide as well as the provision of better hospital-level care to patients infected with Covid. This has been made possible by new antibodies treatments. For this purpose, the Health Care Select Sector SPDR Fund (XLV) includes key plays like Johnson and Johnson (JNJ) with its Janssen vaccine as well as Pfizer (PFE) with its Covid pill, as longer-term solutions to countering Covid.

Apparently trivial, but equally important, there is the important role played by diagnostics companies in early detection of the coronavirus so that infected people can be isolated. This separation act has been critical in order to contain the infection, in turn reducing hospitalization rates. Here, companies like Thermo Fisher (TMO) and Abbott (ABT) who were quick to develop relatively cheap Covid tests come to mind. In this respect, for those wondering about the role of these medical devices and tool plays in the future where Covid becomes more analogous to “normal” seasonal flu, there is the stark reality of the coronavirus mutating rapidly into Alpha, Delta, and Omicron strains. Thus, the market for Covid testing should become a constant in the new normal.

https://static.seekingalpha.com/uploads/2022/1/3/49663886-16411948065317018.png

Source: ssga.com

Moreover, XLV is not just about Covid as seen with health insurance plays like United Healthcare (UNH). The company makes the system work better for everyone by simplifying the health care experience through the use of advanced data and technologies, breakthrough treatments, and consumer choice. Talking diversification, with normalization in health care, there are a number of sectors including ophthalmology and dentistry as well as clinical trials activities in areas like biotech research which should prove beneficial for XLV’s holdings.

The market seems to already have realized this, rewarding XLV with 7.36% during the last month against only 2.69% for the S&P 500.

Source: Trading View

I believe that this outperformance should continue in 2022, as the role of medical science, especially through sequencers in rapidly understanding the DNA of the coronavirus as well as its mutants has been established. There may be periods of doubt as for example when investors’ high expectations of Merck’s Covid pills were dashed when some clinical trial data suggested that Molnupiravir was less effective than originally thought. This resulted in volatility in the State Street fund around December 13. Subsequently, XLV rapidly overcome this “volatility episode” and is now at the $140-141 range.

Looking at the sector, XLV comes with an expense ratio of just 0.12% and a dividend yield of 1.32%. Another peer, the Vanguard Health Care ETF (XHT) does offer lower fees of just 0.10%, but, it is the State Street fund that has outperformed both on a one-year and one-month basis, by 600 and 110 basis points respectively.

Finally, in line with its five-year performance, XLV should continue with its uptrend and reach the $150-155 level by the middle of 2022.

 

Why Moderna Stock Is Down By 4% Today

Moderna Stock Keeps Moving Lower Despite Worries Over The Spread Of Omicron

Shares of Moderna gained additional downside momentum today after Merck‘s COVID-19 drug molnupiravir received an emergency use authorization from FDA. Earlier, Moderna stock faced pressure when Pfizer‘s Paxolovid got an emergency use authorization from FDA.

The market’s logic is simple. Anti-coronavirus pills will serve as an additional tool in the fight against the pandemic. If the danger from coronavirus decreases thanks to new drugs, demand for vaccines will fall over time, which will be bearish for Moderna.

In addition, the competition in the vaccine space is intensifying. Novavax vaccine has recently recevied an emergency use listing (EUL) from the World Health Organization. EUL will allow Novavax to participate in the COVAX, which aims to distribute vaccines to less developed countries.

What’s Next For Moderna Stock?

Currently, analysts expect that Moderna will report earnings of $25.89 per share in 2021 and earnings of $26.47 per share in 2022, so the stock is trading at roughly 9 forward P/E, which is cheap for the current market environment.

However, earnings visibility remains Moderna’s key problem. While it is obvious that the company will enjoy strong demand for its vaccine for 2022, the picture for 2023 is less clear. At first glance, it looks that demand should stay strong as developed countries are already rushing to introduce boosters due to the spread of Omicron while developing countries have not completed their initial vaccination programs.

However, it is not clear whether the company will be able to deliver strong profits after the pandemic ends. These worries have already put significant pressure on Moderna stock, so news about new drugs or alternative vaccines serve as bearish catalysts for Moderna shares. It remains to be seen whether speculative traders will rush to buy Moderna stock after the recent pullback or wait for more data on Omicron to adjust their estimates.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 Futures Move Higher Amid Optimism In Infrastructure Stocks

Stocks Set To Open Higher

S&P 500 futures are gaining some ground in premarket trading while traders wait for additional catalysts which could push stocks to new highs.

S&P 500 moved from the 4350 level to the 4700 level without any pullback, and its RSI has entered into the overbought territory.

The strong earnings season provided significant support to stocks, while recent news on COVID-19 treatments from Merck and Pfizer pushed the market to new highs.

Over the weekend, the $1 trillion infrastructure bill has finaly passed the U.S. House of Representatives. Infrastructure-related stocks like Caterpillar or Deere are already moving higher in premarket trading, and this market segment will likely enjoy significant support today.

Gold Moves Towards $1830 As U.S. Dollar Retreats From Highs

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, failed to settle above the resistance near yearly highs at 94.50 and moved closer to the 94 level.

Weaker dollar provided support to gold, which managed to settle above the psychologically important $1800 level and moved closer to the resistance level at $1830.

In case gold manages to settle above the resistance at $1830, it will gain additional upside momentum and move towards the next resistance at $1845 which will be bullish for gold mining stocks.

WTI Oil Tries To Settle Above $82

WTI oil has recently made an attempt to settle above the 82 level as traders continued to bet on the recovery of oil demand.

The recent pullback was short-lived, and WTI oil quickly managed to find buyers below the $80 level. Energy-related stocks are trading close to yearly highs, and they will have a good chance to gain additional upside momentum during today’s trading session.

While crude inventories have been moving higher in recent weeks, the market looks focused on rising demand, infrastructure investments and the reopening of international travel in the U.S., which serve as bullish catalysts for oil.

For a look at all of today’s economic events, check out our economic calendar.

Marketmind: The ECB’s Inflation Conundrum

A look at the day ahead from Tommy Wilkes.

Will it or won’t it become the latest central bank to warn that price pressures are more severe — and less transitory — than they appeared a few months ago?

The difficulty for the ECB is that it wants to maintain its ultra-dovish stance to boost the region’s economy, but at the same time, it must face up to inflation expectations that are running at seven-year highs above 2%.

