Tuesday, November 2, 2021

Easier distribution may make Moderna’s vaccine much more valuable | Nils Pratley

A second coronavirus vaccine candidate was always likely to struggle to match the excitement of the first, at least in stock market terms. Sure enough, Moderna’s promising trial results merely added to the generally bullish mood in markets without generating the same sense of wild relief, and 5% rise in the FTSE 100 index, that Pfizer and BioNTech achieved a week ago.

But, actually, the key difference with Moderna’s version looks significant. It’s the fact the company says its vaccine can be transported and stored for up to six months at -20C and will then remain stable for 30 days at fridge temperatures. By contrast, Pfizer and BioNTech spoke about -75C in storage and then only five days of stability in conventional fridges.

What’s that difference worth in terms of ease, and thus speed, of distribution? Weeks? Months? Hard to say, but Shore Capital analyst Dr Adam Barker is surely correct that Moderna’s product could massively simplify the logistics of a mass vaccination campaign. As he puts it: “A vaccine can be as effective as you want, but if you can’t get it to people, it’s efficacy becomes zero”.

The point will be understood instinctively by swathes of the locked-down economy – airlines, events and hospitality – where it really matters whether a vaccination programme takes six months, a year or more.

The roll-out process still looks daunting – and the UK has only just secured 5m doses from Moderna – but the big picture is that the US firm is talking about delivering 500m-1bn doses globally in 2021. Pfizer’s projections imagine 1.3bn doses next year (again, with two shots per person). Then there’s the Oxford University/AstraZeneca study, where results are due next month, and the initial target for manufacture is again 1bn-plus.

All last week’s caveats also apply to Moderna’s vaccine: the product still has to be approved; more safety data is needed; and it’s not yet clear how long protection lasts. That is why it is still premature to assume a V-shaped economic recovery for 2021 is on the cards. But the chances are improving by the week.

AstraZeneca played the Moderna long game

Whatever happens with the AstraZeneca trial, the UK company can reflect that it made a very good bet when it invested in Moderna as long ago as 2013.

Back then, Moderna was a three-year-old biotechnology tiddler with an interesting new line of innovation in messenger RNA therapeutics, the science now being used in the coronavirus vaccine. AstraZeneca’s interest, naturally, was in partnerships in other medical areas – cardiovascular, metabolic and renal diseases as well as cancer.

AstraZeneca invested $240m (£181m) in March 2013 in one of Pascal Soriot’s first moves as chief executive. Then it topped up with a further $140m in August 2016. In 2018, Moderna went public and its share price has risen fivefold since. AstraZeneca’s 7.65% stake is now worth $2.9bn – a very decent return.

Vodafone may thrive in lockdown

Vodafone was seen by the stock market as a lockdown loser. The share price, 150p in February, retreated to 100p in March. Now it’s 128p, which feels appropriate: the kneejerk analysis was only half right.

The correct part was a whack from lower roaming charges with the collapse of international travel. That duly arrived in Vodafone’s half-year numbers on Monday. But the other part of the story was solidity in everyday telephony and broadband revenues, which is more important. Overall revenues in the April to September period declined by only 2.3% to €21.4bn.

It suggests there’s something in chief executive Nick Read’s boast that “a flight to quality” is under way as consumers and businesses pay more for better communications. Demand for services is stronger than it’s ever been, says the company. It is now confident that its full-year operating profits, ignoring interest and depreciation and suchlike, will arrive at between €14.4bn (€12.8bn) and €14.6bn, which is roughly what was expected before the pandemic.

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Investors shouldn’t get too excited. Vodafone’s territory is no longer the go-go growth market of a decade ago. It’s best to think of it as more utility-like these days. But resilience is not to be sniffed at.

There’s also minor excitement to come with next year’s partial flotation in Frankfurt of Vantage Towers, the mast-owning business that is the one part of Vodafone that should command a pretty valuation as its combines growth prospects and fashionable infrastructure assets.

Read was embarrassed 18 months ago when he cut the dividend by 40% only a few months after declaring the distribution to shareholders to be affordable. Oddly, life for Vodafone in 2020 feels calmer.

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