COVID-19 Update: Moderna and Pfizer vaccines also effective against new variants

Overall - current thinking

Europe has seen improvement in most countries with the exception of France, Spain and Portugal. Concern is rising over a possible third lockdown in France. The UK and Ireland have seen a further decline in new infections but pressure on hospitals is still severe. A combination of restrictions and fewer social gatherings is contributing to the decline in new cases. In the US, the situation has improved and some states are already easing restrictions. China seems to have the new outbreak under control but travel related to the Chinese New Year holiday is set to be low again this year

Contagion in countries with lockdowns should continue lower in the coming weeks but an early lifting of restrictions in the US could lead to a renewed flare-up in contagion. We still expect restrictions to be with us for most of Q1 due to the new, more contagious variant and winter weather.

The vaccination process continues with Israel still leading with a vaccination percent of 50%. The UK is leading the European race with EU countries lacking supply. The US has increased its vaccination pace slightly. Moderna reports their vaccine is effective against new variants. Our base case (which is also the consensus story) remains a long winter with many restrictions but that restrictions will not be re-imposed in the autumn. A major tail risk has emerged, as vaccines may not be as effective against possible new mutations and in a worst case not sufficiently effective. The risk is that the vaccines are ineffective and that vaccinating against the old variants will not be enough to end the pandemic this year. This would mean another 'lost' year, as the strong economic comeback would be postponed into 2022 and may imply a significant setback in risk sentiment with investors pricing in a very positive outlook at the moment.

Details

Coronavirus, treatment and vaccine news

This week's most important news was Moderna's press statement saying that its vaccine is fully effective versus the UK variant (B.1.1.7) and still overall effective versus the South African version (B.1.351) although to a lesser extent. A new scientific paper by Shi et al (2020) also finds no major impact on the Pfizer vaccine's effectiveness against the UK and South African variants. Moderna writes further that the company will test two things in order to make the vaccine more effective also versus the South African version. It is too early to say what it means for the overall efficacy of the vaccine but scientists are speculating that it may be around 70-90%. One is to test whether another additional booster shot of its mRNA-1273 vaccine will increase neutralising titres further. The second is to test another booster shot called mRNA-1273.351 with strain-specific spike protein, which is advancing into pre-clinical and phase 1 studies. Science Maghas a very good overview of what we know so far. We continue to see a mutation making the vaccines ineffective as the biggest economic risk.