The prospect of slowing economic growth and central bank policy tightening is flattening bond yield curves worldwide — taking longer-dated borrowing costs lower. Europe is no exception, with German 10-year yields on Wednesday seeing their biggest daily drop in eight months.

A busy day for central bank activity elsewhere too. The Bank of Japan delivered another dovish statement, projecting inflation to stay below target for at least two more years. It just reinforces the view it will lag others in dialling back crisis-mode policies.

The Reserve Bank of Australia, meanwhile, skipped a chance to buy a government bond at the heart of its stimulus programme, sending yields soaring above target and raising wagers it will become yet another bank opting for an early rate hike.

Supply chain disruptions continue to dominate the earnings season, with Volkswagen the latest carmaker to report lower-than-expected operating profit, partly because of the chip shortage.

Samsung reported its highest quarterly profit in three years but expect component shortages to affect chip demand.

Stock markets have pulled back, with Germany’s DAX opening 0.2% lower and Wall Street futures only marginally higher.

(For graphic on Euro zone inflation expectations – https://fingfx.thomsonreuters.com/gfx/mkt/xmvjolwdgpr/euro%20zone%20inflation.PNG)

Key developments that should provide more direction to markets on Thursday:

-ECB meeting

-German unemployment/prelim CPI Oct (4.4% Y/Y/ Reuters poll)

-Euro zone consumer inflation expectations Oct

-Norway Central Bank Governor Øystein Olsen speaks

-Emerging markets: Egypt central bank meeting

-U.S. flash GDP Q3 (2.8% Reuters poll)

-U.S. core PCE flash Q3 (4.5% Reuters poll)

-U.S. Initial jobless claims

-U.S. 7-yr note auction

-U.S. earnings: Allegheny, AllianceBernstein, Caterpillar, Comcast, Hershey, Mastercard, Merck, Newmont Mining, Moody’s, Royal Caribbean Cruises, T-Rowe Price, Yum Brands, Amazon, Apple, Gilead Sciences, Starbucks, United States Steel.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Tommy Wilkes, editing by Sujata Rao)

Why Moderna Stock Is Up By 4% Today

Moderna Stock Gains Ground As The Company Is Expected To Take A Big Share Of Vaccine Market In 2022

Shares of Moderna gained upside momentum after a Financial Times report indicated that Pfizer/BioNTech and Moderna will control 3/4 of non-China coronavirus vaccine market in the next year.

According to the report, Moderna is projected to make $38.7 billion in revenue due to demand for booster shots in developed countries.

Moderna stock has declined from all-time highs at $497.49 to the $300 level as traders questioned whether the company’s valuation is justified, but the stock managed to find buyers in recent weeks and is currently trying to settle above the $335 level.

What’s Next For Moderna Stock?

Earnings estimates for Moderna have slightly improved compared to the levels seen at the beginning of the month. Currently, analysts expect that Moderna will report a profit of $29.34 per share in 2021 and $27.28 per share in 2022, so the stock is trading at roughly 12 forward P/E which is cheap for the current market environment.

The sustainability of Moderna’s revenue remains the main question for traders and investors. If Moderna can generate strong earnings in the next few years and use its revenue to expand the business into other areas in order to ensure the firm’s financial health after the end of the coronavirus pandemic, its shares look attractive at current levels.

The report from Financial Times may serve as a significant catalyst for the stock which has found itself under material pressure after Merck announced positive results of its antiviral drug. Merck plans to produce at least 20 million courses of its drug in 2022, so the world will still have to rely on initial vaccination and booster doses which is bullish for Moderna. If the market stays focused on the recent revenue forecast from the Financial Times report, the stock will have a good chance to develop additional upside momentum in the upcoming trading sessions.

For a look at all of today’s economic events, check out our economic calendar.

Moderna Could Offer Low-Risk Buying Opportunity

Moderna Inc. (MRNA) fell 11.4% on Friday after Dow component Merck and Co. Inc. (MRK) announced positive clinical results for a pill to reduce COVID-19 hospitalizations and death. If emergency use is approved, patients can take the pill after infection but it won’t replace the billions of vaccinations still needed to inoculate the planet. The decline added to a string of losses since late September, bringing the total weekly loss to a staggering 19.44%.

The Pure COVID Play

MRNA’s float is just 344 million shares, far lower than the billions at Merck, Pfizer Inc. (PFE), and AstraZeneca PLC (AZN), generating volatile price action that’s highly levered to pandemic catalysts, positive and negative. In fact, shareholders have been whipsawed by price swings of 80 points or more, higher and lower, four times since the end of July. Unfortunately, accumulation has deteriorated badly on the latest downturn, exposing the stock to a deep Q4 correction.

However, the future is bright for the Cambridge, MA juggernaut, which holds the most important biotech patents since statins hit the market in the 1980s. The company announced a host of “significant advances across its growing portfolio” at a Research and Development Day last month, with ongoing trials and treatments for the COVID booster, RSV + hMPV, Epstein-Barr, and forms of cancer. In addition, it announced that 37 programs are now in development, including 22 in ongoing clinical studies.

Wall Street and Technical Outlook

Wall Street consensus is mixed after Moderna’s historic gains, with a ‘Hold’ rating based upon 5 ‘Buy’, 7 ‘Hold’, and 1 ‘Underweight’ recommendation. In addition, three analysts recommend that shareholders close positions and move to the sidelines. Price targets range from a low of $85 to a Street-high $485 while the stock closed Friday’s session more than $100 below the median $453 target. It’s instructive to note that analysts have been horrifically wrong about the pandemic’s trajectory since the start of 2020.

Moderna came public at 22 in 2018 and traded in a range between 11 and 30 into 2020 when it broke out in a powerful but highly volatile uptrend. It cleared resistance in the 80s in November and another barrier at 160 in June 2021, entering a final wave that posted an all-time high at 497.49 in August. The stock just broke down from a double top pattern, favoring downside that could offer a low-risk buying opportunity at the unfilled July gap between 260 and 271.

For a look at this week’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Merck COVID-19 Pill Success Slams Moderna Shares, Shakes Up Healthcare Sector

Merck shares jumped as much as 12.3% and hit their highest level since February 2020 after data showed the company’s pill molnupiravir  could halve the chances of dying or being hospitalized for those most at risk of contracting severe COVID-19. Experts hailed the news as potentially a huge advance in the fight against COVID-19.

