Phase 3 Trials And More: Any COVID-19 Data Is Good Data, Even If It's Bad – Seeking Alpha

Moderna (MRNA) has just begun enrollment of its phase 3 trial of candidate mRNA-1273, aiming to have a trial size of 30,000 non-infected individuals as data from phase 2 trials is expected to surface in late August or early September. Moderna is joined by Pfizer (PFE)/BioNTech (BNTX) as well as AstraZeneca (AZN)/Oxford in the phase 3 category. While the race to the finish line, and a coveted effective vaccine is still going strong, any data that surfaces is good, in the sense that it can help the overall development of any vaccine to become more effective.

Macaque Testing Looks Positive

Last week both Moderna and Johnson & Johnson (JNJ) reported efficacy of their vaccine candidates in rhesus macaques – while the monkeys of course offer no perfect, direct comparison to humans, it does offer glimpses in to the possibilities of the vaccines and where effectiveness could emerge in human trials.

JNJ’s vaccine “shielded the monkeys with just one dose” as opposed to the “two shots spaced over four weeks” utilized in Moderna’s macaque trials. Both subsets of macaques (8 for Moderna, and 52 for JNJ) were then exposed to the virus – in Moderna’s case, one month after the second injection, and in JNJ’s, six weeks after the injection.

Inovio’s INO-4800 (INO) and AstraZeneca’s ChAdOx1 also underwent similar studies – data published show both had led to a reduced viral load, as opposed to no viral presence; different but still a strong positive note on viral development.

As the macaques were exposed to the virus through the intranasal and intratracheal passages – the main entryways into the lungs – viral presence is key; mRNA-1273 showed that the virus was either not detectable in those passageways or had “replicated slowly before disappearing.”

And while none of the 8 macaques in Moderna’s study had “detectable levels of virus in their noses two days after exposure” in the 100 mcg dosage, 7 of the 8 had no viral presence in the lungs two days after, in both the 10 mcg and 100 mcg dosages. mRNA-1273 was also the first vaccine to show “rapid viral control in the upper airway” – an important factor should it be replicated in human trials.

Understanding the Different Vectors

Most of the vaccine candidates are utilizing different vectors to stimulate an immune response and neutralizing antibodies, and each has its own advantages and disadvantages. Moderna and Pfizer/BioNTech are pioneering the mRNA front, Inovio is creating a DNA vaccine, and JNJ and AstraZeneca are using adenovirus vectors.

mRNA and DNA

Nucleic acid based vaccines (MRNA, PFE/BNTX, INO) have shown both antibody and T-lymphocyte responses across a wide range of protein antigens. But unlike traditional (live or attenuated viral) vaccines, there is no real risk of viral infection – the cells are only receiving the codes to express and then recognize the viral antigen.

Advantages of nucleic acid vaccines are “simplicity of the vector, the ease of delivery, the duration of expression, and, to date, the lack of evidence of integration.” These vaccines are easy to administer simply because they are composed of a strand of genetic material, which creates a lasting response with little risk of integration into normal cells aside from an immunogenicity standpoint.

However, the vaccines can be “prone to a rapid degradation…and can lose their efficiency when exposed at freezing or high temperatures.” Yet there are ways to protect the mRNA or DNA strands such as adding other molecules. Inovio has shown that INO-4800 “is stable at room temperature for more than a year and does not require to be frozen in transport or for years of storage.”

But when it comes to COVID-19, the nucleic acid vector has one standout feature – ability to mass produce vaccine doses quickly. There is no need to manufacture any of the viral proteins in a lab setting, instead relying on the genetic material to create the vaccine, which leads to amazingly fast vaccine development times.

CureVac (currently working with GlaxoSmithKline (GSK) in preliminary studies) touted back in 2015 that vaccines could be developed in “less than two months at a lower production cost, making it possible to respond to epidemics even as they develop,” while BioNTech claimed that a “tailored, on-demand vaccines…could be manufactured in 5 months.” Those are the types of times that these companies are now pressured into working with, and traditional vaccine development time usually takes much longer.


Adenovirus vector-based vaccines, such as the adenovirus serotype-26 (Ad26) vector used by JNJ, insert a viral gene into the adenovirus, which then transfers that viral gene into a cell without replicating.

