The possibility of a Covid-19 vaccine signals a ray of hope for the world, coming at a time when the public are concerned over the country’s direction as the number of cases within the country continue to rise daily in the four-digit region.
Ipsos Malaysia in a statement outlined the rakyat’s rising concern that we are on the wrong track as Covid-19 cases surge.
“Optimism about the direction of the country peaked in July, when new cases of Covid-19 receded from the early outbreak. Now, with a resurgence in cases, Malaysians increasingly feel the country is on the wrong track,” it explained.
While concerns about the pandemic dropped towards the middle of the year, Ipsos Malaysia said this has now increased again and is near the levels seen back in April.
“Malaysians’ concerns about Covid are well above the global average,” it continued. “Even in hard hit countries in Europe and the Americas, the level of concern is lower than in Malaysia.”
These concerns are hoped to be allayed soon as figures from World Health Organisation’s (WHO) revealed a total of 48 candidate vaccines in clinical evaluation and 164 in pre-clinical evaluation as of November 12, 2020.
With various vaccine candidates in various stages of development, Franklin Templeton believed scientists and researchers are better equipped – now more than than ever – to identify new mutations that drive diseases.
They are also better able to design new drugs with better efficacy and fewer side effects, as well as to improve diagnoses of patients so that the best treatment options can be found for them to improve clinical outcomes.
“While we do not have a definite timeline, the pipeline of drugs and vaccines in development for Covid-19 has been growing at an unprecedented pace, and we are optimistic that some of these will be effective in treating and preventing infections,” Franklin Equity Group’s senior vice president and director of equity research Evan McCulloch and research analyst Wendy Lam told BizHive in an email interview.
On whether the world will be ready should another pandemic arise in the future, McCulloch and Lam opined that for the biotechnology industry, it will continue to navigate the effects from Covid-19 for years to come.
“In the past few months alone, the Covid-19 pandemic has already made a profound impact on every sector within our economy, and like every other sector, the biotechnology industry will continue to navigate the effects from Covid-19 for months and possibly years to come.
“However, despite the many challenges that have emerged as a result of the pandemic, the key growth drivers for biotechnology have remained intact, and importantly, we believe the industry will continue to generate innovative new drugs in both the near term and the long term.
“As a society we are now reaping the benefits of the many scientific and medical advancements made in the past 10 to 15 years, all of which have led to the accelerated pace of new innovative drugs and treatment modalities we are seeing today.”
Innovation is key
In view of the ongoing pandemic and the race against time to develop a cure, the question now is whether we can automatically assume that the biotechnology and biopharmaceutical industries are set to gain immensely from the Covid-19 pandemic.
On this, McCulloch and Lam believed that innovation has always been a key driver for the biotech industries.
“Even as Covid-19 presents new headwinds to the drug development process – this extends beyond just the search for the Covid-19 vaccine – we believe that any disruption to health care innovation will be temporary.
“For this reason, our long-term investment outlook remains positive. In particular, we are excited about three therapeutic classes that have been especially innovative and disruptive in recent years: adoptive T-cell therapy for cancer, precision oncology drugs and gene therapy. We expect these three categories to transform the standard of care for many difficult-to-treat diseases.”
Overall, the Franklin Templeton duo observed that the medical and scientific community around the world, together with health care, pharmaceutical and biotechnology companies, are working more closely together than ever to find better treatment options and a cure to combat the virus.
“Innovation has always been a key driver for the biotechnology industry and as global investors, we expect to see continued growth in this sector,” they reiterated.
“We are seeing companies that are applying their innovative drug discovery platforms to help manage this pandemic, and we believe there are others that will continue to create value in the long term once we are past this pandemic.”
Major breakthrough by Pfizer-aBioNTech
Pfizer Inc (Pfizer) and BioNTech SE (BioNTech) is currently leading the pack in the fight against Covid-19. On November 9, 2020, the duo announced that their messenger RNA (mRNA)-based vaccine candidate, BNT162b2, against SARS-CoV-2 has demonstrated evidence of efficacy against Covid-19 in participants without prior evidence of SARS-CoV-2 infection.
According to their press statement, this was based on the first interim efficacy analysis conducted on November 8, 2020 by an external, independent Data Monitoring Committee (DMC) from the Phase 3 clinical study.
The statement also revealed that after discussion with the US Food and Drug Administration (FDA), the companies recently elected to drop the 32-case interim analysis and conduct the first interim analysis at a minimum of 62 cases.
