Investors everywhere drew hope from the announcement of a potential vaccine – but they shouldn’t count their chickens before they’ve hatched.
Biotech company Moderna has reported promising results in clinical trials of its mRNA-1273 vaccine against COVID-19, with subjects demonstrating similar levels of antibodies against the virus as those who have recovered from it.
“When combined with the success in preventing viral replication in the lungs of a pre-clinical challenge model at a dose that elicited similar levels of neutralizing antibodies, these data substantiate our belief that mRNA-1273 has the potential to prevent COVID-19 disease and advance our ability to select a dose for pivotal trials,” said Dr Tal Zaks, chief medical officer at Moderna.
Also promising is the fact that subjects tolerated the vaccine well, with no serious adverse effects detected. Moderna is now moving “as fast as safely possible” to start its phase three study and is investing to scale up manufacturing to maximise the number of doses it can produce “to help protect as many people as (it) can from SARS-CoV-2”.
The Dow surged 912 points as the news spread, while the S&P 500 rose by 3.2 per cent and the Nasdaq was up 2.4 per cent. The ASX was up 2.6 per cent in opening trade.
Forecasts for the post-COVID world are often characterised by the lingering economic threats of both renewed lockdowns and social distancing measures. A vaccine could change all of that.
“A vaccine would be a game changer for the economic outlook,” Natalie Tam, investment director at Aberdeen Standard Investments, told Investor Daily. “At the moment, there is an underlying fear of a second or third wave of COVID-19 which is causing many companies to conserve cash and stop non-essential business investment.”
“A vaccine that is proven to be safe and effective would enable a swift resumption of activity and a faster economic recovery with employment and spending improving more rapidly than the market’s current base case scenario.”
However, any hopes of a quick fix should be tempered. Moderna’s results haven’t yet been peer-reviewed, and they’ve only announced that eight of the participants in the trial actually developed antibodies. There are still several more phases to go, and a vaccine won’t be immediately available at scale – if it’s available at all. These clinical trials could result in nothing more than the 20 per cent leap in the price of Moderna’s stock that the company has already seen.
If that’s the case, investors should still be looking ahead to a period of protracted business failure and reduced consumer discretionary spending where the only hope for economic recovery is holding on for dear life. It’s a grim outlook – but unlike a vaccine, it’s likely to happen.