Why We Are Optimistic on COVID-19 Vaccines and Therapeutic Antibodies

THE COWEN INSIGHT

One or more vaccines may be approved for emergency use in Q4’20, but access for the general population is the more relevant economic catalyst. That’s likely to occur in H1/mid-’21. Antibody therapies will have major role supplementing vaccines. We expect both modalities to generate significant revenue in FY21 ($3B and $2.9B, respectively).

Transitioning From the End of the Beginning to the Beginning of the End

A return to normalcy and its associated economic recovery hinges on successful prophylactic and therapeutic treatments for COVID-19. Though much of the political focus has been on the potential for regulators to grant Emergency Use Authorization (EUA) to one or more vaccine candidates before the presidential election in November, we believe investors should focus on the timing of full approval and the subsequent rollout to the general population.

Recent reports noted that the four leading COVID-19 vaccine makers will issue a statement reaffirming their commitment not to file for EUA until they have sufficient clinical data from ongoing Phase 3 studies. This could delay the EUA timing to after the election and into year-end.

Based on the neutralizing antibody (nAb) and T cell data in the early trials and initial manufacturing capacity, we believe at least one EUA in Q4’20 is likely and will allow vaccination of the most vulnerable patients first (e.g., people with ≥2 co-morbid conditions, hospitalized and nursing home patients in regions with high case counts). While this is a positive for society, we do not expect it to be a catalyst for economic activity (though the market is likely to welcome it as a sign that vaccine trials are on track for success).

ACIP Sets Stage For Vaccine Rollout – Vote Expected On September 22 Ahead of VRBP Advisory Committee Meeting On October 22

The CDC’s Advisory Committee on Immunization Practices (ACIP) made an initial recommendation following its public hearing on August 26 about the plan for vaccine rollout. The first phase will offer vaccination to 25-26 million people. The second phase will extend that to 45-50% of the U.S. population. Phase 3 will roll out to another 40-45% of the population. A vote on this interim prioritization scheme is expected on September 22 for approval ahead of CBER’s Vaccine & Related Biological Products (VRBP) advisory committee meeting scheduled for October 22 to discuss COVID-19 vaccines.

What We Don’t Know Can Hurt Us – Key Question Is Sustainability of Protection After the Initial Early Period Post Vaccination

Data from patients who have recovered from COVID-19 show that nAb levels against the virus peak within 3 months and then decrease. This naturally raises the question of whether developing an effective vaccine is possible. The key question for full approval of COVID-19 vaccines is whether the duration of immunity will be sustainable after the first 3 months.

This is critical because when nAb levels fall, there is a risk for vaccine dependent enhancement (VDE) (aka antibody dependent enhancement or ADE). This means that the vaccine-generated antibodies become insufficient to confer protection but theoretically can facilitate viral entry into immune cells and lead to increased severity among infected patients compared to placebo by helping the virus infect the person.

While we believe that the risk of VDE is relatively low (our base case is that vaccines are generally tolerable and safe), the need to prove safety beyond the initial few months will translate to full FDA approval no sooner than Q1’21.