Advantages of adenoviral vectors include “ease of genetic manipulation …ability to induce robust transgene-specific T cell and antibody responses, non-replicative nature in host, and ease of production at large scale.” Quite similar to nucleic acid vaccines in most senses, but offering a different method of targeted viral expression, which could lead to drawbacks.

But this vector is prone to “pre-existing immunity in humans, inflammatory responses, sequestering of the vector to liver and spleen, and immunodominance of the vector genes over transgenes” which could hinder the overall efficacy of using an adenovirus vector.

A New Development

A recent academic study of SARS-Cov-2 prefusion-stabilized S glycoproteins led to the identification of a lab-created combination dubbed HexaPro, which could provide extra benefits to nucleic acid vaccines like larger scale production of a viable vaccine.

Similar to what Inovio has shown, the scientists behind HexaPro believe that the “high yield and enhanced stability [in extreme temperatures] of HexaPro should enable industrial production of subunit vaccines and could also improve DNA or mRNA-based vaccines by producing more antigen per nucleic acid molecule, thus improving efficacy at the same dose or maintaining efficacy at lower doses.” That could be a huge breakthrough, since efficacy of the vaccines as well as finding the right dosage are arguably the most important features of vaccines in development.

Is The Data Good?

It looks good, but that’s hard to say.

It all is coming down to one thing – promise.

The data from the companies developing vaccines look promising in showing an immune response and neutralizing antibody creation. But sometimes reports seem to highlight only the positive outcomes, possibly without extensive data or evidence; some developments are less promising.

Moderna has just begun enrollment for its phase 3 trial, after preliminary results have shown that “mRNA-1273 vaccine is safe and immunogenic” according to the company, the NIH, and Dr. Fauci. The trial is assessing whether mRNA-1273 “can prevent COVID-19 and for how long such protection may last.” That’s a big uncertainty for mRNA-1273 to hurdle over, even with the positive signs from previous studies.

Pfizer and BioNTech announced the start of their pivotal phase 2b/3 trial on the same day as Moderna, using candidate BNT162b2 – both candidates testing in previous trials showed “high levels of neutralizing antibody in various animal species,” but BNT162b2 showed a better tolerability profile “with generally mild to moderate and transient (1-2 days) systemic events, such as fever, fatigue and chills and no serious adverse events.” Pfizer and BioNTech aim to have results out by the fall/early winter.

Novavax (NVAX), while soaring higher, is still lagging the rest of the group in terms of clinical trial progression – phase 1 data is expected to be reported later this week. Novavax is looking to get moving on to phase 2 trials, but don’t be surprised if the data is not fully definitive, like Inovio had done.

While AstraZeneca’s ChAdOx1 showed promising results within reduction of viral load and immune response, the notion that it “induced a balanced Th1/Th2 humoral and cellular immune response” brings reason to worry. Th2 responses have been linked to vaccine-associated enhanced respiratory disease (VAERD) and could lead to “hypersensitivity reactions [and] non-protective antibodies” among other adverse effects.

Until a vaccine gets approved, promise and hope is all it is – vaccines can always look like the next breakthrough, only to fail at the very last minute in phase 3 trials. Rushing a vaccine to market, or rushing a vaccine through human trials can lead to unwanted results due to variability within individuals in pharmacokinetics and pharmacodynamics – we’ve seen that the spectrum of infection with SARS-Cov-2 can be asymptomatic to severe, and when creating a vaccine to deal with a virus that creates such a wide range of symptoms could also have a wide range of responses in a large human population.

What’s Next For Investors

From an investing standpoint, positive data is key in sending shares higher or fueling a rally, while negative data usually results in a sharp selloff. Especially with the COVID-hopefuls, where billions are on the line for whoever can create that coveted vaccine first, the rallies are fueled by optimism and promise that those candidates won’t fail. But fail they can. There’s always a chance that a failure is the outcome, even if the data looks stellar.

We’re dealing with such a great unknown in terms of the virus – how it spreads, how long symptoms last, if reinfection is possible, etc. – and just as much within the vaccines – what vector works best, can promising results from animal studies translate into humans, does it create an immune response and neutralizing antibodies, but most importantly, just how promising is the vaccine?

At the end of the day, a successful vaccine unlocks enormous revenue potential, but few are closing in on the necessary approval – the companies in phase three trials are the closest, and provide the most potential opportunity in terms of bringing a vaccine to market by late 2020 or early 2021. But not all of those are solid investments.

