Investors in Pfizer (NYSE: PFE) and Modern (NASDAQ: MRNA) he may have breathed a sigh of relief when the US Food and Drug Administration granted the companies’ emergency use authorization for coronavirus vaccines in December. The risk of failure during clinical trials was in the rear view mirror. The companies started dispatching doses of vaccines to be administered. The revenue from his government contracts was just around the corner.
And then there was another risk: new variants of the coronavirus. In the past few weeks, new strains have emerged: a strain found in the UK, one that started in South Africa and, more recently, new strains in Japan and Columbus, Ohio. Now, the big question 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.
Image source: Getty Images.
Focused on the peak
Let’s start with a short history about the virus itself, vaccines and variants. The coronavirus contains a “peak protein”. These are literally spikes on the surface of the virus that allow it to attach itself to cells and infect them. Vaccine manufacturers are focused on this peak. In the cases of Pfizer and Moderna, their vaccines contain instructions for the body to make a copy of this spike protein. Then, the body produces antibodies to fight it. That way, if the real coronavirus appears, that army of antibodies will recognize it and attack it.
Each of the newly discovered variants of the coronavirus contains mutations or genetic alterations. And in each variant, the changes affect the peak protein. So now the question is: with these changes in the spike protein, will these antibodies still recognize it?
So far, the situation looks positive for both Moderna and Pfizer. Moderna said its vaccine includes all the sequence needed to make the protein spike. That is 1,273 amino acids. The new variants include about eight changes in the amino acids of the spike protein. Overall, this means that the “new spike protein” is about 1% different from the original coronavirus spike protein – the one encoded in Moderna’s vaccine. The company is testing its vaccine against the new variants, but expects the vaccine to be effective.
Moderna and Pfizer comment
Moderna says that if she eventually has to update her vaccine, the process will not require major clinical trials, according to an article in the MIT Technology Review. Therefore, an updated vaccine can move from the drawing board to the market in a few months, as long as regulators agree.
As for Pfizer, the company recently conducted an in vitro test against a mutation in the new strains that is linked to rapid transmission. The company said antibodies from vaccinated people neutralized strains in the UK and South Africa. Still, the test did not include the full set of mutations for the new variants. Pfizer said more data is needed to confirm the vaccine’s effectiveness against new strains. The company also said that if new mutations eventually lead to a decline in vaccine effectiveness, updating the current vaccine would not be a problem.
What does all this mean for investors?
At the moment, new strains are likely to pose one of the biggest risks for coronavirus vaccine companies – and their stock performance. So far, it appears that the Pfizer and Moderna vaccines can handle the new strains. But that does not mean that this will be true for additional strains.
The good news is that the possibility of a vaccine-resistant variant does not mean that all of the companies’ hard work will be thrown away. As Moderna and Pfizer said, updates are possible. This process is not new. Researchers regularly update the flu vaccine to add new strains.
Still, this is not an ideal situation during a pandemic and after companies have already increased production of their original vaccines. It is bad news from the point of view of cost and logistics.
Of course, we are not there yet. And that scenario may never happen. But if you own shares in vaccine manufacturers or plan to buy some, this is a point to watch very carefully.