Dr Jimmy Muchechetere: The Covid-19 vaccine might not be a silver bullet

14 Jan 2021 Expert insight

A Covid-19 vaccine might not necessarily be the silver bullet investors have been hoping for, argues Dr Jimmy Muchechetere, an equity research analyst at Investec.

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Any vaccine that achieves a 90% efficacy is remarkable. But to develop it within six months and get it right the first time takes us into uncharted territory. Then to have three, and even perhaps more in the fullness of time, marks this as a significant achievement for science and mankind. But what barriers do these vaccines still need to overcome until we can reach a sense of normality again?

The UK’s regulatory agency became the first in the world to approve a Covid-19 vaccine. This was the Pfizer/BioNTech vaccine which received conditional approval. This means that it is approved for use subject to further monitoring of both efficacy and safety data. Efficacy will likely change as more people get the vaccine and are exposed to the virus. Rarer side effects will also be kept in mind as clinical surveillance continues. While great progress has undoubtedly already been made, we now move to the next hurdle: how well does the vaccine work in the real world?

Efficacy vs. effectiveness

Efficacy does not equal effectiveness. Efficacy is how well the vaccine works in a controlled situation such as a clinical trial. Effectiveness is how well the vaccine works in the real world. In the real world, some people do not respond to vaccines, others refuse to take vaccines and there will be errors in picking up those with the disease, symptomatic or otherwise. We would expect effectiveness of the vaccines to be lower than the demonstrated efficacy. Efficacy data is also subject to change as additional data comes in from the ongoing phase III clinical trials. We would be impressed if the efficacy rates remain as high as we have seen thus far.

Regulators and safety: what boxes still need to be ticked?

Regulators will keep a keen eye on safety. The safety bar for vaccines is higher than for therapeutics. This is because vaccines are given to healthy people as opposed to medicines given to people suffering with the diseases they are looking to address. So it is right that safety is of paramount importance. This also engenders confidence that the vaccines are safe and encourages people to voluntarily take the vaccines, which is key to achieve widespread vaccine coverage necessary to achieve population immunity.

We would expect that all safety concerns are ironed out before full or unconditional approval. These will be relating to injection site side effects but also general side effects such as headaches, fever and malaise, as well as rarer side effects such as antibody disease enhancement (ADE) where the vaccine potentiates the immune system to over-react and worsen the disease. Thankfully the data we have seen thus far allays many of these concerns, which is why the emergency use authorisation has been granted for the Pfizer/BioNTech vaccine. However, we have to keep an eye on all the incremental data on this vaccine and the others in late stage development.

The clinical trials are not over. Trial participants will continue to be monitored. Safety issues will be noted. Efficacy of the vaccines will thus change over time. The post-approval surveillance, typically known as phase IV clinical trials, are important to answer some of the outstanding questions: For how long does immunity last? Are there rarer safety concerns that might crop up?

Manufacturing, distribution and storage

Manufacturing remains a significant challenge. Typically the quality control for vaccines is of the highest order, often with over six hundred independent checks. As one might imagine, this will slow down the speed of manufacturing. An added challenge will be producing billions of doses of vaccines at speed across multiple geographies and manufacturers all to the same standards. But vaccine manufacturing has improved in leaps and bounds over the last decade and we have every confidence this is a challenge that can be overcome.

Logistics loom as the next big challenge after manufacturing. This is where the nuances of the different vaccines come into play. Messenger RNA (mRNA) vaccines need to be stored at between minus 20 degrees Celsius for the Moderna vaccine and minus 70 degrees Celsius for the Pfizer vaccine. There is already a concerted effort to put in place cold chain storage and transportation facilities to be able to deal with these challenges.

Nevertheless, the speed of distribution is highly dependent on solving these issues. The vaccine manufacturers are already working on improved formulations that are easier to transport and store, and if all goes well, we might see these iterations in the second half of 2021. The logistical problems are less acute for the traditional vaccines such as the AstraZeneca adenovirus vaccine which are cheaper and can be stored at between two to eight degrees Celsius. These will be key for vaccinating people in developing countries and geographies further afield.

What other questions are still unanswered?

The vaccine data we have seen thus far is undoubtedly positive. But there remain a number of outstanding questions. First, we do not know if the vaccines just prevent symptomatic infection or asymptomatic infection as well. We do not know if the vaccines prevent onward transmission of the virus if one is infected, but asymptomatic. We do not know for how long immunity lasts. We do not know if the virus mutates to an extent to render the vaccines ineffective. We do not know if one can mix and match different vaccines. Many of these questions will only be answered in time, and the science continues to evolve to meet whatever challenges we may yet encounter.

The threat of litigation will temper the enthusiasm of many pharmaceutical companies to expedite vaccine development or over-promise. Although the allure of being first to market remains, given potential for large profits and a reputational boost, if the vaccines were later discovered to be harmful, legal battles could prove more damaging than any potential benefits. And so despite promising data, we would expect pharmaceutical companies, and regulatory agencies, to exercise caution and restraint in the face of political pressure. Perhaps we could see guarantees against litigation for any long term effects of a vaccine being negotiated by these companies. This would be good for the companies to press on with potentially life-saving therapies in the midst of a pandemic, but will it inspire confidence in the vaccine itself?

Another challenge will be the equitable distribution of a successful vaccine. Many developing countries may not be able to afford a vaccine, even at the cost of production. Other countries may be able to afford the vaccine but not manufacture on its own. The World Health Organisation (WHO) is co-ordinating an effort to make sure such countries are not at the back of the line.

This is crucial in a globally connected world, countries with unvaccinated populations could continue to seed infections in the rest of the world. The concept of herd immunity for a pathogen that spreads as easily as Sars-Cov-2 makes more sense in a global rather than country-specific context.

An investment perspective

An understanding of what might happen next from a medical perspective is essential, both for overall investment strategy and at the micro level for individual industries. Economies are currently rebounding but unless people are able to circulate freely there will always be a brake on economic activity, with those countries best able to adapt to further cases moving ahead of other regions.

Similarly, at the sector level, companies involved in areas such as leisure, media and transport are going to be hugely influenced by how comfortable people feel using their services. The outlook for restaurants, pubs, airlines, and hotels all depends on how fast countries can control the pandemic and whether we see permanent changes in human behaviour, such as travelling to an office.

Outlook for the future

It is almost certain that an effective vaccine will not be the end of the Covid-19 story. But science is not done either, there are iterations of these vaccines already in the pipeline. Some will be designed to be taken orally, and others intra-nasally. These would be important developments because mucosal surfaces, such as the mouth and nose, tend to have a local immune system which is not fully engaged by intramuscular vaccines, as are all the first wave vaccines. But perhaps for logistical purposes, the most important advancement will be a single shot vaccine.

Vaccines will most probably make the biggest difference in how we live with Covid-19, though perhaps not eliminate it in the next few years. Immunity to coronaviruses tends to wane over time. Coronaviruses can also mutate, sometimes to be weaker, other times to be more infectious or deadly, or both. Sars-Cov-2 is likely to become a seasonal virus – the fifth endemic coronavirus. And so vaccination is likely to be a recurring procedure, much like the annual flu jab.

Nevertheless, we have come a long way, science has achieved much, and the resolve to succeed remains as strong as ever giving us hope for a better future.

Dr Jimmy Muchechetere is an equity research analyst at Investec

Charity Finance wishes to thank Investec for its support with this article 

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