Should investors be worried about new variants of the coronavirus?
Just when there seems to be a light at the end of the COVID-19 pandemic, there is a new twist. Millions of people around the world have received vaccines. Now, however, there are new variants of the coronavirus that appear to be more contagious.
Should investors really be worried about the potential impact of these variations? Will COVID-19 vaccines still be effective against the new strains? Here’s what you need to know.
Let’s start with some good news. Last week, Moderna (NASDAQ: mRNA) reported that in vitro studies have shown that its COVID-19 vaccine, mRNA-1273, produces neutralizing antibodies against the coronavirus variant B.1.1.7 first found in the UK and variant B. 1,351 identified for the first time in South Africa. The company said the neutralizing titer levels were higher than the levels that should be needed to protect against the newer variants.
Two days later, Pfizer (NYSE: PFE) and BioNTech (NASDAQ: BNTX) announced encouraging results from an in vitro study of their COVID-19 vaccine BNT162b2 (marketed as Comirnaty). The companies also reported that their vaccine appeared to neutralize both variants.
We also received news last week from two other drugmakers on how their investigational COVID-19 vaccines have performed against new strains of coronavirus. Novavax (NASDAQ: NVAX) announced on January 28 that its candidate, NVX-CoV2373, proven effectiveness against B.1.1.7 and B.1.351 in an advanced stage study conducted in the UK. Biotechnology estimated the effectiveness of 85.6% against the UK variant.
Johnson & johnson (NYSE: JNJ) reported the results of an advanced global study of its COVID-19 vaccine candidate the day after the news from Novavax. The health giant’s vaccine differs from other major coronavirus vaccines in that it only requires one dose instead of two doses. J&J said a single dose of its vaccine has shown efficacy against new strains of coronavirus, including that first identified in South Africa.
A cause for concern?
So everything looks great, right? Not so fast. It is quite clear from all the results reported so far that the efficacy of existing vaccines is lower against the South African variant B.1.351 compared to the existing prevalent coronavirus strain.
Pfizer and BioNTech seemed the most optimistic. The companies said the neutralization of the South African variant was only “slightly less” than that of the other strains. They believe that the small differences “should not lead to a significant reduction in the effectiveness of the vaccine.” Moderna, on the other hand, said there was a significant reduction in neutralizing antibody production with its South African variant vaccine compared to other variants.
But the data from Pfizer / BioNTech and Moderna came only from test-tube studies. Novavax and Johnson & Johnson provided a better picture of how their vaccines worked in the real world against the new strains.
In addition to announcing the results of its late-stage UK study last week, Novavax also released preliminary data from a Phase 2 study of NVX-CoV2373 conducted in South Africa. Biotechnology said nearly 93% of the COVID-19 cases in the study so far were caused by the B.1.351 variant. His vaccine’s efficacy in the study was 60%, well below the 95.6% efficacy against the existing strain of coronavirus.
Part of J & J’s advanced stage global study was also conducted in South Africa. The large company said the efficiency among those participants was 57%, well below the 72% efficiency seen among its US participants. Almost all of the COVID-19 cases (95%) in the South African group were due to infections with the B.1.351 variant.
The bottom line is that it is entirely possible that the overall effectiveness of COVID-19 vaccines is significantly lower against the South African variant. Certainly, it seems at this point that the vaccines will be effective enough to slow the spread of the coronavirus. However, it might take longer than expected to achieve collective immunity.
Potential investment implications
So what does this mean for investors? On a larger scale, this could suggest that work-at-home actions like Zoom will continue to benefit from strong momentum throughout 2021. The same could be true for stocks of companies marketing COVID-19 tests such as Abbott Laboratories and Quidel. On the other hand, recovery games, including retail brick and mortar stocks, might not be as good if the pandemic lasts longer than expected.
Some biotechnology stocks we have already mentioned could also be winners. Moderna and Novavax, for example, have already announced plans to advance booster shots targeting new variants in clinical trials. The success of these studies could provide catalysts for both actions.
Perhaps more importantly, the emergence of disturbing new coronavirus variants could foreshadow a future where new strains are common. This could mean that the stocks of companies with the most flexibility to develop new vaccines targeting these variants will have huge market opportunities for a long time.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.