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Morgan Stanley
  • Thoughts on the Market
  • Sep 10, 2020

Why Vaccine Discovery Is Just the Beginning

Matthew Harrison and Ricky Goldwasser
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As COVID-19 vaccine development continues in phase three studies, the logistics of FDA approvals, production and the complex hurdles of distribution are taking shape.

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Current Episode Transcript

Matthew Harrison: Welcome to Thoughts on the Market. I'm Matthew Harrison, equity research analyst covering biotechnology.

Ricky Goldwasser: And I'm Ricky Goldwasser, equity research analyst covering health care services and technology.

Harrison: And on this special episode of the podcast, we'll be talking about the road to a COVID-19 vaccine and the hurdles and considerations on how a potential vaccine could get distributed. It's Thursday, September 10th, at noon in New York.

Goldwasser: 365体育投注网站So, Matt, I think that a natural place to start is around vaccine development. And we can say that R&D on COVID-19 vaccine has really developed at an unprecedented scale and speed. But even so, there was news a couple of days ago that one late stage trial has been paused. Maybe we should start with what implications, if any, that has to the other late stage candidates.

Harrison: 365体育投注网站Thanks, Ricky. It's a good question. All the vaccines right now have different technologies that they're using. Some vaccines use other viruses to deliver the genetic material to get you to mount an immune response. And others just give your body the code to be able to mount that immune response and create the antibodies against the vaccine. I think what we're seeing right now is that in large studies, sometimes rare side effects occur and they need to be investigated to find out if they're actually related to the vaccine or not. And so that's the process that's going on right now. And hopefully we'll find out. But right now, that seems specific to that one vaccine candidate.

Goldwasser: And what is the current status of delayed stage studies and when would you expect that we could see full trial data from the leading candidates?

Harrison: So right now, there are three leading candidates in the US. They have all started large phase three studies, enrolling thirty thousand patients. We've had enrollment updates across the board from them with most of them north of 20,000 patients and so sometime in September, we would expect to see those studies fully enrolled. Now, the way these studies work is they're what's called an event driven study. So that means you need a certain number of people in the trial to get infected with COVID. So then you can see if the vaccine prevents more infections with COVID versus the people that didn't get the vaccine. There are three time points that's going to be looked at: around 50 people, around 100 people, and around 150 people. Based on our view around enrollment and the spread of the disease, we think that that first interim analysis could happen sometime in October. And if the vaccine were to prove successful at that point, it would need to prevent about 85% of the infections. The next time point is sometime in November, which is our current base case, and it would prevent about 60% or more of the rate of infection. And then the last time, would happen sometime towards the end of the year, where you'd need to prevent about 55% of the infection with the vaccine.

Goldwasser: There are many more vaccines in development behind the three late stage candidates. What are the key features that could differentiate those vaccines?

Harrison: So right now, the current late stage vaccines all require two shots, one initial shot and one booster about a month later. Some of the candidates that are in development after these may only require one shot so that could be a key differentiator. And then secondly, as I'm sure we'll talk about a little bit later on, the shipping requirements for some of the initial vaccines may be different than later. Some require very cold temperatures, which could complicate the distribution. And some of the earlier stage candidates may not require certain refrigeration or other requirements.

Goldwasser:365体育投注网站 Now, the FDA is expected to hold an advisory committee hearing on October 22nd. It appears to be earlier than your expected timeline for a readout on vaccine efficacy. If there won't be vaccine data at that committee hearing, what do you think they'll discuss?

Harrison: I think most people that I've spoken to think that the FDA wants to have in place certain requirements for things like who the vaccine might initially be available to, or how much safety follow up may be necessary when you make the vaccine available to a select group of people versus a very wide group of people. And so, while the FDA has published a document about what is required for full authorization of a vaccine, there is some flexibility when they might consider issuing an emergency use authorization. And so I think that the advisory committee hearing will discuss some of those various items around what is required for an emergency use authorization.

Goldwasser: So then when would you expect the FDA to approve a vaccine?

