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Is the Coronavirus Vaccine Market Oversaturated?

Is the Coronavirus Vaccine Market Oversaturated?

Stocks of coronavirus vaccine candidate developers have been on fire this year. If you invested in a balanced portfolio consisting of the five most prominent COVID-19 vaccine developers in the beginning of March, your total holdings would be up 164.68% as of Oct. 9. These include Pfizer (NYSE: PFE), Moderna (NASDAQ: MRNA), Sanofi (NASDAQ: SNY), Novavax (NASDAQ: NVAX), and AstraZeneca (NYSE: AZN). That means a moderate investment of $10,000 would have grown to $26,468 in just seven months, far outperforming the S&P 500‘s 20% in the same period.

In the last leg of the coronavirus vaccine race, investors now face the question of whether there’s enough room for all of the players to succeed. Investors should keep in mind that a coronavirus vaccine can be deemed safe and effective by the U.S. Food and Drug Administration (FDA) and still perform poorly in commercialization. Let’s examine the significant risks faced by all the participants in the COVID-19 vaccine race and find out the best way to invest in this young sector.

Snapshot of a vial labeled "coronavirus vaccine" alongside pills and syringe.

Image source: Getty Images.

Is there too much supply?

Assuming the top nine large-cap and mid-cap biotechs bring their COVID-19 vaccine candidates through clinical trials and earn regularly approval, they will have a combined annual production capacity of up to 8.7 billion doses by the end of next year. Right now, we need between 7.8 billion and 15.6 billion doses of a vaccine (depending on single or double dose requirements) to immunize everyone on the planet against the coronavirus.

Company Progress 2021 Annual Production Capacity Single/Double Dose
Pfizer Phase 2/3; Rolling Regulatory Submission 1.3 billion (with BioNTech) Double
BioNTech (NASDAQ: BNTX) Phase 2/3; Rolling Regulatory Submission 1.3 billion (with Pfizer) Double
CureVac (NASDAQ: CVAC) Phase 1/2 400 million Double
Moderna Phase 3 1 billion
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77% Of Economic Activity Lost To Social Distancing Is Back, But An Economic Recovery Still Depends On A Vaccine

77% Of Economic Activity Lost To Social Distancing Is Back, But An Economic Recovery Still Depends On A Vaccine

Topline

Third-quarter earnings season officially kicks off this week with big banks, airlines and consumer-staple firms set to report on Tuesday, and though Wall Street’s eyeing improvements over the previous quarter, a sustained economic recovery is still ultimately contingent on widespread vaccination.

Key Facts

Big banks and airlines–two of the coronavirus pandemic’s worst-hit industries–kick off earnings season on Tuesday, with JPMorgan Chase, Citigroup and Delta Air Lines all set to report before the opening bell.

Expect weak and uneven sales growth, and a collapse in profit margins, to characterize third-quarter results, Goldman Sachs said in a weekend note to clients, adding that it still expects election results will have more of an impact on stocks than earnings, and that ultimately, vaccination is “essential for the normalization of the economy.”

Goldman believes there’s a 48% chance that there will be enough doses of an FDA-approved coronavirus vaccine to treat 25 million Americans by the second or third quarters, the most likely time lines, followed closely by 42% odds that this will happen by the first quarter.

Meanwhile, wealth management firm Glenmede said Monday that although it estimates 77% of economic activity lost due to social-distancing mandates has been regained, it only expects earnings will see a small rebound from an “abysmal” second quarter.

Glenmede doesn’t expect earnings will reach new highs until the second half of 2021, which the firm adds is “not so coincidentally aligned with estimates for vaccine delivery.”

In a Monday note to clients, LPL Financial had similar hopes, saying, “The combination of efficiencies gained during the recession,

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Third-Quarter 2020 Market Commentary: Despite Uncertainty Around U.S. Election And Hard Brexit, Hope Springs Eternal For COVID-19 Vaccine And Government Relief

Third-Quarter 2020 Market Commentary: Despite Uncertainty Around U.S. Election And Hard Brexit, Hope Springs Eternal For COVID-19 Vaccine And Government Relief

Data Source: Bloomberg

Source: PxHere

3D Note: As part of our ongoing commentary concerning the coronavirus global contagion and its impact on human and global markets, we remind readers that the situation remains fluid as evidenced by volatile market reactions to most new developments, although the pace of these reactions seems to have slowed down from March/April. In addition to our bi-monthly articles and periodic podcasts, 3D has started publishing mid-month updates to our advisor partners as we navigate through the coronavirus pandemic. Please contact us if you would like to be added to the distribution list.

Market action during the third quarter was largely uneventful despite a moderate pickup in volatility and a “pause” in the global reflation trade. The first two months saw rallies in the global reflation trade, broadly represented by growth technology stocks, emerging markets, commodities/non-U.S. currencies, and corporate credit, only to see investors back away from this trade in September due to technical reasons (e.g. over-exposed long positioning in large-cap technology stocks via call option purchases and speculative non-commercial long positioning in EUR/USD) and diminishing prospects over a second U.S. pandemic relief spending program as well as rising prospects over Hard Brexit. The end of the quarter saw elevated (i.e. buy-the-dip) risk sentiment after having peaked in mid-August, prior to the early September sell-off (we wrote about this in peak in investor sentiment in mid-August titled “Market is Euphoric”).

The furious global technology growth rally that characterized the early quarter advance spilled over into the first week of September before the “trade” unwound itself following reports of a large options “whale” (later to be revealed Softbank – Japan’s publicly-traded venture capital fund) having bid up single stock call options on key technology stocks, forcing options market-makers to buy the underlying stocks in order to

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Analysis: Could 500,000 sharks die for a COVID vaccine?

Analysis: Could 500,000 sharks die for a COVID vaccine?

This originally appeared as part of our daily coronavirus newsletter.
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Half-a-million sharks could die to provide the world with a coronavirus vaccine.

Why? Squalene, a chemical made from shark liver oil that is used in vaccines. It’s not necessarily more effective at boosting a vaccine’s efficacy than squalene found in other sources, according to conservation group Shark Allies, but it’s cheap.

It takes 3,000 sharks to produce 1 ton of shark squalene, according to Shark Allies, and the organization estimates that about 3 million sharks are killed already for the purpose every year.

Based on that organization’s math, 21,000 sharks would have to be killed to provide enough COVID-19 vaccine for every American citizen to get two doses. Scale that out globally and you are looking at about 490,000 dead sharks.

“This could spell potential disaster for sharks and humans since this resource is neither sustainable nor reliable for the mass production of a COVID-19 vaccine,” Shark Allies wrote on a Change.org petition. “Countries producing shark squalene may soon need the oil for their own vaccine. The supply chain has never been tested at the scale that a coronavirus vaccine would demand.”

It’s not a new issue. The World Health Organization has said that since 1997, 22 million doses of a flu vaccine containing shark-derived squalene have been administered globally.

But if a coronavirus vaccine using shark squalene is mass produced, Shark Allies and other conservationists worry that some species of the apex predator might not survive.

The good news is, it might not be necessary. Not all of the proposed COVID-19 vaccines contain squalene (used as an emulsifier) and the substance can be obtained from other sources, including plants.

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