At the same time, shares of vaccine makers such as Moderna Inc, Pfizer Inc and partner BioNTech SE were hit, with some analysts saying the promise of an oral drug that can be taken at home could change the public perception of risks associated with COVID-19.

“We see modest perceived headwind to vaccine stocks such as MRNA (Moderna) if the market thinks people will be less afraid of COVID-19 and less inclined to get vaccines, if there is a simple pill that can treat COVID-19,” Jefferies analyst Michael Yee said in a client note.

Moderna shares tumbled 13% in midday trading, while Pfizer, which is developing a COVID-19 pill of its own, fell 1.3%. U.S. shares of BioNTech dropped 11%.

For Moderna investors, the Merck news presented an opportunity to lock in gains after an already stunning run. Shares of Moderna, which were added to the S&P 500 in mid July, remain up some 220% in 2021 despite Friday’s declines. BioNTech’s shares were also still up about 200% for the year, even with Friday’s fall. The Merck news is a “great reason for folks to be taking profits off the table” in Moderna and BioNTech shares, said Sahak Manuelian, head of equity trading at Wedbush Securities. “These moves can get exacerbated to the downside given the momentum they have had to the upside.”

Shares of other companies with COVID-19 vaccines also fell, with AstraZeneca down 2% and Novavax falling 16%.

Companies with other COVID-19 therapies that are administered intravenously or through injection also traded lower, with Regeneron Pharmaceuticals In down nearly 5% and Gilead Sciences Inc off about 2%.

Healthcare was the only one of the 11 S&P 500 sectors in negative territory in mid-day trading, falling 0.5%. “We see molnupiravir, with its oral format as a clear game changer that is likely to meaningfully impact not just the treatment paradigm for COVID-19 but also has potential utility in the prevention setting,” Piper Sandler analyst Christopher Raymond said in a research note.

Merck is conducting a late-stage trial to see if its antiviral pill can prevent COVID-19 infection, in addition to the study that showed it can significantly cut hospitalization and death in those already infected.

Merck, whose shares were last up about 9%, leads the race in developing the first oral antiviral medication for COVID-19. Rivals such as Pfizer and Swiss drugmaker Roche Holding AG with partner Atea Pharmaceuticals Inc are running late-stage trials of their pills. Atea shares were up 19%.

Merck, which discontinued its own COVID-19 vaccine program, had seen its shares fall about 4% for the year through Thursday, before they moved into positive territory for 2021 on Friday.

“Merck has kind of been dead in the water to investors for the past couple of quarters,” said Kevin Gade, portfolio manager with Bahl & Gaynor, which owns Merck shares. “This shows their R&D engine is not dead and they were first … in what could be a multi-billion dollar opportunity.”

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Lewis Krauskopf in New York and Manojna Maddipatla in Bengaluru; Editing by Ira Iosebashvili and Bill Berkrot)

Merck Sees Recovery in Non-COVID Vaccine Demand as Quarterly Sales Beat Estimates

By Manas Mishra and Carl O’Donnell

Sales of non-COVID-19 vaccines and physician-administered drugs are expected to recover as hospitals and clinics have started to adapt to the impact of the pandemic, Merck executives told investors.

Merck, which failed in its efforts to produce a coronavirus vaccine, expects to have late-stage data for its COVID-19 antiviral, molnupiravir, in October, Chief Financial Officer Caroline Litchfield said.

The U.S. drugmaker in June agreed to provide 1.7 million doses of the drug to the United States government for around $1.2 billion once it is cleared by regulators. It is also in supply talks with other countries.

Demand for Gardasil, its vaccine to prevent cancers linked to the human papillomavirus, recovered sharply in the second quarter as patients started to catch up on routine medical visits skipped at the height of the pandemic.

Gardasil sales jumped 88% to $1.23 billion, beating analysts’ estimates of $991.38 million.

Recent improvements in the supply chain for the vaccine will drive “very strong sequential and year-over-year growth for Gardasil in the back half of the year, especially in ex-U.S. markets,” said Franklin Clyburn, president of Merck’s human health business.

Sales of cancer immunotherapy Keytruda rose 23% to $4.18 billion in the quarter, in line with estimates.

The company’s top growth driver is on track to become the world’s best-selling drug by 2023.

Merck on Thursday said it had the financial flexibility to consider deals of all sizes and would focus on assets that could add to its strength in the cancer market.

“We want to build upon that strength and actually see ourselves as a company that over time can be a broad player across oncology,” said Merck’s new Chief Executive Officer Robert Davis on an investor call.

“One of the areas we continue to believe we do not need to go is to the very large synergy-driven deals. I think we have enough firepower in our own pipeline,” he added.

The company’s second-quarter sales rose 22% to $11.40 billion, beating estimates of $11.10 billion.

Merck reported adjusted earnings of $1.31 per share for the quarter, in-line with analyst estimates. Its share were down 1% in early trading.

(Reporting by Manas Mishra in Bengaluru; Editing by Shounak Dasgupta and Bill Berkrot)

Germany’s Merck Sees Boost from Labs Supplies Earnings

Adjusted earnings before interest, tax, depreciation and amortization at the division rose to 793 million euros ($961 million).

The company, which also makes pharmaceuticals and specialty chemicals, on May 4 reported better-than-expected quarterly earnings for the group ahead of schedule.

At the time it said it expected 2021 adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of 5.4-5.8 billion euros, up from 5.2 billion last year. It reaffirmed that guidance on Wednesday.

($1 = 0.8249 euros)

(Reporting by Ludwig Burger; Editing by Riham Alkousaa)

Merck Sees Bigger 2021 Sales Hit After First Quarter Feels Pandemic Pain

Shares fell nearly 2% to $75.70 before the opening bell as the health crisis also led to a roughly $600 million drop in first-quarter sales.

Merck has said two-thirds of its treatments and vaccines need to be administered by a doctor, leading to a larger impact from the pandemic-induced restrictions. Full-year sales are now expected to take a hit of 3%, from 2% previously.

The company is also struggling with a decline in the use of vaccines to treat other diseases besides COVID-19, echoing an impact disclosed by Britain’s GlaxoSmithKline on its vaccines business on Wednesday.

Sales of Merck’s Gardasil, a vaccine to prevent cancers caused by the human papillomavirus virus, tumbled 16.4% to $917 million in the first quarter, hurt by lower demand in the United States and Europe.

