Investors in Pfizer (NYSE: PFE) and Modern (NASDAQ: MRNA) may have breathed a sigh of relief when the U.S. Food and Drug Administration granted the companies permission to use coronavirus in December. The risk of failure during clinical trials was in the rearview mirror. The companies have started sending out doses of vaccines. The revenue from their contracts with governments was around the corner.
And then another risk emerges: new coronavirus variants. In recent weeks, new tribes have emerged: a tribe found in the United Kingdom, one that started in South Africa, and more recently new tribes in Japan and Columbus, Ohio. The big question now is whether the Pfizer and Moderna vaccines can protect against these new versions of the coronavirus. Let’s take a closer look at what we know so far.
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Focused on the peak
Let’s start with a little background on the virus itself, the vaccines and the variants. The coronavirus contains a ‘vein protein’. It is literally nails on the virus surface that make it possible to attach to cells and infect them. Vaccine makers are focused on this increase. In the cases of Pfizer and Moderna, their vaccines contain instructions so that the body can make a copy of this vein protein. Then the body produces antibodies to fight it. That way, if the actual coronavirus appears, these army antibodies will recognize and attack it.
The newly discovered coronavirus variants each contain genetic mutations, or changes. And in each variant, the changes affect the ear protein. The question now is: will these antibodies still recognize it with these changes to the vein protein?
So far, the situation looks positive for both Moderna and Pfizer. Moderna said the vaccine contains the entire range needed to make the protein of the peak. This is 1,273 amino acids. The new variant contains about eight changes in the protein amino acids. In general, this means that the ‘new ear protein’ differs by about 1% from the original coronavirus ear protein – the one encoded in Moderna’s vaccine. The company is testing the vaccine against the new variants, but expects the vaccine to be effective.
Moderna and Pfizer both comment
According to an article in MIT Technology Review, Moderna will say that if it is to eventually update its vaccine, it will not require major clinical trials. Thus, an updated vaccine can move from the drawing board to the market within a few months, as long as regulators give it the nod.
As for Pfizer, the company recently conducted an in vitro test against a mutation in the new strains associated with rapid transmission. The company said antibodies from vaccinated people had neutralized the UK and South African tribes. However, the test did not include the entire range of mutations of the new variants. Pfizer said more information is needed to confirm the vaccine’s efficacy against new strains. The company also said that if newer mutations eventually lead to a decrease in vaccine efficacy, updating the current vaccine would not be a problem.
What does all this mean for investors?
At present, new strains probably represent one of the biggest risks for coronavirus vaccine companies – and their share performance. So far, it appears that the vaccines Pfizer and Moderna can handle the new strains. But that does not mean it applies to additional tribes.
The good news is that the possibility of a vaccine-resistant variant does not mean that all the companies’ hard work will be thrown away. As Moderna and Pfizer both said, updates are possible. And this process is not new. Researchers are regularly updating the flu vaccine to add new strains.
However, this is not an ideal situation during a pandemic and after companies have already increased their original vaccines. This is bad news from a cost and logistical perspective.
Of course we are not there yet. And that scenario may never happen. But if you own stock from vaccine makers or plan to buy it, it’s a point to keep a close eye on.