Positive News From COVID-19 Vaccines Don't Change FVEs

AstraZeneca AZN published solid phase 1 data for its SARS-CoV-2 vaccine AZD1222 in the Lancet on July 20, and we're maintaining our Astra fair value estimate as we continue to see promise in the vaccine's efficacy and safety, but the firm's not-for-profit plan for the vaccine limits long-term underlying profit impact. Astra's rapid progress with development and manufacturing of a potential COVID-19 vaccine is a testament to the firm's wide moat, which is also supported by a strong portfolio of therapies in oncology and immunology. In addition, BioNTech BNTX and partner Pfizer PFE released efficacy data from a Germany phase 1/2 study on July 20, adding further support to prior data, and we're not making any changes to our fair value estimates for either firm. We now have positive clinical data from four different vaccine programs; beyond Astra's adenovirus-based AZD1222, which is poised to enter a large phase 3 study in the U.S. in August, two RNA-based vaccines are rapidly moving forward. Moderna's mRNA-1273 and Pfizer/BioNTech's BNT162 have both generated strong phase 1 data and are on track to start phase 3 trials in late July. In addition, the Lancet published phase 2 data from CanSino's adenovirus-based vaccine on July 20, but we're concerned about pre-existing immunity to the vector limiting its ultimate efficacy, particularly in older adults. It is also difficult to compare CanSino's data with that of other vaccines without convalescent comparisons in the study, and the relatively low manufacturing capacity announced so far (100 million-200 million doses in 2021) is concerning. Although it isn't clear what level of neutralizing antibodies (that are expected to neutralize the virus) or T-cell response (that could help support long-term immunity) is necessary to protect against infection or against severe disease, comparisons to levels in recovered patients give us some comfort, and we continue to expect an effective and safe vaccine to be available by the end of 2020.

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