The company expects the impact to vaccine sales to persist during the first half of 2021, and will allocate doses of Gardasil to markets outside the United States to soften the blow.

Merck reiterated its 2021 adjusted earnings per share expectation of $6.48 to $6.68, and did not assume any benefit from a potential launch of molnupiravir, an antiviral drug for COVID-19 it is developing with Ridgeback Biotherapeutics.

Sales of blockbuster cancer drug Keytruda rose 18.7% to $3.90 billion, but missed Wall Street estimates of $3.98 billion.

Merck’s net earnings fell about 1% to $3.18 billion, or $1.25 per share, in the quarter ended March 31.

Excluding items, the company earned $1.40 per share, missing the average analyst estimate of $1.63, according to IBES data from Refinitiv.

(Reporting by Manas Mishra in Bengaluru; Editing by Sriraj Kalluvila)

COVID-19 – Moderna Delivers Even More Impressive Results

Moderna Inc. Delivers

Following Pfizer Inc. and BioNTech’s announcement, however, the markets were awaiting Moderna Inc. trial results.

The markets didn’t have to wait long. With pressure building on pharmas to deliver an effective vaccine, Moderna Inc. delivered its phase 3 trial results today.

According to the phase 3 trial results, Moderna Inc.’s mRNA-1273 vaccine was 94.5% effective in preventing COVID-19.

Not only were the numbers more impressive than that of Pfizer Inc. and BioNTech, the trial results included severe disease cases.

Efficacy rates of in excess of 90% are impressive. Both Pfizer Inc. /BioNTech and Moderna Inc. have delivered hope of an end to the pandemic.

Logistics and cost issues remain, however. Both Moderna and Pfizer Inc. will need to deliver vaccines in refrigerated containers. This raises the cost and availability of the vaccine in warmer climates. The good news for Moderna Inc., however, is that Moderna Inc.’s temperature requirements are more favorable than that of Pfizer Inc.

While positive for Moderna Inc., it also means that the likes of AstraZeneca and Novavax remain viable global alternatives should clinical trials impress.

Near-term, both Pfizer and Moderna will need to deliver safety, durability, and manufacturing sustainability data.

Favorable figures will give the two a continued edge over the rest of the front runners and those playing catch up.

The 2nd Wave

From the weekend, new COVID-19 cases continued to surge across Europe, the US, and beyond.

The impact of the negative numbers on the markets was muted, however, with Moderna Inc.’s results delivering riskier assets with yet another boost.

Looking at the latest COVID-19 numbers, the U.S has seen the total number of cases rise to 11,367,214. From the weekend, the total number of COVID-19 cases has risen by more than 500,000 to 54,896,579.

With India reporting 8,845,617 total COVID-19 cases, France has edged ever closer to the 2 million mark.

Geographically, the 2nd wave of the pandemic has been so significant that a global inoculation remains key to ending the risk of an extended economic meltdown.

The harsh reality remains that borders will remain closed until there is confidence in a global end to the pandemic.

The Race Participants

Pharmaceutical companies in the race to deliver an effective COVID-19 vaccine are vast in number. Some have progressed more than others, however, and are therefore of greater interest to governments and the global financial markets.

The companies are shown in the chart below:

statistic_id1119090_top-companies-by-covid-19-treatment-vaccines-in-development-2020

While the companies listed above were trialing 60 different drugs and vaccines. There are many more in trial phases, however. As at 12th November, 670 drugs and vaccines were in development, targeting the coronavirus.

The figures are made available by statista.com and Pharma Intelligence.

Looking at the top 10 companies listed above and a few more in more detail:

U.S Headquartered

Johnson & Johnson: Listed on the NYSE (“JNJ”) and headquartered in New Jersey, USA.

Mateon Therapeutics: Listed on OTCMKTS (“MATN”) and headquartered in California.

Medicago: and is headquartered in Quebec, Canada.

Merck & Co.: Listed on the New York Stock Exchange (“MRK”) and headquartered in New Jersey, USA.

Moderna Inc.: Listed on the NASDAQ (“MRNA”) and headquartered in Cambridge, Massachusetts, USA.

Novavax: Listed on the NASDAQ (“NVAX”) and headquartered in Gaithersburg, Maryland, USA.

Pfizer Inc.: Listed on the New York Stock Exchange (“PFE”) and headquartered in New York City. (Pfizer Inc. has partnered with Germany’s BioNTech SE)

Sorrento Therapeutics: Listed on the NASDAQ (“SRNE”) and headquartered in California. Currently trailing many of the front runners in the race for an effective vaccine.

Talem Therapeutics: This is a wholly-owned subsidiary of ImmunoPrecise Antibodies USA. Its parent company, ImmunoPrecise Antibodies Ltd is listed on the Toronto Stock Exchange.

Tonix Pharmaceuticals: Listed on the NASDAQ (“TNXP”) and headquartered in New Jersey.

Europe Headquartered

AstraZeneca: Listed on the London Stock Exchange (“AZN”) and headquartered in Cambridge, England and Sodertalje, Sweden.

GlaxoSmithKline: Listed on the London Stock Exchange (“GSK”) and headquartered in Brentford, England.

Grifols, S.A: Listed on the Bolsa de Madrid (“GRF”) and headquartered in Barcelona, Spain.

Sanofi: Listed on the CAC40 (“SAN”) and headquartered in Paris, France.

Asia Headquartered:

GC Pharma: Listed on the Korea Stock Exchange (“006280”) and headquartered in Yongin, South Korea.

As indicated above, the U.S pharmas make up the lion’s share of companies in the race to deliver a COVID-19 vaccine.

The Road Ahead

As pharmas roll out phase 3 clinical trial results, there are other factors that remain key considerations.

In addition to efficacy rates, other considerations include:

  • Safety: Side effects are a key consideration and any safety concerns would delay approval by government agencies. At present, Pfizer Inc. and BioNTech are accumulating safety data for the FDA. These numbers may well have a greater impact on the global financial markets than the efficacy numbers released earlier this month.
  • Effectiveness: While the latest efficacy numbers were impressive, more information on effectiveness is required. In particular, effectiveness where severe cases of COVID-19 are present.
  • Consistency in manufacturing: With the global COVID-19 pandemic raging on, pharmas will need to provide evidence that the vaccine can be mass-produced. Additionally, pharmas will also need to have the right logistics plans to deliver vaccines to facilities, hospitals, clinics, and pharmacies.
  • Durability: Some vaccines work for longer than others. For an effective COVID-19 vaccine, the durability would most likely need to be similar to that of the flu shot. Anything less and the vaccine would likely be ineffective in immunization for the winter months.

