Count Me a Covid-19 Skeptic, Including When It Comes to a Vaccine

I have been a Covid-19 skeptic from the start and remain one. Don't get me wrong. This is a truly infectious virus that is taking a huge human toll. However, it is not the bubonic plague or the Spanish flu. In terms of lethality it seems little different than other major virus outbreaks over the past century, such as the Hong Kong flu of 1968 or the Asian flu of 1957, neither of which disrupted the global economy and barely rated a footnote in your history class even as they caused large-scale death tolls. Unfortunately, it is the first pandemic in the age of social media and 24/7 news cycles. More people in this country under the age of 25 have died of pneumonia this year than of Covid-19, yet we have closed almost all K-12 schools and colleges throughout the nation. About 80% of the individuals in the U.S. and Europe who have succumbed to this virus have been 75 years old or older. Almost half have been in nursing homes or long-term medical facilities, many of which have not been protected as they should have been. The media rarely covers these factoids. Instead of protecting vulnerable populations and employing prudent measures such as cancellations of large events, social distancing and face masks in public places, the initial reaction in most of the developed world was to shut down their economies completely and have their populations shelter in place. This course of action has had disastrous economic and other consequences that we will be paying for as a society for a very long time. I am also a skeptic on the Covid-19 front from an investor perspective. Things seem to change weekly. CNN was pooh-poohing hydroxychloroquine for months as a possible treatment for Covid-19; now it is lauding a study conducted by Michigan's Henry Ford Health System that this treatment could lower the death toll from the virus substantially. I think treatments such as remdesivir from Gilead Sciences will continue to be successfully developed to treat Covid-19. I am far more skeptical on the vaccine development front. We still don't have a vaccine for SARS even though that coronavirus appeared in 2003. Even if a vaccine is developed, it is unlikely to be foolproof. Consider that the Centers for Disease Control and Prevention (CDC) said the vaccine for last flu season was just over 45% effective, which was better than the 29% effective rate of the vaccine for the year before. In addition, there are dozens of companies currently developing vaccines for Covid-19. According to the World Health Organization (WHO) there are 17 vaccines in human trials with another 130 in clinical development. Which company is leading in this race changes almost weekly. Moderna , which reached a $30 billion market cap before turning down recently, was an early leader on this front. Now a candidate from BioNTech SE and Pfizer is generating buzz. Inovio Pharmaceuticals doubled in value to a $5 billion market cap in the week after it announced on June 23 a $71 million Department of Defense contact to manufacturer a device to deliver a potential Covid-19 vaccine candidate on which it is working. Profit taking soon hit the stock after that overbought rally. Inovio has been public some 20 years and still has no product revenues. The company also is very good at using spikes in its stock to raise more capital, it should be noted. The same can be said about another Covid-19 player, Novavax , which has been public even longer than Inovio and still has not garnered Food and Drug Administration (FDA) approval. Its stock is only up 1,300% over the past year. I don't know when this Covid-19 vaccine bubble will end, but I have confidence it will end badly for most investors. Therefore, I am avoiding this niche completely. In my next column, I will talk about a few small-cap biotech names I do like in the current market environment.

Count Me a Covid-19 Skeptic, Including When It Comes to a Vaccine

The extent of the measures taken to combat the virus seem to be an overreaction, and no one should count on a vaccine being a magic bullet.

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