Monday’s news about AstraZeneca (NYSE: AZN)Proof of the AZD1222 coronavirus vaccine appeared to be the kind of information that would raise the stock price, it would not.
Provisional results from the company’s phase 1/2 trial of the vaccine, developed in collaboration with the University of Oxford, suggested that it boosted the antibody and T-cell immune responses against COVID-19 in each of the 1,077 participants. of the study.
Although the test is only in its third month, it is a big problem. The COVID-19 vaccine has not yet been approved. An article in The lancet He quoted the World Health Organization as saying that there are more than 137 candidates for the coronavirus vaccine in clinical trials and 23 more in the preclinical stage. The AZD1222 study is one of only two candidates now entering the third stage of the trials.
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AstraZeneca and the University of Oxford received up to $ 1.2 billion from the Advanced Biomedical Research and Development Authority as part of Operation Warp Speed, the Trump administration’s push to have a widely available coronavirus vaccine this winter.
What went up quickly went down
AstraZeneca’s shares initially rose in the news, rising nearly $ 3 a share from next Friday to $ 61.40 on Monday morning. However, when the market closed on Tuesday, AstraZeneca shares had fallen to $ 58.07, and by the closing bell on Friday, it was below $ 56.
AZN data by YCharts
Why? Analysts looked beyond the sunny picture of AstraZeneca’s release, in which they said the drug had “only minor side effects,” to see exactly what that meant.
The study said the side effects included “pain, fever, chills, muscle pain, headache, and discomfort.” That doesn’t seem minor, especially when you see that participants were given one gram of acetaminophen every six hours for 24 hours after the vaccine injection to reduce fever, headaches, or muscle aches. Of course, given the choice between receiving COVID-19 or dealing with a headache and a little fever, most people would gladly choose the latter. However, the fact that the side effects were largely overlooked left some wondering if the researchers are being overly optimistic about the vaccine’s outcome.
To be fair, other recent candidates for the COVID-19 vaccine have shown similar side effects. Almost all phase 2 test subjects received mRNA-1273, a candidate for Modern (NASDAQ: MRNA), exhibited fatigue, fever, muscle aches and headache.
Another, possibly greater, reason for AstraZeneca’s falling stocks is that the pharmaceutical company is competing against so many other vaccine candidates. Partners BioNTech (NASDAQ: BNTX) and Pfizer (NYSE: PFE)For example, it also announced phase 1/2 clinical results for its vaccine candidate on Monday, though they did so via a preprint (no peer review) rather than a peer-reviewed journal. Moderna’s most recent phase 1/2 results came out last week in a New England Journal of Medicine report.
Still a good stock, with or without vaccine
Vaccines normally take 10-15 years to produce, not months. Things are moving at the speed of light due to the global need for a coronavirus vaccine, but it is equally possible that multiple candidates will succeed or that none of them will work in the real world. Despite our best efforts, we still do not have vaccines against malaria, HIV, or tuberculosis.
Another possible concern is that while AZD1222 has been shown to produce antibodies, it has not yet been shown whether those antibodies will prevent the virus from reaching healthy cells, or if so, for how long. The vaccine works by mimicking the spike protein used by COVID-19 to infect cells. The hope is that, after being vaccinated, the body’s immune system will recognize the spike protein and mount its defense quickly.
More encouraging, perhaps, is that the vaccine elicited a T-cell response, which should stimulate the immune system to attack cells infected with the virus.
Even if AZD1222 turns out to be the first viable candidate for the COVID-19 vaccine, a better vaccine could quickly supplant it. There is also the possibility that a SARS-CoV-2 virus mutation will render any current vaccine useless.
Fortunately, AstraZeneca remains a good stock, regardless of the outcome of the coronavirus vaccine. The company produced $ 24.4 billion in revenue last year and has had six consecutive quarters of revenue growth. It also has a huge portfolio that includes a growing number of cancer drugs. In the first quarter of 2020, the company’s revenue increased 17% year-over-year, and it maintained its annual guideline of single- and double-digit revenue growth. Those are solid reasons to invest in AstraZeneca if your candidate vaccine is successful or not.
