The spread of coronavirus COVID-19 has paralyzed social and economic activity in most countries of the world. Despite the fact that a number of countries are now preparing to ease social restrictions and restart the economy, many experts expect a second or even third wave of COVID-19 incidence. And the head of WHO believes that it will not be possible to stop the coronavirus without a vaccine.
The recovery of the economy and the value of many financial assets may directly depend on progress in COVID-19 vaccine development. Currently, more than 100 organizations are involved in the process, including several public companies in the pharmaceutical and biotechnology sectors. Only in March 2020, WHO registered about 500 clinical trials of a vaccine and treatments for a new disease.
But there is currently no clinically tested vaccine sample. In February 2020, WHO expected the appearance of a working vaccine no earlier than 18 months later.
The huge budgets and high involvement of pharmaceutical companies around the world give hope for a fast pace of vaccine development. Already in April 2020, according to the Milken Institute in the United States, about 100 candidates for vaccines were registered in the world. According to the institute, it’s convenient to track not only the vaccine development process, but also the methods of treating a new disease.
As of April 24, seven of the candidates submitted have been undergoing or have passed the first stage of clinical trials in the human body. As part of the first phase, safety for the person is checked mainly. To produce a working vaccine, candidates must go through another, most important, third stage of research. As a rule, tests in the framework of the third phase are much longer and more extensive.
According to the Milken Institute, one of the candidates developed by the Beijing Biotechnology Institute is already undergoing the second phase of testing. The US biotechnology vaccine Moderna, which received $483 million from the US government to speed up the development process, is undergoing the first phase of clinical trials. The second phase should begin in the 2nd quarter 2020. The first and second phases are planned to be completed in June 2020.
Despite the rapid start of vaccine development and methods of treating a new coronavirus disease, a number of studies show that the probability of a vaccine candidate for passing the second stage of a clinical trial can be about 18-30%. The third stage is already about 50% of the tested vaccines.
Moderna (MRNA)
This American biotech is now considered the top favorite among public companies in the development of COVID-19 vaccine. The company specializes in RNA biochemistry, most of the research is devoted to the study and development of vaccines. Moderna entered the IPO quite recently, at the end of 2018. Like most biotech companies listed on the stock exchange, MRNA remains unprofitable, both in terms of net profit and EBITDA. Over the past 12 months, EBITDA loss was $1.44 per share. Earnings per share does not show stable growing dynamics. The company is traded under the ticker MRNA.
Arcturus Therapeutics Holdings (ARCT)
Another public company developing a new vaccine is Arcturus Therapeutics. The first phase of the candidate’s trials should begin in the summer of 2020. The company received permission for clinical trials after a successful preclinical study.
ARCT has long gone to IPO, but still remains unprofitable, even at the EBITDA level. ARCT capitalization does not exceed $0.5 billion. The loss on EBITDA for 12 months amounted to $24 million. The company's revenue since 2016 does not show a stable result, and due to periodic additional issues per share, it has significantly decreased. The company is traded on the NASDAQ under the ticker symbol ARCT.
Inovio Pharmaceuticals (INO)
Another American biotech is developing a vaccine in collaboration with Beijing Advaccine Biotechnology. Companies began the first phase of clinical trials in April. Ends of phases I and II are expected by the end of summer 2020.
INO is a biotechnology company with small capitalization about $ 2billion. This Biotech became public even before the dot-com boom in 2000. The EBITDA loss over the past 12 months amounted to $105 million. The company's revenue over the past three years has been sharply and consistently declining. INO is overloaded with high debt. Debt / Eq is 29x. Despite the extremely negative financial results, the company's shares over the past two months have grown by tens of percent amid news about the development of the vaccine. The company’s stocks are traded on NASDAQ under the ticker symbol INO.
Applied DNA Science (APDN)
The company’s shares have been traded on NASDAQ since 2013. During this time, its capitalization dropped to $22 million. Shares are currently traded near historical lows. The company has been unprofitable at the EBITDA level for the past three years. Earnings per share are gradually decreasing. Debt load ratio is relatively low, Debt / Eq is 0.21x.
Shares of APDN have shown revival in recent weeks amid reports of vaccine development. The company works in consortium with Takis and Evvivax. Preclinical trials should be completed soon, clinical trials are scheduled for autumn 2020, but permission for them has not yet been obtained. Obtaining an appropriate certificate can significantly affect stock quotes.
Dynavax (DVAX)
This biotech is working on a vaccine with several other companies. Together with the Chinese Sinovax, Dynavax is scheduled to begin phase I and II clinical trials soon. Only preclinical studies of vaccines under development are underway with other manufacturers.
DVAX is a small biotech with a capitalization of $285 million. EBITDA loss over the past 12 months amounted to $114 million. The company's earnings per share are growing at an unstable pace. The stock is traded on Nasdaq.
