Knowledge. Shared Blog

May 2020

COVID-19: Understanding the Science & Investment Implications (Part V)

In the latest installment of our video series on the scientific and investment implications of COVID-19, Biotech Analyst Agustin Mohedas discusses how efforts to develop treatments and vaccines have accelerated innovation in health care. He also provides insight on the potential impact of certain states reopening their economies and what the timeline to develop an effective vaccine could look like.

Key Takeaways

  • Efforts to generate vaccines for COVID-19 highlight the importance of innovation in health care and demonstrate how quickly new technologies can be developed.
  • These efforts are also helping some companies accelerate their technological capabilities in a rapid and meaningful way. In addition, smaller companies with cutting-edge technology are starting to partner with pharmaceutical giants, which can ramp up manufacturing and distribution.
  • A number of vaccines are currently being tested on healthy volunteers to determine the drugs’ safety. While larger clinical trials will be needed to gauge the efficacy of these drugs, we expect some vaccines could be approved by early next year and become broadly available in the second half of 2021.

View Transcript

Michael McNurney: Hi, my name is Michael McNurney. Welcome to Janus Henderson’s ongoing series on the COVID crisis. Today, I’m joined by Agustin Mohedas, and Agustin and I are going to talk about the latest updates on the disease and some of the secular themes that have been accelerated through this crisis. Agustin, welcome. 

Agustin Mohedas: Thanks, Mike. Yes, happy to give an update on COVID-19 and how we’ve seen it evolve. I’ll focus primarily on Europe and the U.S., but I’ll also mention some things about how it’s evolved in Asia as well. Now, in the EU five, the European Union saw the peak of new daily cases actually around mid-March.

Meanwhile, in the U.S., we’ve been around 25,000 to 30,000 daily new cases since the end of March and are still holding around that number. The case numbers have come down a little bit but not nearly as much as they have in Europe, which suggests that our social distancing measures in the U.S. are not as uniform or as effective as they have been in Europe. And in fact, if you remove New York state, New Jersey and Connecticut, new daily cases in the U.S. are actually increasing.

Now, this contrasts with Asian countries such as South Korea, Vietnam, China and others where they’ve effectively shut down the epidemic through very strict lockdowns, contact tracing and widespread testing.

McNurney: Agustin, it seems to me that we’re trying to strike a very delicate balance between the health of the country and our economic health. What is the biggest threat, or what are maybe the indicators that you’re looking for to measure that balance?

Mohedas: So, some states that have been particularly hard hit, like New York, New Jersey, Connecticut, Massachusetts, you know, really in the Northeast, are still in lockdown, while other states that have also seen cases but are at much lower numbers are starting to reopen their economies. Now, the potential problem is as we reopen the economy and people start going to businesses and interacting more, the social distancing measures that were put in place are slightly relaxed, causing the arc of the virus, or the infectivity, to increase and leading to more daily new cases.

Now the main question will be how much will it rise? Will we see a doubling of the new daily cases in the states that are reopening … tripling? It’s really hard to tell at this point. We’re also monitoring things in, you know, countries like Germany, which have recently relaxed their social distancing restrictions and have seen a small uptick in the number of cases.

So I guess, big picture, as countries and states and cities start reopening their economy, we just have to be very cognizant and careful that this will lead to more cases but, hopefully, it will be in a controlled manner. And with the availability of testing and isolation and tracing, we will be able to quarantine those people that do test positive while still allowing others to remain active in the economy.

McNurney: Agustin, one of the things that Janus is known for is our differentiated research and not just taking the consensus view on things. So can you talk about some of the ways that you’re measuring and tracking this disease?

Mohedas: I’ve created multiple models particularly focused in the U.S., where we are predicting between 1.6 and 1.8 million cases and 100,000 deaths by the end of June. Now these models, however, are all based on kind of how the epidemic evolved in other countries. However, as countries begin to open up, we could see the rate of daily new cases start to increase, in which case all of these models will have to be revised.

McNurney: Now Agustin, one of the things that we’ve seen, particularly within technology, is this acceleration on some of the secular themes that we’re investing in through the course of this crisis and, in particular, because of the measures that we’re putting in place to try to curtail the spread of the disease. Is something similar to that happening within the health care space?