With the above in mind, safety will need to be proven for emergency approval. Once approvals are given, the focus will then shift to manufacturing capacity and logistics.

Governments including those of EU member states, the U.S, and beyond continue to place orders.

Any hint of a distributable vaccine by year-end should provide riskier assets with further support.

As we covered over the weekend, the front runners remain unchanged and are summarized below.

The Front Runners

  • Pfizer Inc. (“PFE”) and BioNTech SE: Awaiting safety and manufacturing consistency data for emergency FDA approval.
  • AstraZeneca (“AZN”) and the University of Oxford: There have been reports of AstraZeneca’s vaccine being as much as 7 times less expensive than Pfizer’s. While Pfizer and BioNTech are currently leading the race, this could give AstraZeneca the edge, particularly across the emerging markets.
  • Moderna Inc. (“MRNA”): Experts are continuing to suggest that Moderna will deliver similar results to that of Pfizer Inc. and BioNTech. Clinical trial data could be out as early as this week. Reuters reported last week that the Swiss government has started a rolling review of its vaccine. This is to ensure a quick approval can be given should it deliver positive results. Swissmedic is also reportedly viewing vaccines under development by AstraZeneca and Pfizer & BioNTech.

Trailing Big Names

  • Johnson & Johnson: Phase 3 clinical trials are continuing and are taking place in a number of geographies. Johnson & Johnson began its phase 3 clinical trials back in September. Trials had to be put on hold following a serious medical event. Trials resumed in late October, however. Trailing Pfizer and a number of others, Johnson & Johnson reportedly received additional funding to ramp up its clinical trials. Partnered with the U.S government, the U.S government has reportedly committed an additional US$454m to support phase 3 trials.
  • Medicago: Last week, Medicago released phase 1 trial results. 100% of subjects who received the trial vaccine developed significant antibody and cellular immune responses after two doses. With no safety concerns, the pharma is due to enter phase 2/3 clinical trials before the end of this year. Reuters also reported last week, that Medicago will use a booster from GlaxoSmithKline in its bid to develop an effective vaccine.
  • Novavax: While trailing the majority of the front runners, Novavax is expected to release phase 3 clinical trials from the UK in the 1st Unlikely its peers, Novavax is looking to deliver a dual vaccine. In addition to a COVID-19 vaccine, the company is looking to also include a flu vaccine. For the Novavax dual vaccine, storage of between 35F and 46F means that transport is far simpler and cheaper. One final advantage that Novavax reportedly has over its peers is production capacity.
  • Sanofi / GlaxoSmithKline: The partnership received a US$2.1bn funding commitment from the Trump administration to deliver a COVID-19 vaccine. Their first results are due out in early December, with late-stage trials to begin before year-end. Along with Johnson & Johnson, Medicago, and Novavax, the vaccine currently trails Pfizer, Moderna, and AstraZeneca.

What’s to come?

With Moderna Inc. now having delivered, the focus will shift to Sanofi and AstraZeneca. The two are likely to deliver the next set of results.

Phase 3 trial results will not be enough, however. The pharmas will need to support global inoculation. That means that safety, manufacturing capabilities, and durability will also become a factor in the race to delivering a global vaccination.

It remains a tall order as key economies enter the winter months. While the phase 3 clinical trial results are positive to date, a global inoculation remains a difficult task. This continues to leave the race to deliver a global vaccine wide open.

COVID-19 – Updates on Vaccine Trials are coming. Is Pfizer Still out Ahead?

The 2nd Wave

COVID-19 continued to spread over the weekend, with the total number of COVID-19 cases standing at 54,328,752 at the time of writing.

While there are reportedly 37,871,087 who have recovered, there have been 1,318,278 related deaths.

The U.S and India continue to have the largest number of cases, with the U.S reporting 11,226,038 cases. Additionally, the U.S also has the largest number of COVID-19 related deaths, currently at 251,256.

Things also continue to be bleak across Europe, with France nearing 2 million cases after having overtaken both Italy and Spain.

While the total number of cases in Italy and Spain sit at 1,492,608 and 1,144,552 respectively, the UK has also seen a jump in new cases. At the time of writing, the total number of new cases stands at 1,344,356.

With the winter months rapidly approaching, the race towards an effective COVID-19 vaccine has intensified.

More cases and more COVID-19 related deaths are anticipated, in spite of governments introducing containment measures.

For the U.S, the headline figure will likely get far worse before any effective vaccine is widely available. The outgoing administration continues to leave the economy open, in spite of new daily cases sitting at record highs.

As a result, market sentiment and updates from the pharmas on when a vaccine is likely to be available remain key to risk sentiment.

The Race Participants

Pharmaceutical companies in the race to deliver an effective COVID-19 vaccine are vast in number. Some have progressed more than others, however, and are therefore of greater interest to governments and the global financial markets.

The companies are shown in the chart below:

statistic_id1119090_top-companies-by-covid-19-treatment-vaccines-in-development-2020

While the companies listed above were trialing 60 different drugs and vaccines. There are many more in trial phases, however. As at 12th November, 670 drugs and vaccines were reportedly in development, targeting the coronavirus.

The figures are made available by statista.com and Pharma Intelligence.

Looking at the top 10 companies listed above and a few more in more detail:

U.S Headquartered

Johnson & Johnson: Listed on the NYSE (“JNJ”) and headquartered in New Jersey, USA.

Mateon Therapeutics: Listed on OTCMKTS (“MATN”) and headquartered in California.

Medicago: and is headquartered in Quebec, Canada.

Merck & Co.: Listed on the New York Stock Exchange (“MRK”) and headquartered in New Jersey, USA.

Moderna Inc.: Listed on the NASDAQ (“MRNA”) and headquartered in Cambridge, Massachusetts, USA.

Novavax: Listed on the NASDAQ (“NVAX”) and headquartered in Gaithersburg, Maryland, USA.

Pfizer Inc.: Listed on the New York Stock Exchange (“PFE”) and headquartered in New York City. (Pfizer Inc. has partnered with Germany’s BioNTech SE)

Sorrento Therapeutics: Listed on the NASDAQ (“SRNE”) and headquartered in California. Currently trailing many of the front runners in the race for an effective vaccine.

