Which Covid-19 vaccines look likely to be the best bets?

The race to produce a treatment to prevent Covid-19 has hundreds of entrants. How should investors approach it? Matthew Partridge reports.

AstraZeneca has said it hopes to start distributing Oxford University’s Covid-19 vaccine by the end of 2020, says Samuel Lovett in The Independent. Preliminary trial results revealed that it induces a “strong immune response within humans” and “appears to be safe”. More detailed results for this vaccine are expected to be available between September and November. Meanwhile, the company has struck deals with the UK, France, Germany and the US to deliver supplies of the vaccine, and will start manufacturing it even before trials finish, with the aim of making two billion doses.

The results may be positive enough to continue with trials, but they “weren’t enough to convince the market”, says Bloomberg. AstraZeneca’s shares fell back early this week. Good news had been “widely expected”, while there are also concerns over whether its vaccine can match the progress seen at rival companies such as Pfizer, BioNtech SE and Moderna. The decision to prioritise a two-dose regime (rather than a single injection) and the fact that the end-of-year deadline is later than the previous promise of a September delivery are also “dampening” some of the enthusiasm.

Hedging bets

In a reminder that AstraZeneca is not the only company close to bringing a vaccine to market, even the British government, one of the biggest backers of Oxford University’s research, now seems to be hedging its bets by working with rivals, says The Daily Telegraph. Having previously agreed to buy 100 million doses of the AstraZeneca vaccine, it has signed additional deals to “secure 90 million doses of two possible Covid-19 vaccines from the Pfizer and BioNTech alliance and French group Valneva”. This could rise to 140 million doses if the Valneva vaccine proves to be “effective and suitable”.

Betting on vaccines from more than one company is an approach investors should adopt too, says Lex in the Financial Times. Formerly considered a “neglected Cinderella industry”, vaccines have “never been so hot”. But there are 170 Covid-19 vaccines in development, so many “also-rans” will inevitably suffer from “irrevocable losses”. Investors should back different approaches to “spread risk”. In any case, the need for “multiple success stories” means that this “is not a winner-takes-all market”, with rewards likely to be spread across multiple firms.

Investors should also note that even if they do manage to bet on a winner, “sales and profits might not flow as much as hoped”, says Charley Grant in The Wall Street Journal. Given that the drug industry will want to avoid “heavy scrutiny” over its pricing practices during the upcoming US election, it will be under pressure to price a vaccine “modestly”. More broadly, the “euphoric trading” that has seen the share price of biotech companies such as Moderna triple means that “caution is always warranted”.

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