The good Lord knows that since I got sick last March, I invested probably more than I should have in the pharmas and biotechs that were working on finding vaccines or therapeutics meant to target this evil virus. I knew that I never wanted anyone I cared for, or anyone at all to go through that. I also knew, and still know, that I would rather cut off fingers and toes than go through Covid again. For those of you who remain untouched... God bless, I hope that does not change.
Covid, if it picks you, makes the worst flu you have ever experienced seem like a minor annoyance. Then, when you realize that you have also been chosen by the overactive immune response, also known as Post-Covid, or "long-haul" Syndrome, you just can't believe it. You spend the first few months in denial. Eventually, the doctors tell you that they have no idea if this condition is life long. Research shows that the original SARS also produced for some a "post-viral" syndrome, and further research shows that those individuals had still not fully recovered two to four years later.
Just going by the numbers provided by Johns Hopkins University's website, and just using my state... in New York, there are now more than 950K confirmed cases of SARS-CoV-2 in the state, while of those, to date... just less than 38K have unfortunately passed. This suggests a mortality rate of roughly 4%, which is awful. Of course we were hit early, and leadership made some mistakes, so our numbers are higher than they are in other states. The mortality rate across the nation is more like 1.7% and thankfully in decline. Now check this out... New York only reports a little over 100K full recoveries. Some of the bananas you hear on television often speak of the low mortality rate. Nobody mentions the 29.6% full recovery rate. This is why the vaccines matter. Just what does an illness whose symptoms linger in over 70% of its victims do to a nation, and not just individual productivity, but long-term healthcare and in effect.. the entire economy?
News Cycle
I never took to AstraZeneca's (AZN) efforts, not even in the beginning. That's when I was all in on mRNA technology. I remain long both Pfizer (PFE) and Moderna (MRNA) . I am still up 300% in MRNA even after this selloff. PFE? At least that name yields 4.2%. I had also been attracted to Johnson & Johnson (JNJ) for their one and done approach, and likely ability to both read out early in 2021, as well as produce at scale. I also went for Merck (MRK) , who is way behind the pack in terms of time, but is developing their vaccine the old fashioned way... just in case everyone else fell on their face. AstraZeneca, in collaboration with the University of Oxford, went the vector viral way, making use of a coronavirus found in chimpanzees in order to create an immune response in humans. That sounded a bit iffy to me at the time.
Flash forward to this (Wednesday) morning, and the firm is able to report that the UK Medicines and Healthcare Products Regulatory Agency had okayed an emergency authorization for this candidate. The company already has orders for 100 million doses from the British government, 400 million doses on order from the EU, and 300 million doses on order from the United States. The advantage of this vaccine over that of say Pfizer, is that this vaccine can be stored in the same temperatures that household refrigeration is capable of. Unfortunately, even with at least those 800 million doses on back order, AstraZeneca CEO Pascal Soriot, who has stated that the firm is not looking to profit from this effort (at least not during the pandemic), can supply only 2 million doses per week, and expects numbers vaccinated to reach the tens of millions by the end of the quarter. I found that somewhat alarming. Like the mRNA vaccines, this vaccine requires two doses within a four to 12 week window. Unlike the mRNA vaccines this one appears to average roughly 70% efficacy (The mRNAs are about 95% effective, but remember... not too long ago everyone was hoping for 50%.), but it does seem to be 100% effective in preventing severe disease.
On the negative side, the European Medicines Agency has no plans to assess this vaccine until sometime in January, while U.S. regulators are prepared to wait for late stage trials to come to completion. In other news, this week, Lynparza, which is a collaborative effort between AstraZeneca and Merck, was approved in Japan for the treatment of advanced ovarian, prostate, and pancreatic cancers.
Looking Back
On November 5th, AstraZeneca reported a pretty lousy third quarter. The firm missed the mark on both earnings and revenue. Revenue growth at 2.4%, by the way continued trend, the trend of deceleration. On the bright side, product sales did slightly beat consensus, growing 6% year over year. The best seller is Tagrisso (treats non-small cell lung carcinomas) at $1.155 billion, but the fastest growth is being experienced by the above mentioned Lynparza at 42% ($464 million). The firm has not yet set a date for its Q4 earnings release, but it will probably post the first week of February. The street is looking for EPS of $0.89, which would be flat from the comparable period a year ago, on revenue of $7.1 billion. That revenue number would be good for growth of more than 6%.
My Thoughts
While there are certainly some things to like about AstraZeneca, I do not think this vaccine, nor the emergency authorization in the UK make it investable. AZN certainly is tradeable, and similar authorizations either in the EU or the U.S. will likely be tradable events. Remember though, that AZN is selling this vaccine at cost to the developed world for now, and in perpetuity to the developing world. For that reason, Moderna and BioNTech (BNTX) make for better speculation. Beyond that, Pfizer, Johnson & Johnson, and Merck all pay shareholders a bit better just to hang around. In the fight against the virus, JNJ is (I hope) the big bazooka.