Pfizer and AstraZeneca stand out as the giants here – these two are the safest of the phase 3 cohort, with multibillion revenue streams excluding potential opportunities from COVID-vaccine development. JNJ also provides much needed diversity within the pharmaceutical realm. If all else fails on the COVID-vaccine front, these three are likely to shed only a little, as the dominance they have already established remains. They also provide more stable growth supplemented by dividends, which the smaller experimental COVID-players can’t offer.

Novavax, Moderna and BioNTech are all in the ‘clinical stage’ category – none of three have brought a candidate to market, and are riding on the hype of the coronavirus. Look just where Novavax was before – shares are up over 3,400% YTD.

Moderna has a broad pipeline under development, but just three in phase 2 trials aside from mRNA-1273. Due to this “relative inexperience and what the sources described as its lack of staff and expertise to oversee the most critical phase of human trials,” Moderna “has squabbled with government scientists over the process, delayed delivering trial protocols and resisted experts’ advice on how to run the [phase 3] study.” While mRNA-1273 has added significant value to Moderna, a failure to hit endpoints could be quite a shock, and toss the company back to its other candidates, which are quite some time from phase 3 and commercialization, if applicable.

Novavax has undoubted the most value added to shares on COVID vaccines hopes, but is steps behind the rest in terms of trials. While there still is potential for Novavax ahead of its upcoming data release, failure to push NVX-Cov2373 through until approval and/or being beat to approval by any of the vaccines further along in trials could knock Novavax out of the race completely, and it could be the short opportunity of a lifetime if it fails to bring its candidate to market in a timely manner. But Novavax does have two candidates nearing the approval stage, putting it much closer to pushing a product to market and realizing some revenues, albeit not enough to sustain current valuations.

BioNTech has Pfizer on its side, and is the farthest ahead in development right now, but still has yet to get a candidate in to phase 3 trials, with only one in phase 2. While the progress BioNTech and Pfizer are making is quite positive, there’s nothing close to commercialization, again, leaving much of the value added by COVID vaccines hopes.


Vaccine development is usually a long, arduous route, but the timeliness of a COVID vaccine is of utmost importance, forcing these companies to fly through clinical trials at an unparalleled pace. No matter how promising early studies or phases are, there’s always a chance for the final phase to have one serious adverse effect or not hit a target antibody response, causing all the work to go out the window.

But bad data is still good data – from a company standpoint, not so much, as the good data keeps the rally going. But if one of the phase 3 or some of the upcoming data releases show some negatives, other companies can assess what caused that to happen, and better their own vaccines. From an overall standpoint, any data is good data, since it allows the development of the leading vaccines as well as the lagging to build upon those failures to create something better.

Moderna, Pfizer/BioNTech and Inovio are creating nucleic acid vaccines, which allow for possible rapid mass production of doses due to simplicity of the vaccine, but face challenges in storage and transportation, which Inovio looks to have conquered.

Novavax is creating a subunit protein vaccine, while AstraZeneca/Oxford and JNJ are developing adenoviral vector vaccines. Vaccines using subunit or adenoviral vectors typically generate a substantial immune response, but are prone to adverse effects from potentially inducing a Th2 response – partially shown in AstraZeneca’s results – that could lead to hypersensitivity and VAERD.

Trading these names could earn decent profits in the short term, as optimism on data and developments is very likely to keep pushing the clinical stage players higher (NVAX, INO, BNTX, MRNA) as they look to capture a piece of the very large pie.

But we still don’t know just how long this pandemic will last – will one vaccine emerge that gives the immunity? Or will we have to endure life with the virus for years or decades to come? Long-term revenue streams stemming from a COVID vaccine are still very unpredictable. With that in mind, Pfizer, JNJ, AstraZeneca and the other pharma giants involved in the COVID race look to be the safest long-term investments, providing dividends and consistent revenues to back their growth. But they don’t have the same degree of value added to shares from COVID optimism, and have less downside if a COVID vaccine doesn’t get to market.

There’s many ways to play it. High risk, high reward has been the game of the clinical stages, while the slow and steady growth remains with the pharma giants. Until something much more certain emerges within the vaccine front, that dichotomy is likely to continue.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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