“Upon the conclusion of those discussions, the evaluable case count reached 94 and the DMC performed its first analysis on all cases,” it said.
“The case split between vaccinated individuals and those who received the placebo indicates a vaccine efficacy rate above 90 per cent, at seven days after the second dose.
“This means that protection is achieved 28 days after the initiation of the vaccination, which consists of a two-dose schedule.”
Pfizer chairman and chief executive officer (CEO) Dr Albert Bourla said in the statement that the first set of results from their Phase 3 Covid-19 vaccine trial provides the initial evidence of their vaccine’s ability to prevent Covid-19.
“We are reaching this critical milestone in our vaccine development program at a time when the world needs it most with infection rates setting new records, hospitals nearing over-capacity and economies struggling to reopen.”
He added that with this announcement, they are a significant step closer to providing people around the world with a much-needed breakthrough to help bring an end to this global health crisis.
The statement highlighted that Pfizer and BioNTech are continuing to accumulate safety data and currently estimate that a median of two months of safety data following the second (and final) dose of the vaccine candidate – the amount of safety data specified by the FDA in its guidance for potential Emergency Use Authorization (EUA) – will be available by the third week of November.
“Additionally, participants will continue to be monitored for long-term protection and safety for an additional two years after their second dose,” it further highlighted.
“Along with the efficacy data generated from the clinical trial, Pfizer and BioNTech are working to prepare the necessary safety and manufacturing data to submit to the FDA to demonstrate the safety and quality of the vaccine product produced.”
Based on current projections, Pfizer and BioNTech expect to produce globally up to 50 million vaccine doses in 2020 and up to 1.3 billion doses in 2021.
Pfizer and BioNTech plan to submit data from the full Phase 3 trial for scientific peer-review publication.
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) recapped that following the encouraging announcement, global market rallied – the US Dow Jones and S&P500 indices closed higher by 2.95 per cent and 1.2 per cent respectively while the European stocks closed four per cent higher.
“Additionally, oil price has also shot up by 11 per cent to US$41.22 per barrel as the announcement provided some respite to the otherwise gloomy global economic outlook that has wiped out close to 30 per cent in global crude demand thus far,” MIDF Research said.
“The announcement provided the world with hope that the pandemic – which has resulted in the loss of 1.3 million lives worldwide can finally be contained, and economic activities can finally be restored to pre-Covid-19 level.”
Moderna hot on the trail
The following week, Moderna, Inc (Moderna) also announced it had been informed by the independent, National Institutes of Health (NIH)-appointed Data Safety Monitoring Board (DSMB) for the Phase 3 study of mRNA-1273, its vaccine candidate against Covid-19, that the trial has met the statistical criteria pre-specified in the study protocol for efficacy, with a vaccine efficacy of 94.5 per cent.
“This study, known as the COVE study, enrolled more than 30,000 participants in the US and is being conducted in collaboration with the National Institute of Allergy and Infectious Diseases (NIAID), part of the NIH, and the Biomedical Advanced Research and Development Authority (BARDA), part of the Office of the Assistant Secretary for Preparedness and Response at the US Department of Health and Human Services,” the statement read.
“The interim analysis included a concurrent review of the available Phase 3 COVE study safety data by the DSMB, which did not report any significant safety concerns. A review of solicited adverse events indicated that the vaccine was generally well tolerated.”
According to the statement, based on these interim safety and efficacy data, Moderna intends to submit for an EUA with the FDA in the coming weeks and anticipates having the EUA informed by the final safety and efficacy data (with a median duration of at least two months).
“Moderna also plans to submit applications for authorisations to global regulatory agencies. Moderna is working with the US Centers for Disease Control and Prevention (CDC), Operation Warp Speed and McKesson, a Covid-19 vaccine distributor contracted by the US government, as well as global stakeholders to be prepared for distribution of mRNA-1273, in the event that it receives an EUA and similar global authorisations.
“By the end of 2020, the company expects to have approximately 20 million doses of mRNA-1273 ready to ship in the US. The company remains on track to manufacture 500 million to one billion doses globally in 2021.
On another note, Moderna also announced new data showing that its Covid-19 vaccine candidate, mRNA-1273, remains stable at two degrees to eight degrees Celsius (36 degrees to 46 degrees Fahrenheit), the temperature of a standard home or medical refrigerator, for 30 days.