Novavax (NVAX)
Novavax is a relatively large and long-standing biotechnology company with a capitalization of about $1 billion. EBITDA loss over the past 12 months amounted to $114 million. The company's earnings per share do not show stable growth. Given negative equity and negative EBITDA, the company's debt burden is high.
NVAX, together with Emergent BioSolutions, plans to begin clinical trials of the vaccine. The company's shares over the past few weeks have risen significantly amid the announcement of a vaccine development. The stocks are traded on the NASDAQ under the NVAX ticker.
Pfizer (PFE)
Pfizer is an international pharmaceutical giant with a capitalization of $209 billion. Pfizer announced the development of a vaccine in conjunction with the German BioNTech. The company began the first phase of clinical trials in late April. Unlike most of the biotechs listed here, Pfizer is a profitable company with consistent earnings growth per share. EBITDA over the past 12 months increased by 36%, earnings per share by 53% - to $2.48. Not taking into account the impact of participation in the development of the vaccine against COVID-19, analysts expect growth in earnings per share by 5-6% in 2020. The stock is traded on NASDAQ Exchange under the ticker symbol PFE.
Who else plans to start clinical trials
In addition to the above American biotechnology and pharmaceutical companies, there are several European public companies that are also participating in the vaccine development sprint. These are, for example, the Swedish ISR Immune System Regulation (ISR) and the French Sanofi (SNY). Shares of these companies are traded on European exchanges or in the form of receipts on the NASDAQ.
In addition to private and public companies, a large number of institutes and public institutions are involved in the development of vaccines at different phases. There are the Beijing and Wuhan Bioproducts Institutes, the Shenzhen Gene-Immune Medical Institute, a consortium of European medical institutes in cooperation with AdaptVac, Merk and others among them.
Summary
Despite the fact that a very large number of private companies and government institutions have joined COVID-19 vaccine development race, only a few are embarking on a very important barrier phase II clinical trial.
As practice shows, no more than a third of the declared candidates pass in the III phase of testing, which lasts much longer than the first two. In connection with this state of affairs, the dates for the creation of a working and tested vaccine announced by WHO no longer seem pessimistic.
The development of a vaccine from COVID-19 is a strategic priority of the states, and a large amount of funds is allocated for its creation. Thanks to this, many small farms and biotech companies have joined the development.
Most of the public biotechnologists who have announced an attempt to develop a vaccine are unprofitable at the EBITDA level. The exception is the global pharmaceutical company Pfizer. Quotations of its shares have already significantly responded to positive and promising news and may grow more as the safety and effectiveness of the vaccine candidate are confirmed.
However, disappointing clinical trial statistics should be considered. Only 18-30% of candidates will be able to pass the second phase of testing. In case of failure, most likely, the shares’ price of such companies will rapidly drop.
Bill Gates: innovation is needed in 5 areas to get life back on track
According to Gates, a “semi-normal” world can be expected over the next two months: “People can go out, but not so often, to crowded places,” he writes. The basic principle should be to allow activities that are of great benefit to the economy or the well-being of people, but pose a small risk of infection, the tech billionaire believes.
Most of the story will go on
In his thoughts, Gates says that the world so far has survived only a third of COVID-19 pandemic consequences. Even when governments open enterprises and companies, the situation will not be standard. Behavior of people will change, there will be a natural aversion to the fact that you can suddenly become infected. Therefore, he predicts: “There will not be a large crowd at airports. Sporting events will take place at empty stadiums. And the global economy will be depressed because demand will be low.”
When life returns to normal
This will only happen after most of the population has been vaccinated, and this may take some time. Bill Gates hopes that the vaccine will be launched into mass production by the second half of 2021. If this happens, it will be a historic achievement: the shortest path in history when mankind moved from recognizing a new disease to immunization against it.
In a CNBC interview, Gates emphasized that the world must promote a variety of treatments, vaccines, testing, contact tracing, and test its own virus detection policies.
Microsoft leader believes innovation is needed in 5 areas.
- Treatment: many treatment methods are still unsuccessful, to make people feel safe at social events, 95% effective treatment is needed. He pointed out the possibility of using blood plasma or antibodies and antiviral medicines.
- Vaccines: this is the only way to return to normal. Gates noted that it usually takes five years for a vaccine against a new disease to be on the market. Gates is optimistic, predicting an earlier Covid-19 vaccine appearance in up to 18 months.
- Testing: Gates said the United States needs to prioritize and speed up Covid-19 testing to get results in one day. First of all, it is worth testing those who have symptoms.
- Contact tracking: priority should be given to those who are in close contact with the virus-positive. Gates pointed to Germany's example of tracking contacts and monitoring such patients.
- Discovery: Gates believes that most developed countries will enter the second phase of the pandemic in the next two months. Countries will have to learn from each other the effective experience of social distance, and officials must compromise taking into account the risks and benefits.
