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  • Michael Livian, CFA and Martin Fridson, CFA

Covid-19 Vaccine: the Light at the End of the Tunnel

2020 has been the year of setting records—mostly bad ones! A record number of sick people. Record post-World War II unemployment. Record speed of a bear market and recovery. And so on. The most important record broken, however, may turn out to be the speed at which a vaccine was developed. As we write, 10 months into the pandemic, the US Food and Drug Administration (FDA) is reviewing and almost certainly about to approve the first two COVID-19 vaccines.

Two aspects of the vaccine are of particular interest. First, we discuss who will likely have priority for vaccination when it becomes available later this month. Second, we explain why the two COVID-19 vaccines under consideration for regulatory approval are unlike any previous inoculation methods.

Vaccination Priority

It is currently expected that one or more COVID-19 vaccine will become available in the United States before year-end, but only in limited supply. Manufacturing a sufficient supply of the Pfizer or Moderna vaccines, or both, to cover the entire population will take longer. Deciding who should receive the scarce initial vaccinations is a vital question in deciding how best to manage the pandemic. According to Dr. Anthony Fauci, the medical authority leading the response to the virus, by the second quarter of 2021 the entire US population will have access to the vaccine.

The Advisory Committee on Immunization Practices (ACIP) recently voted 13 to 1 in favor of assigning top priority to healthcare workers and elderly residents of long-term care facilities. ACIP, which advises the U.S. Centers for Disease Control and Prevention (CDC) on issues of this nature, based its decision on presentations by CDC scientists.

At its recent meeting, the ACIP did not take up the remainder of the protocol proposed by the CDC scientists. Under that plan, the second priority would go to essential workers such as schools’ staff, police officers, grocery workers, and bus drivers. The third-priority group would include seniors (aged over 65) and adults with high-risk medical conditions, regardless of age.

The mRNA Revolution: Faster and Cheaper

Vaccination has been part of the battle against infectious diseases since Edward Jenner introduced the smallpox vaccine in 1796. But the Pfizer and Moderna COVID-19 vaccines currently awaiting regulatory approval represent a new scientific methodology altogether. It is based on messenger RNA, or mRNA. Not coincidentally, MRNA is the stock symbol of Moderna, which focuses on this technology.

Many previous vaccines trigger an immune response by placing a weakened or inactivated germ in the body. In contrast, mRNA vaccines teach the body’s cells to make a whole or partial protein, which then triggers an immune response. That response prevents infection if the actual virus enters the body.

So far, U.S. authorities have not licensed any mRNA vaccines, even though research on them has been underway for decades. They have been studied as potential weapons against flu, Zika, rabies, and cytomegalovirus (CMV). The excitement surrounding mRNA vaccines arises from the fact that they can be produced in laboratories from readily available materials. That makes the process standardizable and scalable, enabling the development of vaccines to be faster and cheaper than with traditional methods. Beyond vaccine applications, scientists are exploring the possibility of using mRNA to cause the immune system to target specific cancer cells.

For more in-depth discussion about the mRNA revolution, you can read the following article: mRNA, a quantum leap in biotech.

Better Times Ahead

To sum up, despite the record number of US Covid-19 reported new cases (205,513), new deaths (2,190), and the “black winter” that is coming our way, we can see the light at the end of the tunnel. By mid-2021 we expect the health crisis to have largely receded and the US economy to be on track for a very strong rebound.


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