Talem Therapeutics: This is a wholly-owned subsidiary of ImmunoPrecise Antibodies USA. Its parent company, ImmunoPrecise Antibodies Ltd is listed on the Toronto Stock Exchange.

Tonix Pharmaceuticals: Listed on the NASDAQ (“TNXP”) and headquartered in New Jersey.

Europe Headquartered

AstraZeneca: Listed on the London Stock Exchange (“AZN”) and headquartered in Cambridge, England and Sodertalje, Sweden.

GlaxoSmithKline: Listed on the London Stock Exchange (“GSK”) and headquartered in Brentford, England.

Grifols, S.A: Listed on the Bolsa de Madrid (“GRF”) and headquartered in Barcelona, Spain.

Sanofi: Listed on the CAC40 (“SAN”) and headquartered in Paris, France.

Asia Headquartered:

GC Pharma: Listed on the Korea Stock Exchange (“006280”) and headquartered in Yongin, South Korea.

As indicated above, the U.S pharmas make up the lion’s share of companies in the race to deliver a COVID-19 vaccine.

The Clinical Trials

Last week, Pfizer and BioNTech SE spurred a global equity market rally, with their impressive phase 3 clinical trial results.

As the week wore on, however, greater awareness led to some apprehension over what lies ahead.

While Pfizer announced an efficacy rate of more than 90%, there are a number of other important considerations. As importantly, there is also some way to go before an effective vaccine is available worldwide.

Other Vaccine Considerations

In addition to efficacy rates, other considerations include:

  • Safety: Side effects are a key consideration and any safety concerns would delay approval by government agencies. At present, Pfizer Inc. and BioNTech are accumulating safety data for the FDA. These numbers may well have a greater impact on the global financial markets than the efficacy numbers released earlier this month.
  • Effectiveness: While the latest efficacy numbers were impressive, more information on effectiveness is required. In particular, effectiveness where severe cases of COVID-19 are present.
  • Consistency in manufacturing: With the global COVID-19 pandemic raging on, pharmas will need to provide evidence that the vaccine can be mass-produced. Additionally, pharmas will also need to have the right logistics plans to deliver vaccines to care facilities, hospitals, clinics, and pharmacies,
  • Durability: Some vaccines are effective for longer than others. For an effective COVID-19 vaccine, the durability would most likely need to be similar to that of the flu shot. Anything less and the vaccine would likely be ineffective in immunization for the winter months.

So, as clinical trial data begins to hit the news wires, the markets will also need to begin focusing on the other considerations. For emergency approvals to be given by the likes of the FDA, safety requirements must be met as a minimum.

While Pfizer Inc. and BioNTech SE are currently out in front, a number of other pharmas are likely to release results imminently.

The World Health Organization has listed more than 200 vaccines in the works, with 48 currently in clinical evaluation. The WHO’s overview of COVID-19 candidate vaccines is available to download here.

The Front Runners

  • Pfizer Inc. (“PFE”) and BioNTech SE: Awaiting safety, duration, and manufacturing consistency data for emergency FDA approval.
  • AstraZeneca (“AZN”) and the University of Oxford: There have been reports of AstraZeneca’s vaccine being as much as 7 times less expensive than Pfizer’s. While Pfizer and BioNTech are currently leading the race, this could give AstraZeneca the edge, particularly across the emerging markets.
  • Moderna Inc. (“MRNA”): Experts are continuing to suggest that Moderna will deliver similar results to that of Pfizer Inc. and BioNTech. Clinical trial data could be out as early as this week. Reuters reported last week that the Swiss government has started a rolling review of its vaccine. This is to ensure that a quick approval can be given should it deliver positive results. Swissmedic is also reportedly viewing vaccines under development by AstraZeneca and Pfizer & BioNTech.

Trailing Big Names

  • Johnson & Johnson: Phase 3 clinical trials are continuing and are taking place in a number of geographies. Johnson & Johnson began its phase 3 clinical trials back in September. Trials had to be put on hold following a serious medical event. Trials resumed in late October, however. Trailing Pfizer and a number of others, Johnson & Johnson reportedly received additional funding to ramp up its clinical trials. Partnered with the U.S government, the U.S government has reportedly committed an additional US$454m to support phase 3 trials.
  • Medicago: Last week, Medicago released phase 1 trial results. 100% of subjects who received the trial vaccine developed significant antibody and cellular immune responses after two doses. With no safety concerns, the pharma is due to enter phase 2/3 clinical trials before the end of this year. Reuters also reported last week, that Medicago will use a booster from GlaxoSmithKline in its bid to develop an effective vaccine.
  • Novavax: While trailing the majority of the front runners, Novavax is expected to release phase 3 clinical trials from the UK in the 1st quarter. Unlikely its peers, Novavax is looking to deliver a dual vaccine. In addition to a COVID-19 vaccine, the company is looking to also include a flu vaccine. For the Novavax dual vaccine, more favorable storage requirements mean that transport is far simpler and cheaper. One final advantage that Novavax reportedly has over its peers is production capacity.
  • Sanofi / GlaxoSmithKline: The partnership received a US$2.1bn funding commitment from the Trump administration to deliver a COVID-19 vaccine. The first results are due out in early December, with late-stage trials to begin before year-end. Along with Johnson & Johnson, Medicago, and Novavax, the vaccine currently trails Pfizer, Moderna, and AstraZeneca.

What Lies Ahead

We can expect plenty of updates in the coming weeks and we will see plenty of movement in the respective stocks.

Pharmas trailing, in the event of further positive news, will likely come under further pressure.

For Pfizer, safety results, manufacturing, and durability results will be in focus near-term. For Moderna and AstraZeneca phase 3 clinical trial results will be in focus. With AstraZeneca commencing vaccine production ahead of approvals, favorable results could give them an edge.

Trailing pharma/government partnerships may also announce further investment commitments to bridge the gap.

COVID-19 – Pfizer Leads the Race to a COVID-19 Vaccine

The 2nd Wave

The West continues to see rising new COVID-19 cases, with the U.S continuing to report more than 100,000 new cases a day.

Things have not been much better for Europe, which has seen lockdown measures reintroduced in a number of member states.

