Doctor, Doctor Give Me the News
17 Jul, 2020
READ TIME 5 mins
Rod Skellet
Equities Investment Strategist

The level of optimism in equity markets and society in general, regarding the progress being made on developing a vaccine for COVID-19, has certainly been increasing.

The world is desperate for news of a potential vaccine and is very much putting the recovery of the economy and the reduction in the health crisis on the line, so much so it’s like the vaccine is almost fully developed and trialled.

I am not sure how many of this readership has been personally exposed to vaccines.

Sure, the flu shot many of us get each year is pretty common, but if the world thinks the vaccine for COVID-19 is going to be like getting a flu shot, then we could well be in for a very rude and thought-provoking wakeup call.

Not all vaccines are as simple and benign as the influenza virus.

Having grown up in Papua New Guinea, my entire family was given the smallpox vaccination.

My father at the time in the early 1970’s was 35 and he took us down to the doctors to get jabbed. The negative side effects of the smallpox injection were known at the time and we also had little choice as it was a legal requirement to be inoculated prior to travelling to PNG. But the impact it had on my dad was horrible. He spent 4 days in hospital and 3 weeks in bed at home. He was very, very sick. If this type of side effect is what could be expected from any COVID-19 vaccination how many people are going to want to be vaccinated and can the hospitals cope with the negative side effects of those vaccinated?

The search for a vaccine is front of mind in the pharmaceutical industry with some 160 individual programs underway. In recent times, Moderna Inc has been in the news with some positive results from a Phase 1 clinical trial across 45 healthy adults. All participants in the trial showed an antibody response.

Antibodies are the proteins the body makes to fight infection. Being safe to use in 45 people is not the same as being safe for say 20 or 200 million people that would need vaccinations in the US.

Source: Factset

Ken Frazier, CEO of pharmaceutical giant Merck was interviewed recently by Professor Tsedal Neeley from Harvard Business School.

If there was ever a rational discussion on the topic in my view, it was this;.

I will summarize his interview with the following bullet points.

  • Developing a vaccine takes time; a lot of time. The fastest vaccine ever bought to market was for the epidemic parotitis (“mumps”). It took Merck 4 years to produce this vaccine.
  • The most recent vaccine created for a large viral outbreak was for the Ebola virus and took 5.5 years.
  • In the last 25 years there has been only seven truly new vaccines introduced globally. By new that means that they were effective against a pathogen for which there had previously been no vaccine. Merck has developed four of those seven and the rest of the world three. There has been an enormous amount of work done in the field of prevention. Despite all this work, the world has been trying to develop a vaccine for Aids since the early 1980’s, and so far, has had no success.
  • Developing a vaccine requires vigorous scientific assessment. Vaccines need to be both safe and effective as well as durable. No one knows if any of the 160 programs will produce a vaccine that is effective. This vaccine needs to work on billions of people.
  • Lots of vaccines in the past have stimulated the immune system (just like the Moderna trial vaccine) but ultimately did not confer protection.
  • When politicians suggest there will be a vaccine available by the end of 2020, I think they are doing the public a “grave disservice.”
  • We do not want to rush the vaccine, before rigorous science is done. We do not have a good history of introducing a vaccine in the middle of a pandemic. Look at Swine flu vaccine. It did more harm than good.
  • While we are working hard on a vaccine the best preventative measures to limit the spread and infection of COVID-19 are good hygiene, wearing a mask and social distancing.
  • The bigger challenge to developing a vaccine is distributing it to where it is needed most. In a time of ultra-nationalism, countries want to take whatever is available and say, I am going to use it in my own population first rather than using it on the populations globally at greatest risk.
  • Developing a vaccine for 7 billion people has never been done before. Delivering it to 7 billion people is an enormous logistical challenge especially to those communities who cannot afford it.
  • This is a global pandemic. Unless all of us are safe then none of us are safe.
  • The mobility of the world’s society poses a real problem. The EU has barred Americans travelling to Europe for a reason. We Americans are not doing the things required to suppress the epidemic. We Americans value liberty. It has been a strong theme through US politics for 200 years, largely because we had 2 big oceans protecting us. This virus does not care about your liberties. If you are going to exercise your liberty at my personal expense, then we cannot control this pandemic.
  • America is 4% of the world’s population and 25% of the world’s infections. That’s scary.
  • We need politicians with enough integrity to tell us the truth. This time next year we will still be experiencing what we are experiencing now. Be prepared for that.

With these sage words lingering in your mind, let’s hope that when a Phase 3 trial for the Moderna vaccine gets underway, a trial that will involve thousands of patients, the results of the safety and efficacy will be such that a reliable vaccine can be developed. Just be conscious that it will be a miracle if it is developed before the end of 2020, and if you believe Ken Frazier, 2025 is a more realistic time frame. On the positive and this is reason to be optimistic, despite the rate of infection currently on the up especially here in Australia, the death rates are fortunately still very low.

The views expressed in this article are the views of the stated author as at the date published and are subject to change based on markets and other conditions. Past performance is not a reliable indicator of future performance. Mason Stevens is only providing general advice in providing this information. You should consider this information, along with all your other investments and strategies when assessing the appropriateness of the information to your individual circumstances. Mason Stevens and its associates and their respective directors and other staff each declare that they may hold interests in securities and/or earn fees or other benefits from transactions arising as a result of information contained in this article.

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