I thought whatever outcome that would come from the post-election results would lead to an increase in volatility for the rest of that week. To my pleasant surprise, the markets didn’t react negatively to a projected President-Elect Joe Biden result. In fact, investors for the most part seemed to welcome the potential change to the oval office alongside the headline news of the day that was released at 6:45am Monday morning. Of course, I’m referring to the headline that primarily pushed the equity markets higher for the entire week, Pfizer and BioNTech’s COVID-19 trial findings.

Pfizer’s first Phase 3 interim study evaluated 94 confirmed cases of COVID-19 in trial participants, out of the roughly 44,000 participants, which had shown an efficacy rate above 90% (far exceeding its target of 60% effectiveness). On average, a regular flu vaccination has a 40% efficacy rate in preventing an individual from getting the flu, thus a 90% efficacy rate is astonishingly impressive. To analyze the Phase 3 clinical trials, Pfizer had employed an independent Data Monitoring Committee (DMC). Their finding did not report any serious safety concerns and recommended the study to continue gathering more safety and efficacy data. Data findings is expected to conclude once a total of 104 confirmed cases have accumulated. Pfizer has stated it will have two months of safety data by the third week of November, stipulations set by the FDA, by which it will be able to file for Emergency Use Authorization, and will likely be approved by the end of this year.

While this is a great milestone in the search for a coronavirus vaccine, let’s remember not to count our chickens before they hatch. For one, Pfizer’s vaccine must be kept in cold storage at -70 degrees Celsius. Most hospitals around the country aren’t equipped with ultra-cold storage freezers, so many states have begun buying ultra-cold freezers to prepare for mass distribution of Pfizer’s vaccine. Unfortunately, the manufacturers of these freezers are expecting multiple months of backlogged orders due to the sheer demand. The second presents a concern of how effective the virus will be outside a closely monitored study and be used in uncontrolled environments, real life. The effectiveness of the drug will depend on many factors; one is human behavior. For example, if people hear that the vaccine is 90% effective, some could forego safety measures put in place because of the pandemic. Another concern is how long immunization lasts since the trials run so far are only based on short-term results. Like any vaccine development, it will be difficult to anticipate a quick adoption and determine how effective it will be. However, we’ve undoubtedly taken a big step in the right direction.

In addition to Pfizer’s news last week, today we received further positive developments in the search for a vaccine. This time offered up by Moderna who featured an impressive efficacy rate of 94.5% in their interim study. Similar to Pfizer, they are using messenger RNA (mRNA) as the primary component of their vaccine. Although, it may be more accurate to say that Pfizer is using a similar process to Moderna since its primary focus is on the mRNA industry.

Even with the positive events from last week and today, a lot of uncertainty is still at play for 2020, especially with the growing number of new cases across the nation and globally. As the year closes out, we continue to monitor our watchlist of quality companies for opportunities that present themselves. As always, please don’t hesitate to reach out with any questions you might have.

Stay safe everyone!

Matt Kawashima