Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Global Head of Macro Strategy
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Vaccine hope jumps on a dose of Moderna COVID-19 vaccine news
Peter Garnry
Chief Investment Strategist
Summary: Moderna shares were up 20% on the news that its COVID-19 vaccine shows promising results of immune system response and generally good safety in its phase 1 study. However, investors should be a bit cautious putting too much weight on the news as the study only consisted of 45 subjects and phase 1 studies are dominated by false positives.
Moderna, a US-based biotechnology company, which is on the official WHO list of companies working on a COVID-19 vaccine and highlighted in our research note from 7 May on companies working on vaccines. Yesterday, the company published interim phase 1 trial on their SARS-CoV-2 vaccine showing the vaccine was generally safe and well tolerated. Shares rose 20% and the news helped sentiment in global equities to improve further.
But some important points around the Moderna study is worth reflecting on. The phase 1 trial design consisted of 45 subjects placed in three cohorts of dose level. This is a small sample size and thus investors should not put too much weight on these finding for now. Phase 2 study will begin shortly and consist of 600 subjects and thus provide a better sample size before moving to the real test in phase 3. Investors should recognize that the false positives far exceeds the number of true positives in drug discovery and especially in phase 1 studies. Randomness exists everywhere and also in drug discovery. The dividend futures market price a bit steeper curve (more positive growth outlook) but not by much so in essence not putting that much weight on Moderna’s news.
After the initial release of the phase 1 study data Moderna announced a public offering of shares worth $1.3bn at $76 per share indicating that the company is taking advantage of its market value to raise additional capital fund research and development. This will likely be the environment going forward that biotechnology companies will release data on COVID-19 and spin it positively to get more funding and potentially access to partnership funding from large pharmaceuticals and governments.
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