A Unique Challenge
It appears that COVID-19 is more transmissible than flu/SARS and can have very muted symptoms, which further complicates understanding of fatality and transmission rates. Urgent current concerns about COVID-19 come from lack of treatment options, higher initial mortality rates, asymptomatic presentation, and worse survival outcomes for older people with underlying respiratory and other comorbidities (diabetes, cardiovascular etc.).
Antivirals are normally the first line of defense (for example, HIV is controlled with antivirals), followed by monoclonal antibodies (man-made antibodies made from cloned human immune cells), and finally vaccines developed to prevent future outbreaks.
Antiviral drugs will deliver some late-stage clinical data in a few weeks from trials that are ongoing in China. Gilead Sciences’ Remdesivir, originally developed for Ebola, is an example of an antiviral drug. The goal with an antiviral drug is to reduce the intensity and duration of the infection (which is particularly important as healthcare systems become overwhelmed), but they are not a cure or a prevention. The advantage of antivirals is that they could potentially be brought to market relatively quickly. Remdesivir’s initial trial results are due in April.
Novel vaccines for COVID-19 are currently under development (see table) and are still in early stages of clinical enrolment and trials. In a pandemic situation, the FDA works very closely with companies to bring products to market rapidly – but the FDA also has to closely monitor the safety of these products because they may be rapidly adopted and widely used.
The biopharma industry is fully engaged in finding a solution to the COVID-19 pandemic, but it will take at least 8 to 12 months to develop a vaccine. Most companies are developing vaccines using traditional approaches, and some are using a messenger RNA (mRNA) approach based on the body’s natural protein synthesis processes. mRNA approaches also simplify manufacturing and help clinical trials start sooner; they would also bring the product to the market sooner. Yet the industry may not ultimately be successful in the endeavour. Our belief is that treatments will come in the form of a cocktail of therapies for patients with initial use of antivirals and antibodies, followed by vaccines as they come to the market.
State Street’s Fundamental Growth & Core Equity team takes a long-term perspective and is focused on quality, sustainable growth companies. We have held positions in several of the companies listed in the table for some time based on their long-term fundamentals, including their overall development pipeline and portfolio of drugs as well as their specific relevance to COVID-19 diagnosis and treatment. From an investment perspective, we are mindful of the continued uncertainty of the situation but are also looking at opportunities that the market dislocation has created, always with an eye on long-term fundamentals.
Table: COVID-19 Therapeutic Development Overview