It highlighted that stability testing supports this extension from an earlier estimate of seven days. The group also revealed that mRNA-1273 remains stable at minus 20 degrees Celsius (minus four degrees Fahrenheit) for up to six months, at refrigerated conditions for up to 30 days and at room temperature for up to 12 hours.
“We believe that our investments in mRNA delivery technology and manufacturing process development will allow us to store and ship our Covid-19 vaccine candidate at temperatures commonly found in readily available pharmaceutical freezers and refrigerators,” Moderna chief technical operations and quality officer Juan Andres said.
“We are pleased to submit these extended stability conditions for mRNA-1273 to regulators for approval. The ability to store our vaccine for up to six months at minus 20 degrees Celsius including up to 30 days at normal refrigerator conditions after thawing is an important development and would enable simpler distribution and more flexibility to facilitate wider-scale vaccination in the US and other parts of the world.”
MIDF Research opined that Moderna’s vaccine would require lesser degree of cold storage when compared against Pfizer’s minus 70 degrees Celsius.
“Following closely behind are, AstraZeneca-Oxford, Russia’s Sputnik V and Johnson & Johnson; companies that have entered Phase 3 trials for their respective Covid-19 vaccines and are currently awaiting trial results,” the research arm noted.
“This concurrent development not only brings more option to the table but also brings the world closer to preventing further new cases of Covid-19 infections.”
HWGB: Polio vaccine for prevention of Covid-19
On the local front, Ho Wah Genting Bhd’s (HWGB) wholly-owned subsidiary HWGB Biotech Sdn Bhd (HWGB Biotech) had signed a joint venture agreement to collaborate with US-based E-Mo Biology Inc (EBI) in developing a preventive Covid-19 vaccine through Phase IV clinical trials based on the use of poliovirus vaccine.
As per HWGB’s statement, once Phase IV clinical trial is proven successful for the new indication of oral poliovirus vaccine (OPV), HWGB will begin the production and distribution of its own Covid-19 vaccine.
The group highlighted that OPV is safe, relatively affordable and can be administered easily as well as its widespread availability in medical industry.
“As the world searches for a way to end the Covid-19 pandemic, the race is on to find and produce a vaccine,” HWGB Biotech’s Medical & Pharmaceutical Research general manager Dr Yaman Walid Kassab said.
“The type of production facilities needed will depend on which kind of vaccine turns out to work best.”
He further stated that, if billions of people need a new kind of vaccine for the prevention of Covid-19 while pharmaceutical firms continue to produce the normal array of shots against influenza, measles, mumps, rubella and other diseases, there could be a production shortage.
This is because huge amount of money and time will be poured into setting up manufacturing plants for the new vaccine. The good news is, however, there are production plants for poliovirus vaccine readily available in Asia.
According to HWGB, most Covid-19 vaccines currently in development require a strict temperature-controlled environment of minus 70 degrees Celsius, unlike the poliovirus vaccine that can be stored at four to eight degrees Celsius. OPV does not require a high-performing active thermal shipper.
“Covid-19 vaccines require advanced freezers that can reach extremely low temperatures (minus 80 degrees Celsius) when compared against poliovirus vaccines,” the group said.
“At the same time, trucks that provide refrigerated transportation for the pharmaceutical industry will have to comply with the varying storage requirements of different vaccines.
“As a result, it can be quite challenging to maintain the cold chain from production through delivery to distributors or distribution centres.”
According to HWGB, cold storage capacity in the Asia Pacific region is limited compared to developed Western markets.
“In the case of poliovirus vaccine, given that there would not be much loss in virus titre for up to a year when stored at four to eight degrees Celsius, there is less hassle with storage and transportation.”
What’s next for local pharmaceuticals?
While not much information is available at this juncture with regards to the fill and finish tender for the Covid-19 vaccine, Pharmaniaga Bhd (Pharmaniaga) is one of the frontrunners to win the tender.
MIDF Research in a special report said this is due to the fact that Pharmaniaga has a well-established logistics and distribution network nationwide and large capacity of sterile and liquid plant to conduct the fill and finish process for the vaccine.
“Currently, Pharmaniaga’s small volume injectable (SVI) plant located in Puchong has the capacity to produce 10 million doses per month,” MIDF Research said.
“We understand that to undertake the fill and finish process for the vaccine, Pharmaniaga will require a small capital expenditure (capex) investment of RM2 million which will be spent towards retrofitting its existing SVI plant.
“The retrofitting will take a month to complete which would also include putting in place new machineries.