While the economic impact of the 2nd wave is likely to be particularly severe, hopes of a COVID-19 vaccine continue to prop up the global equity markets.

Maintaining current levels, however, will largely depend upon the timing of a vaccine.

The longer that lockdown measures remain, the slower the economic recovery will likely be.

An effective vaccine will not bring back small to medium-sized companies that collapsed due to the pandemic. A vaccine would also fail to deliver a sharp rebound in labor market conditions.

The Race Participants

There are a vast number of pharma companies that are currently in the race to deliver the 1st effective COVID-19 vaccine.

A number of the leading companies are shown in the chart below:

statistic_id1119090_top-companies-by-covid-19-treatment-vaccines-in-development-2020

While the companies listed above were trialing 60 different drugs and vaccines. There are many more in trial phases, however. As at 5th November, 670 drugs and vaccines were in development, targeting the coronavirus.

The figures are made available by statista.com and Pharma Intelligence.

Looking at the top 10 companies listed above and a few more in more detail:

U.S Headquartered

Mateon Therapeutics: Listed on OTCMKTS (“MATN”) and headquartered in California.

Merck & Co.: Listed on the New York Stock Exchange (“MRK”) and headquartered in New Jersey, USA.

Moderna Inc.: Listed on the NASDAQ (“MRNA”) and headquartered in Cambridge, Massachusetts, USA.

Pfizer Inc.: Listed on the New York Stock Exchange (“PFE”) and headquartered in New York City. (Pfizer Inc. has partnered with Germany’s BioNTech SE)

Sorrento Therapeutics: Listed on the NASDAQ (“SRNE”) and headquartered in California. Currently trailing many of the front runners in the race for an effective vaccine.

Talem Therapeutics: This is a wholly-owned subsidiary of ImmunoPrecise Antibodies USA. Its parent company, ImmunoPrecise Antibodies Ltd is listed on the Toronto Stock Exchange.

Tonix Pharmaceuticals: Listed on the NASDAQ (“TNXP”) and headquartered in New Jersey.

Europe Headquartered

AstraZeneca: Listed on the London Stock Exchange (“AZN”) and headquartered in Cambridge, England and Sodertalje, Sweden.

GlaxoSmithKline: Listed on the London Stock Exchange (“GSK”) and headquartered in Brentford, England.

Grifols, S.A: Listed on the Bolsa de Madrid (“GRF”) and headquartered in Barcelona, Spain.

Asia Headquartered:

GC Pharma: Listed on the Korea Stock Exchange (“006280”) and headquartered in Yongin, South Korea.

As indicated above, the U.S pharmas make up the lion’s share of companies in the race to deliver a COVID-19 vaccine.

Coronavirus – The Latest Numbers

At the time of writing, the total number of COVID-19 cases has risen to 51,241,021. This is up from 49 million cases less than a week ago. More than 20% of the total number of cases has stemmed from the U.S. The U.S has reported 10,421,956 COVID-19 related cases and 244,448 related deaths.

With India not far behind, reporting 8,591,075 COVID-19 related cases, the sense of urgency towards a COVID-19 vaccine has increased.

France, Spain, and the UK have now seen more than 1 million COVID-19 related cases. Italy and Germany have fared somewhat better, but not by much.

For this reason, the EU and U.S economies remain the greatest concern. Biden’s Presidential Election victory adds another dimension to the economic outlook for the U.S and beyond.

Following Trump’s willingness to reopen the U.S economy at any cost, Biden’s stance is likely to be a more conservative one.

The President-Elect has clearly stated that tackling the COVID-19 pandemic will be a priority. This could mean enforced containment measures in the near-term, which would add further pressure on the U.S economy.

A lack of a sizeable stimulus package this year would make things all the more bearish for the U.S economy.

The Clinical Trials

After last week’s review of the key pharmas in the race to develop an effective COVID-19 vaccine, Pfizer delivered a boost for the global equity markets on Monday.

Working with Germany’s BioNTech SE, Pfizer released its latest results, which were particularly promising.

On Monday, Pfizer Inc. announced that its COVID-19 vaccine had an efficacy rate of more than 90%. This meant that the trial vaccine prevented COVID-19 in more than 90% of candidates in phase 3 testing. In response, Pfizer Inc.’s share price jumped by 7.69% on Monday. BioNTech SE’s share price shot up by an even more impressive 14.69% in response to the news.

While this is a huge step towards an effective vaccine, however, there is some way to go before a worldwide distribution of a vaccine.

In addition to efficacy rates, safety and consistent manufacturing are additional requirements that need to be met in order to receive FDA approval.

The markets will therefore need to monitor progress in the coming weeks, as Pfizer delivers more data.

So, with Pfizer Inc. and BioNTech SE leading the charge, other pharmas will now be under pressure to deliver similar results.

Since last week’s review, the front runners and main players remain the same.

The Front Runners

  • Pfizer Inc. (“PFE”) and BioNTech SE will announce further results in the next few weeks. The results will not only include efficacy numbers but also details on safety and manufacturing sustainability. Pfizer Inc. will apply from the FDA for emergency use authorization once it satisfies all three criteria. This could come as soon as the end of November.
  • AstraZeneca (“AZN”) announced last week that they are on track to deliver a vaccine as early as this year. In response to last week’s announcement, news hit the wires yesterday that AstraZeneca has commenced vaccine production in Australia. This is despite the fact that the AstraZeneca and University of Oxford vaccine is still in phase-3 clinical trials. Vaccine tests results are scheduled to be delivered by the end of the year. The move is a gamble, with the group producing vaccines in the hope of acceptable results. In response to Pfizer Inc.’s news on Monday, AstraZeneca’s stock fell by 2.03% on the day.
  • Moderna Inc. (“MRNA”) is expected to have similar results to that of Pfizer Inc. as it has relied upon the same mRNA tech in vaccine development. Moderna Inc. is due to release its clinical trial results in the coming weeks.

What Lies Ahead

So, as the big pharmas make progress towards an effective COVID-19 vaccine, there are a few issues to consider.

Key considerations will include

  • Duration of effectiveness: The shorter the duration of the vaccine’s effectiveness, the less effective the vaccine.
  • Asymptomatic prevention: Clarity on whether the vaccine can prevent asymptomatic carriers.
  • Initial support and supply projections near to medium-term: For bringing an end to the global pandemic, supply will be a key consideration.
  • Side effects: Major side effects could reduce the number of the population willing to take the vaccine.
  • Storage requirements: The storage requirements of the virus will also influence delivery on a global scale.