Mohedas: Yes, that’s a great point, Mike. That’s absolutely what we’re seeing. We’re seeing technologies, for example, mRNA-based medicines. This is a new type of medicine that is … there are no approved products that use mRNA as a form of medicine, but it is basically delivering the message to create a protein to the body and then the body and the cells within the body actually serve as a factory to produce that protein or that medicine. Now, this is particularly useful for generating vaccines. And so we now see multiple mRNA-based vaccines in the clinic, and we will have data from those towards the middle of this year and then, potentially, billions of doses available by sometime next year. And so that’s just one example of some of the acceleration that the COVID-19 pandemic has caused in terms of technology development in biotech.

McNurney: Agustin, how is it that we’re able to evaluate the effectiveness and the safety of these medicines if they are so nascent in terms of their development?

Mohedas: Luckily, for mRNA-based vaccines, the safety has already been shown with some of the other clinical programs that different companies have developed, and so they do appear to be quite safe. The efficacy is another question. We’ll have to see if these vaccines are able to generate sufficient antibodies to be protective in the real world. And so the companies that are developing these vaccines are testing them now in healthy volunteers, and so we’ll be able to see how many antibodies are generated. And so those are called antibody titers, so how high those titers are. And then they will run large phase two, maybe phase three studies with thousands of patients, thousands of healthy volunteers that will receive either placebo or the vaccine and then go about their daily lives. And at some point, they will see, okay, the people that get placebo, were they more likely to get COVID-19 versus those that had the vaccine? And then we’ll be able to have our efficacy signal.

McNurney: Agustin, it sounds like there are a number of modalities that are being used to try to treat or find a vaccine for this disease, which is going to result in just an increasing pace of innovation. But also, aren’t we going to see some goodwill generated for the entire industry because of the fight against COVID?

Mohedas: Yes, I think what COVID-19 is showcasing is just how important the biotechnology and health care innovation ecosystem is, and it’s also showcasing just how rapidly new technology can be developed. And what the companies that are developing cures, treatments and vaccines for coronavirus, while they may not necessarily profit directly from those vaccines or cures, especially if they’re sold at cost or just slightly above cost, they are accelerating their technological development in a very rapid and meaningful way that will then apply to the rest of their pipelines.

And then the sector more broadly is going to experience a lot of goodwill, especially from the political front, for really coming to the rescue here with treatments and vaccines. And so I think what you’ll end up seeing is that there will be a lot less pressure, for example, from a drug-pricing point of view, or a lot less pressure politically on these companies that have really faced a lot of criticism over the last few years.

McNurney: Agustin, one of the things that you’ve mentioned is the fact that we’ve got a lot of companies working on potential vaccines or therapies. One of the things that we’ve noted is that there’s been this pickup in terms of collaborations that are happening, trying to fight this disease. Is that something we’re seeing more of right now?

Mohedas: Yeah, so these innovative smaller companies that have really the leading cutting-edge technology, they are partnering with more established pharmaceutical firms. So for example, BioNTech, which is also developing an mRNA-based vaccine, they actually have two different vaccines for COVID-19. They did a large partnership with Pfizer. Pfizer has a very large vaccines division and, obviously, a huge supply chain worldwide and could get this medicine distributed widely. So we’re seeing companies that have really cutting-edge technology partner with large pharmaceutical giants that can ramp up manufacturing and ramp up distribution in a way that just wouldn’t be possible for the small companies.

McNurney: So then I guess the natural follow-up question is, when is this going to happen?

Mohedas: Sure, so right now like I mentioned, these vaccines are in phase one studies, healthy volunteers. Those are typically just safety studies, but we will be able to get neutralizing antibody titers, and that data will be available in June from a few different companies. And then by the second half of this year or early next year, we will have data from the larger what we call field studies, where you give the vaccine or placebo to thousands of people and then actually measure how many people get the disease first. So, you know, towards the end of the year, we’ll have that. I expect some of these vaccines to be approved maybe by the end of the year or early next year and then become broadly available towards the second half of 2021.

McNurney: Thank you very much for joining us today, Agustin.

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