“While there is no information on the financial impact on Pharmaniaga if it were to land the tender however; the volume is expected to be quite substantial – to the tune of 44.8 million doses for a minimum of two doses for Malaysia to produce herd immunity.”
As details with regards to the potential financial impact from the Covid-19’s fill-and-finish tender on Pharmaniaga remains scarce, MIDF Research has tried to estimate the revenue and earnings contribution from the tender by using a study that it came across published in 2018 by PATH, an international non-profit health organisation based in Seattle, US – an organisation that advocates worldwide health equity and accessibility.
The research arm recapped that the study focused on how the cost of fill and finish – as well as cost of distribution – would impact the total cost of vaccine production.
“Similarly, here, we will concentrate on the cost of fill and finish up to the point of delivery; which is the process that Pharmaniaga is expected to be entrusted with once the Covid- 19 vaccine arrives in Malaysia.
“According to the study, the total cost of delivery (TCOD) of a vaccine is highly dependent on how the vaccine is expected to be administered (oral or perenteral) and consequently, will also impact the cost of transporting the vaccine as different types of containers requires different method of transportation and degree of cold chain storage.
“Using the data produced by PATH via its study on pharmaceutical manufacturers in 2018 as our cost base, we have adjusted and used our internal assumptions on the numbers to reflect current and local market environment to come up with an estimate on the potential revenue and earnings attributable to Pharmaniaga from the fill and finish tender.
“The assumptions took into account among others, price inflation from potential surge in demand for vaccine containers, local currency exchange rate, scalability of Pharmaniaga versus international peers, expected margin from the tender and 50-50 per cent tender split with Duopharma Biotech Bhd.”
Based on the assumptions on the fill and finish costs that the research arm has made, MIDF Research estimated that Pharmaniaga’s financial year 2021 (FY21F) earnings could be lifted by 3.4 per cent to 7.4 per cent or in the range of RM2.77 million to RM6.04 million, depending on how the vaccines will be administered and what type of container the Covid-19 vaccine will require.
“This is as the packaging and distribution method would be highly reliant on whether the vaccine will be orally or perenterally administered.
“We deem the estimates as fair given the urgency of the vaccine and potential difficulty that the company might face in transporting the vaccine – which might increase the TCOD of the vaccine.
“The earnings contribution might seem significant in FY21F however, moving beyond FY21F we estimate that the contribution will correlate with the number of population that needs to be vaccinated every year – which we estimate to be lesser than in FY21F.”
That said, MIDF Research maintained its FY20-21F earnings estimates at this juncture as it awaits for further development on the Covid-19 vaccine. As such, the research arm’s normalised profit after tax and minority interests (PATAMI) remained at RM79.1 million and RM81.8 million, respectively.
Budget 2021’s measures to encourage vaccine production
Initiatives from Budget 2021 showed the government’ss commitment to acquire Covid-19 vaccine supplies, including through participation in the Covid-19 Vaccine Global Access (COVAX) programme.
“These Covid-19 vaccine supplies are expected to cost more than RM3 billion to meet the needs of Malaysians,” Finance Minister Tengku Dato’ Sri Zafrul Tengku Abdul Aziz said.
Meanwhile, to enable Malaysia to become an investment destination especially for locally produced vaccines, medicines and medical devices, the government will strengthen the Ministry of Health’s Off-Take Agreement Programme to attract investment to this country and potential vaccine production in the future.
To encourage manufacturers of pharmaceutical products including vaccines to invest in Malaysia, the government will provide incentive including preferential tax rate of zero to 10 per cent for 10 years.
“To encourage manufacturers of pharmaceutical products including vaccines especially Covid-19 vaccine to invest in Malaysia, it is proposed that the following tax incentives be given: income tax rate of zero per cent up to 10 per cent for the first 10 years and income tax rate of 10 per cent for the subsequent period of 10 years.
“Apart from the above tax incentives, strategic investments by such companies may be considered for other facilities including grants, import duty and sales tax exemption for machineries and equipment as well as raw materials.”
The research arm of Kenanga Investment Bank Bhd (Kenanga Research) recalled that the share price of Pharmaniaga has risen sharply since July on talks that the group will be selected to package the Covid-19 vaccine once it is developed.
However, Kenanga Research cautioned that such talks are premature and even if selected, there may be multiple packagers of the vaccine.
“It is also unclear at this stage as to the financial impact of such a venture, mindful that the government would likely want to see it delivered in the most efficient and competitive manner as possible,” the research arm said in its Budget 2021 market strategy report.