Wall Street Plays Doctor

By this morning, investors had shaken off the potentially worrisome news last night that AstraZeneca was halting the Phase 3 trial of its Covid-19 vaccine. The company said the voluntary pause would "allow an independent committee to review the safety data of a single event of an unexplained illness that occurred in the U.K. Phase 3 trial."

Despite the news, AstraZeneca stock finished the day down just 2%. And as my colleague Bill Alpert noted today, investors seem confident the issue will be limited to AstraZeneca's candidate. Other Covid-19 vaccine makers actually rallied on the day. Moderna finished up 4.7%, BioNTech rose 4.2%, Johnson & Johnson was up 1.7%, and Pfizer gained 0.7%. According to Wall Street, at least, everything is fine in the vaccine chase.

Here's more from Bill's story: 

A safety board will review the case and look for others among the thousands of AstraZeneca test subjects, then decide whether the problem seems related to the vaccine. The company should reach a decision within a few days or weeks, SVB Leerink analyst Andrew Berens said in a Wednesday note.

The analyst has had an Outperform rating on AstraZeneca. He sees several possible outcomes. Best case, the inflammatory condition may prove unrelated to the vaccine. AstraZeneca’s vaccine uses a neutralized virus for delivery, and if the problem relates to that mechanism, it might have worrisome implications for other programs using similar delivery methods, such as Johnson & Johnson’s. The worst case for Covid vaccine hopes would be if the problem stems from an immune reaction to the coronavirus fragments common to all the vaccines.

Berens wrote that there isn’t enough information to choose among those scenarios.

Bill cites one analyst who actually found a positive in yesterday's news:

Earlier on Tuesday, another Leerink analyst, Mani Foroohar, had cut his rating on vaccine developer Moderna to the equivalent of a Sell, arguing that the competition among Covid vaccines would limit pricing and market share. After AstraZeneca’s news, a note from Foroohar acknowledged that it provides “at least a temporary sigh of relief” for Moderna—whose executives tell him that they expect no impact from AstraZeneca’s halt.

Meanwhile, Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, told CBS that a pause in vaccine trials was fairly typical. "It's unfortunate that it happened... It's not uncommon at all."  Even so, this pause seems likely to slow the rollout of at least one vaccine. At some point, Wall Street will have to come to grips with that reality.