While the efficacy numbers are impressive, therefore, the pharma world will need to deliver more to end the COVID-19 pandemic. This could therefore lead to sizeable swings across the global financial markets as optimism shifts to reality.

COVID-19 – The Race to a Vaccine

The 2nd Wave

The 2nd wave of the COVID-19 pandemic has hit Europe hard. As a result, a number of countries across the EU have had little choice but to reintroduce lockdown measures.

Britain has also reintroduced lockdown measures across England this week.

For the U.S, things are not much better. New daily COVID-19 cases continue to set new records as the West enters an uncertain winter.

The economic devastation from the 1st wave could pale into insignificance when considering the likely impact of the 2nd wave.

For this very reason, the race towards an effective and widely available COVID-19 vaccine is all the more important.

Until an effective vaccine is readily available, containment measures, border control, and more will remain economically debilitating.

The Race Participants

There are a vast number of pharma companies that are currently in the race to deliver the 1st effective COVID-19 vaccine.

Some of these companies are researching more drugs than others, suggesting that they may be more likely to deliver first. Others may argue, however, that having too many varieties to test will result in a lack of progress.

The companies are shown in the chart below

statistic_id1119090_top-companies-by-covid-19-treatment-vaccines-in-development-2020

While the companies listed above are trialing 60 different drugs and vaccines, as at 28th October, there were reportedly 674 drugs and vaccines in development, targeting COVID-19.

The figures are made available by statista.com and Pharma Intelligence.

Looking at the top 10 companies listed above and a few more in more detail:

U.S Headquartered

EpiVax: Unlisted and headquartered in Providence, USA.

Mateon Therapeutics: Listed on OTCMKTS (“MATN”) and headquartered in California.

Merck & Co.: Listed on the New York Stock Exchange (“MRK”) and headquartered in New Jersey, USA.

Moderna Inc.: Listed on the NASDAQ (“MRNA”) and headquartered in Cambridge, Massachusetts, USA.

Pfizer Inc.: Listed on the New York Stock Exchange (“PFE”) and headquartered in New York City. (Pfizer Inc. has partnered with Germany’s BioNTech SE)

Sorrento Therapeutics: Listed on the NASDAQ (“SRNE”) and headquartered in California. Currently trailing many of the front runners in the race for an effective vaccine.

Talem Therapeutics: This is a wholly-owned subsidiary of ImmunoPrecise Antibodies USA. Its parent company, ImmunoPrecise Antibodies Ltd is listed on the Toronto Stock Exchange.

Tonix Pharmaceuticals: Listed on the NASDAQ (“TNXP”) and headquartered in New Jersey.

Europe Headquartered

AstraZeneca: Listed on the London Stock Exchange (“AZN”) and headquartered in Cambridge, England and Sodertalje, Sweden.

GlaxoSmithKline: Listed on the London Stock Exchange (“GSK”) and headquartered in Brentford, England.

Grifols, S.A: Listed on the Bolsa de Madrid (“GRF”) and headquartered in Barcelona, Spain.

Asia Headquartered:

GC Pharma: Listed on the Korea Stock Exchange (“006280”) and headquartered in Yongin, South Korea.

As indicated above, the U.S pharmas make up the lion’s share of companies in the race to deliver a COVID-19 vaccine.

Coronavirus – The Latest Numbers

When considering the fact that the U.S has recorded an alarming 9,919,522 COVID-19 cases and 240,953 COVID-19 related deaths, it is not surprising that Pharma U.S is leading the charge.

Looking at the latest Coronavirus figures, the total number of cases currently sits at 49.031. While 34.98m have reportedly recovered, there have been 1.24m reported deaths.

For Europe and the U.S, the number of cases reported amidst the 2nd wave has been far more significant than in the 1st wave.

When considering the fact that the winter has just begun, these numbers are likely to balloon further.

For the Global Economy, the key to any recovery rests on finding an effective vaccine and soon. Failure to successfully trial a vaccine by the end of the year will leave the world exposed for another full quarter.

Larger multinational companies may be able to tighten the belt. Small to medium-sized companies, however, will begin to shut down in far greater numbers than seen in the 1st wave.

The damage to the economy would be so severe that some nations will be in the economic wilderness for a decade if not more.

So, having identified the key players in the race to an effective COVID-19 vaccine, the next step is to understand at what stage of clinical trials each currently stands.

The Clinical Trials

Companies that are more advanced may not ultimately reach the end goal first, but they do have a greater chance.

For this reason, share prices have tended to reflect how advanced and successful trials have been to date.

According to Pharmaintellgence.informa.com,

Of the total 674 drugs, 510 are currently in the preclinical trial phase. This means that the vast majority may not make it to clinical trials.

Of the remainder:

  • 49 are currently in phase 1 clinical trial.
  • 75 are in phase 2, and
  • 28 are in phase 3.

Taking a closer look at the current trials testing drugs for the treatment and/or prevention of COVID-19 fund in Trialtrove, the breakdown in phases is as follows:

  • I: 431
  • II: 1,728
  • III: 1,011
  • IV: 327

From the numbers above, it is clear that the sector is making strong progress towards effective treatment and/or vaccine.

The Front Runners

  • AstraZeneca (“AZN”) announced this week that they are on track to deliver a vaccine as early as this year. The company is due to deliver test results by the end of the year. AstraZeneca is working with the University of Oxford to deliver an effective vaccine.
  • Moderna Inc. (“MRNA”) is reportedly getter ready for a global launch. In late October, the company stated that it had already accepted in excess of $1bn in deposits from governments. Late-stage trials are underway.
  • Pfizer Inc. (“PFE”) and BioNTech SE have announced that they may release initial late-stage trial data this month. If results are positive, Pfizer Inc. will apply from the FDA for emergency use authorization.

While the above are in their final stages, there are a number of other pharmas also making progress.

FDA approvals, however, may be hard to come by for pharmas looking to enter the largest COVID-19 market. That will, therefore, give the likes of Moderna Inc. and Pfizer Inc. the upper hand for now. The flood gates could open, however, should both hit snags at this late stage. Such an event could give AstraZeneca a green light to enter the U.S market.

In the days and weeks ahead, we will continue to monitor progress towards a vaccine and review other pharmas in the race.