Harrison: I think as we see it right now, there will be probably between, from each of the leading contenders, somewhere between 25 and 50 million doses available by the end of the year. As I'm sure you've seen over the course of this week, the nine leading companies said that they are not going to submit something to the FDA until they have significant phase three data. And so I would expect after you have one of those readouts that I described earlier, that that's when a company may submit their data to the FDA. And so based on our base case, we would think sometime around the end of the year is when you could have an approved vaccine.

Goldwasser: And after approval, how long do you think it will take to vaccinate the population? And what would be a potential timeline on production once a vaccine is approved?

Harrison: 365体育投注网站Yeah, two additional important questions. So, our base case right now is that it would take till mid 2021. We think the number of dosages available that would be required to vaccinate the whole U.S. population will be available sometime towards the end of the first quarter or the beginning of the second quarter. But it will obviously take time to then provide those dosages to everybody to get vaccinated.

Harrison: So Ricky, and I think that's probably a good segue to you, we talk about how do we get that vaccine once it's approved to people? So maybe we can talk about distribution. Can you walk us through what's required from cold chain and some of the logistical hurdles that are going to come with distributing this vaccine?

Goldwasser: 365体育投注网站So some of the vaccine candidates need to be transported and stored at subzero temperatures. And the reason for this is that cold chain distribution is to maintain vaccine quality from the time of manufacturing until the point of actual administration by making sure that the vaccines are stored and are transported within the WHO recommended temperatures. There are a few logistical hurdles that need to be addressed between now and when a vaccine is approved and ready to go. So, first of all, is the equipment and storage capacity. Hospitals are actually considering plans to buy special freezers and non healthcare logistics companies are building facilities to house mobile cold storage units or "freezer farms." The other area is patient demographics as a limited number of doses will be available early on. The elderly, health care workers, frontline essential workers, national security workers and some at higher risk minorities communities will be among the priority groups for the first vaccine dose. So where these populations are located creates a challenge. For example, rural areas of the country may have more difficulty storing the vaccine. And then a third challenge is dose administration size. COVID vaccines, like you mentioned, may need two doses a few weeks apart, creating this need for follow up communications and appointments and efficient coordination among providers to make sure that the individual comes back for their second dose.

Harrison: As you as you look towards this, getting the vaccine out and all of the various factors that you just described, how do you figure out who's best positioned to be able to do that?

Goldwasser: So there are three key factors that we think should be considered. So one obviously is the cold chain storage capacity and capabilities. The second one is the channel relationship, whether it's pharmacies, hospitals, long term care facilities and physician offices. And then the third one is also past experience and proven track record. When we think about what we know to date, the CDC has already selected a sole distributor and HHS has already directed about 178 million of funding toward their efforts to retrofit that specific distributor supply chain in distribution capabilities in anticipation of a large COVID vaccine distribution effort. That said, in considering the scale and the scope of the operation at hand, we think there could be room for others to be added over time.

Harrison: 365体育投注网站And then, as you think about the last leg, where people actually have to go get the shot. How do you think about what sites of administration are best?

Goldwasser: It's a really good question and we think that what site is best suited depends on the target population. And we expect that that's something that will evolve over time. So phase one focuses on health and frontline workers, seniors and minorities-- hospitals, long term facilities seem to us as the frontline settings. Over time, we see pharmacies as playing a key role in the administration of the vaccine, given their critical role in COVID testing so far as well as their annual role in providing flu vaccines and their national presence in coverage of rural areas. HHS very recently issued guidance to allow state licensed pharmacists and pharmacy interns to administer a COVID-19 vaccination, and that should allow pharmacies to play a fairly large role. Other sites that we think makes sense over time are physician offices and at work or school settings as part of back-to-school or back-to-work type programs. But we think that these are sites that will gain more prominence in 2021 as the vaccine will be distributed more broadly.

Harrison: Ricky, thanks for taking the time to speak today. Looking forward to more discussion around COVID at our upcoming health care conference as we hear from many management teams working on solutions.

Goldwasser: 365体育投注网站Great speaking with you, Matt.

Harrison: Thanks for listening. As a reminder, if you enjoy thoughts on the market, please take a moment to rate and review us on the Apple podcast app. It helps more people to find the show.