This has been a year that Americans won't soon forget. The coronavirus disease 2019 (COVID-19) pandemic has completely upended our societal norms and transformed the workplace. As of Monday, Nov. 23, there were nearly 12.4 million positive cases of COVID-19 in the U.S. and more than 257,000 deaths, per Johns Hopkins University data.
This mountain of adversity has also led to a monumental feat within the scientific community. It often takes many years to go from discovering a potential therapeutic to bringing it to market. We might witness more than a handful of drug developers do so in well under a year.
Initial coronavirus vaccine efficacy has been off the charts
For each of the past three Mondays, we've received exceptionally good news on the COVID-19 vaccine front. It began with Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) announcing an interim analysis of their vaccine candidate BNT162b2 on Nov. 9. With much of the scientific community expecting a vaccine effectiveness (VE) similar to what we see from seasonal influenza (around 50% to 60%, on average), Pfizer and BioNTech stunned with a "greater than 90%" VE. The duo later updated their data to reflect a VE of 95%.
A week later, the very first company to move into human clinical trials, Moderna (NASDAQ:MRNA), announced its interim analysis data for mRNA-1273. Moderna's phase 3 COVE study, which involves more than 30,000 participants in the U.S., demonstrated a VE of 94.5%, and saw no severe adverse events in the group taking mRNA-1273.
Finally, on Monday, Nov. 23, AstraZeneca (NASDAQ:AZN) and partner Oxford University reported a VE of 90% for experimental candidate AZD1222 in the clinical arm where patients were given an initial half dose, followed by a full dose at least a month later. No serious safety events occurred during late-stage studies.
In other words, the launch of these vaccines could be imminent, eventually halting the pandemic and perhaps eventually eradicating COVID-19 -- or at least the most serious side effects of the disease.
Keep your optimism in check until these questions have been answered
Before you go popping champagne bottles, the American public and investment community would be wise to step back because a handful of critical questions remain unanswered.
What's the duration of immunity?
Aside from the fact that the data presented thus far is incomplete, maybe the biggest question on the scientific front is: What sort of immunity duration can patients expect?
It'll be months, or potentially more than a year, before we really know how long any of these vaccines can protect patients. The vaccine could be needed once yearly, or perhaps require multiple boosters each year until a longer-lasting solution can be developed.
It's also unclear how the mutability of the SARS-CoV-2 virus, which is responsible for causing COVID-19, might affect the long-term VE of these candidates. We know the virus can mutate, but we simply don't have enough data to really understand how those mutations will affect VE.
How will the nation overcome distributional challenges?
Another big concern is how any approved vaccine will get distributed.
There are logistical concerns about the Pfizer/BioNTech candidate, which needs to be stored below 100 degrees Fahrenheit. Pharmacies and doctor's offices don't have access to freezers that can hit this temperature, making broad distribution a challenge. Thankfully, the other vaccine candidates don't have the same storage constraints.
Additionally, it's not clear what the plan will be with regard to an equitable distribution of vaccines around the country (and worldwide). The illness has hit seniors, frontline healthcare workers, and certain ethnicities harder than others. With the Trump and Biden administrations struggling to work together, a pathway to fair and affordable vaccination is far from guaranteed.
Will Americans want a COVID-19 vaccine?
Does the American public even want a coronavirus vaccine?
Back in May, the Pew Research Center polled adults and found that 72% would have taken a COVID-19 vaccine if it was available today (as in at the time of the survey). This included 42% who said they'd "definitely" take the vaccine. But in a September survey, Pew Research found that only 51% of adults were keen on getting a coronavirus vaccine. The number of folks who definitely want to take the vaccine dropping by half to 21%.
Nearly half the population apparently has no desire to get the vaccine, while another 30% might wait until the data conclusively supports getting the vaccine. These results suggest that eradication of COVID-19 is highly unlikely, at least based on the data we have now. Even with exceptionally high VEs in clinical trials, a 20% to 50% uptake rate wouldn't be enough to eliminate the disease. Worse yet, it may not even be enough to bring the pandemic to a halt.
Equity investors and COVID-19 vaccine-stock chasers are playing with fire
The public and investors might be celebrating far too early. Much could go wrong between now and when a handful of these successful vaccine candidates are expected to hit commercial distribution (probably by the midpoint of 2021), especially if a majority of the public is unconvinced they want a vaccine.
I suspect we're going to see another wave lower in the stock market, just as we've witnessed a third wave higher in coronavirus cases. Select states have begun implementing a new round of lockdowns, and the Biden administration is expected to take a hardline stance on combatting COVID-19. We're still a long way from pre-COVID-19 economic levels, and there's no stimulus in the works this time around.
Likewise, investors chasing these coronavirus vaccine stocks could be in for an unpleasant surprise. While these companies make for great feel-good stories, their investment quality leaves a lot to be desired.
For example, Moderna now boasts a $40 billion valuation, but will likely generate around $4 billion in annual sales from mRNA-1273. Even the most aggressive biotech stocks aren't valued at higher than 6 or 7 times their peak annual sales potential. Considering how competitive the vaccine space is likely to be, investors and the American public would be wise to temper their optimism.