Oh. My. God. Once again I am forced to quote John Hillerman's legendary character Jonathan Quayle Higgins from Magnum P.I. In this case I am delaying my Thanksgiving turkey to read the shocking news coming from AstraZeneca (AZN) re: its Covid-19 vaccine, which has been developed in partnership with Oxford University.
AstraZeneca's Covid-19 vaccine candidate AZD1222 produced decidedly mediocre results (62% efficacy) when given its intended, two-shot, equal-dose formulation. AstraZeneca researchers noticed that a cohort of the study group had mysteriously been given an incorrect dosing in the first round (50% of the planned level) and that that cohort performed significantly better (90% efficacy) than the group given the planned dosing. Astra's head of biopharmaceutical research, Dr. Mene Pangalos, attributed this result, in an interview with the Daily Mail, to "serendipity."
This is a joke. It has nothing to do with science. Serendipity? Are you kidding me? We are going to fight the greatest pandemic to hit the world in 102 years with serendipity? Come on.
As much as I love the Daily Mail, I felt compelled, as always, to go to Astra's actual release on the preliminary results from its trial. While Astra noted "no hospitalizations or serious cases" of Covid-19 among its trial groups, it did note 131 subjects had tested positive among a total study cohort of 11,636. The testing group caught Covid-19 at a rate of slightly more than 1%, and with 60 million cases globally now, according to Johns Hopkins data, AZN's Covid infection rate would appear to be slightly above the rate at which Covid-19 infections impact the general public. Also, the incorrectly given dosing cohort (n=2,741) was much smaller than those given the proper double full dose (n=8,895), so sample size and data sufficiency have to be an issue here.
To that end, AZN's CEO Pascal Soriot mentioned in interviews yesterday the need for additional testing. That's where this story becomes interesting to me as a trader. This is when my brain starts percolating and I start to think, "how can I short this thing? "
The first thing to remember is that AstraZeneca stock has already performed poorly. Even before yesterday's mild decline in London trading (it's not Thanksgiving there, so markets were open), AstraZeneca shares had been a major laggard both on London and New York bourses in recent trading. In the past six months, a period that began after the Covid-19 crash had already begun to reverse, Astra shares have been flat in New York and fallen about 10% in London. In contrast, the main benchmarks have shot up, with the FTSE 100 rising about 3% in the past six months and the S&P 500, driven by the red-hot Nasdaq, rising about 18% in that period..
So AstraZeneca has been a poor performer on a relative basis, but what I am looking for here is some serious absolute underperformance, i.e. the stock goes down a lot. Astra is down again today in London trading (off about 1%,) and AZN shares touched a low of $36.14 during the March Covid-19 crash. Though I am no technician, I could see AZN shares reaching that level again if additional data from AZD1222 does not reflect "serendipity."
AstraZeneca has made a "no profit" pledge on its Covid-19 vaccine. Kumbaya! While a "woke" pharma company is probably as attractive as a ''woke" oil company, the real issue for AZN is if "no profit" becomes "no efficacy." Governments around the world have committed to buying hundreds of millions of doses of AZD1222, and AstraZeneca's release noted that the company planned to have the capacity to produce 3.1 billion doses by the end of 2021.
So what if it doesn't work? Hey, that's just serendipity.
