COVID-19 Vaccine Developments

06.15.20

COVID-19 Vaccine Developments

Commentary as of June 15, 2020

Given the high amount of uncertainty on the COVID-19 vaccine development, we find it is critical to monitor its progress closely. We believe it is a matter of when, not if, a vaccine becomes available. While expectations for a widely available and distributed vaccine relying on unprecedented success in the development process, we find these expectations reasonable. However, consensus expectations for the world to return to somewhat normal in 2021 rely on assumptions of flawless execution in every step of the vaccine process. Something we also think is important to be mindful of is that once a vaccine is available, this doesn't necessarily mean the pandemic problem is quickly solved.

To provide some historical context, it has taken a minimum of ten years to develop an approved vaccine – the measles vaccine. In producing a vaccine, there are many steps involved with a highly complex and sequential process. A lot of this is changing and we are actively flipping the script when it comes to the COVID-19 vaccine. For context, there are only 14 approved vaccines out of the more than 100 infectious diseases or pathogens that have been potential vaccine candidates since the 1880s. Vaccines have the highest success rate among all types of therapeutics. Developing a drug for common diseases like diabetes, cardiovascular disease or cancer has a 14% success rate versus a 32% success rate for vaccines. There has been a number of coronaviruses that have been identified over the years, though no vaccine has been developed for one.

There are three distinct components of creating a traditional vaccine: Development, manufacturing, and distribution and immunization. In developing a COVID-19 vaccine, we are quickening the process. For instance, minimal animal testing has been done and we are expediting to human trials. We believe we will probably get an early vaccine approval for high-risk patients, but it will have far less data/testing than your traditional vaccine. Manufacturing has been a highly controlled step where the U.S. Food and Drug Administration (FDA) typically requires a manufacturing facility to operate for a minimum of two years before releasing a vaccine to the public. These regulations for the COVID-19 vaccine have been dropped to expedite the process. There are many steps along the way to distribute a drug from a manufacturing plant to humans. Most vaccines have to be stored at cold temperatures and have very short shelf lives. It's the most complex step along the way, where politics and religion both play a large role. In the U.S., the federal government doesn't mandate vaccines. Vaccination decisions are controlled by the individual states. This makes for a heterogeneous patchwork of rules and regulations. We will have limited supply around the world and the various governments will have to make allocation decisions which could get complicated. We think that is an underappreciated risk. The duration of how long the vaccines last is still unknown. Typically they can last from six months to three years.

There are many reasons to believe the development of a COVID-19 vaccine will be different compared to previous vaccine developments. For starters, this pandemic has forced regulatory agencies around the world to evaluate the risk benefit profile of bringing a vaccine to market very differently. A second reason is the technological advancement in the methodologies being used for vaccine creation, allowing for a much quicker ability to develop and manufacture a cure. A third reason includes the high number of programs working on a vaccine which increase the probability of success. Lastly, the massive amount of financial and structural support being provided for the vaccine effort should largely help to provide a vaccine much sooner than we've seen historically.

If a vaccine becomes available in 2021, we believe demand for a vaccine will outweigh supply until 2022. The consensus view is that we're going to get a vaccine that is going to allow the world to return to normal, and a lot of the equity markets are reflecting this viewpoint. The reality is that just because you have a vaccine that is approved, the process of vaccinating the population takes time. Our view is that it will be quite difficult for business leaders and policymakers, who have already communicated that they will act quickly once a vaccine is ready, to walk back their stance on this. However, we expect these decision makers to have to face this reality in the coming months as they navigate the risks of this virus in the near future considering a COVID-19 vaccine has some time before being available to the public.


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The impact of COVID-19, and other infectious illness outbreaks that may arise in the future, could adversely affect the economies of many nations or the entire global economy, individual issuers and capital markets in ways that cannot necessarily be foreseen. In addition, the impact of infectious illnesses in emerging market countries may be greater due to generally less established healthcare systems. Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty.