By Powerscourt on 23/09/2020
An effective coronavirus vaccine has become the most valuable elixir in world history and has sparked a global race.
Unsurprisingly, there is scepticism from many about the impact an accelerated approvals timeline could have on safety and what this could mean if many millions were injected at the same time with a fast-tracked potion. US medicines regulator the Food & Drug Administration, apparently responding to this concern, has told drugmakers informally it will introduce a new hurdle to be cleared following a successful clinical trial result and before any successful vaccine will be approved for general human use.
If a trial confirms the efficacy and safety of a vaccine in large numbers of trial subjects, drug companies will now be required to monitor trial participants for an average of two months before clearing the drugs for mass use, according to a report in the Washington Post. Nine vaccine candidates are now in so-called Phase 3 studies: the latest and largest stage of human testing before market approval, with pivotal data for at least three of these candidates expected within the next two months.
The FDA’s action is designed to safeguard the integrity of the process and protect populations, given the extraordinarily accelerated timescale of the trials. Its caution is understandable: a vaccine is the closest thing the world has to a silver bullet for coronavirus and has generated a vast amount of hope and many billions of dollars of investment, and the agency itself has been subject to considerable political pressure to push approvals through. But the move seems calculated to enrage President Trump, who has been promising a vaccine will be ready “within weeks” and who seems to be counting on an approval in time for the November 3 US elections.
The UK government, responding to a new wave of coronavirus infections, on Tuesday attempted to walk an agonising tightrope between putting the lid back on exponential new growth without stifling a nascent recovery by forcing new restrictions on behaviour.
The UK recorded just under 5,000 new infections on Tuesday. Coronavirus deaths in England and Wales, having stayed low for the past five months, are now on the rise, according to the Office for National Statistics.
Prime Minister Boris Johnson and his government have been pulled in multiple directions. Scientific advisers had lobbied for the imposition of tougher rules. Some had suggested a so-called “circuit break” – a short national lockdown – was needed to curb the spread of the virus. Scotland and Northern Ireland have now already banned mixing between households.
But Johnson faces a revolt within his own Conservative party if he goes too far: his Chancellor of the Exchequer, Rishi Sunak, has warned of the risks to businesses of this approach, while the powerful backbench 1922 Committee has warned it plans to oppose what it calls “government by diktat” in the form of restrictions on civil liberties.
On Tuesday, Johnson gave a televised address, consciously channelling wartime leader Winston Churchill, in which he said the UK was at a “perilous turning point” and warned of six months of pain for citizens. The government has now effectively reversed an earlier push to get people back to their offices and to restimulate consumption by incentivising them to eat and drink in pubs, now stating that people should work from home where they can. The government has also toughened sanctions on those who don’t wear face coverings and required pubs to close by 10pm.
Johnson said on Tuesday that the goal of the new rules is to avoid a “second national lockdown”. Nevertheless, no-one is quite convinced by this. The latest compromise may seem a British fudge: neither tough enough to reassure the scientists he is stamping down sufficiently hard on the virus nor providing the support needed for business to alleviate economic concerns. And once again, the British public is confused by what is allowed and what is not under the new rules.
Further economic stimulus could be on the way, however, in the US and in other parts of the world. In testimony before Congress on Tuesday, Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell hinted at further support for small businesses. The Financial Times reported that UK Chancellor Sunak was drawing up new plans to subsidise the wages of British workers when the government’s furlough scheme ends in October.
Markets responded positively, with the S&P and Dow closing up Tuesday, although the FTSE-100 has yet to claw back losses after a sharp fall on Monday.
WHAT ARE COMPANIES SAYING?
Consumer & Retail
PZ Cussons has said that sales of its Carex hand sanitising gel have soared as consumer demand wanes for its Imperial Leather soap and Original Source shower gels, highlighting changing consumer habits following nationwide lockdowns. The consumer goods group reported on Wednesday that, along with a poor performance in the Nigerian market, high demand for Carex, which constrained the output of shower products, dragged adjusted profit before tax 14.3 per cent lower to £62m in the year ending May. Caroline Silver, chairman, said: “we saw extraordinary outperformance for Carex in the final quarter tempered with very difficult conditions in beauty, both as a result of the coronavirus pandemic.” Strong sales of Carex in the UK, where it accounts for 40 per cent of hand sanitiser sales, helped to perk up results in the first three months of its financial year to the end of August. Revenue grew to £158.1m, up 19 per cent on a reported basis compared with the same period a year earlier. But PZ Cussons warned of volatility in the months ahead, with the coronavirus crisis and its aftermath having an impact on sales of its personal care, home care and beauty products. “The environment continues to remain volatile in our markets with adverse economic headwinds in the UK, Nigeria, Australia and Indonesia,” the company said. “Competition remains strong [in the hygiene sector] in addition to Covid-19 related risk of volatility in our supply chain.” The company lowered its full-year dividend to 5.80p a share to give it room to invest in new opportunities related to hygiene.
Nike’s sales returned to growth in Europe as initial shutdowns from the coronavirus pandemic abated, though the world’s largest sportswear maker by revenue reported continued declines in its core North American market and its wholesale business. Nike said virtually all of its owned retail stores across the world were open in its most recent three month period ended in August, though “we continue to experience year-over-year declines in physical retail traffic across the marketplace due to Covid-19 impacts and safety-related measures.” Those challenges amounted to a slight decline in overall revenues to $10.6bn, down 1 per cent from the same period a year ago, while net income rose 11 per cent to $1.5bn. Both figures exceeded Wall Street expectations of $9.2bn and $760m, respectively, according to analysts polled by S&P Capital IQ. Nike shares rose nearly 8 per cent in after-hours trading on Tuesday to $126. Nike’s business in two of its most competitive regions, greater Europe and greater China, had revenue gains during the period, with growth of 5 per cent and 6 per cent, respectively. Sales in Nike’s home market of North America, its largest by revenues, fell 2 per cent to $4.2bn. The company also reported double-digit growth in its direct-to-consumer sales.
The pub chain has warned employees working at its airport sites that up to 450 jobs could go. John Hutson, chief executive, has written to 1,000 staff at Gatwick, Heathrow, Stansted, Birmingham, Edinburgh and Glasgow airports to alert them that 400 to 450 positions were at risk of redundancy. It is the first time the chain has made pub workers redundant, although six weeks ago it announced between 110 and 130 head office cuts. Hutson said: “The decision is mainly a result of a downturn in trade in these pubs, linked with the large reduction in passenger numbers using the airports.” He said that “no firm decisions have been made at this stage” and that the company would listen to suggestions from staff to help avoid or reduce the number of compulsory redundancies.
AG Barr hopes to resume dividend payments next year although the soft drinks group has written down the value of its Strathmore water brand by £10 million. The one-off charge plus £1.5 million for restructuring dragged down pre-tax profit by 62 per cent to £5.1 million in the six months to the end of July. On an underlying basis pre-tax profit was £16.6 million, compared with £13.9 million, in spite of a 7.2 per cent fall in revenue to £113.2 million. The shares closed up by 43¼p, or 11.6 per cent, to 415¾p, as analysts suggested that AG Barr performed better than anticipated. The FTSE 250 company has its headquarters in Cumbernauld, North Lanarkshire, and produces brands such as Irn-Bru, Rubicon and Funkin cocktail mixers. Roger White, chief executive, said sales to the hospitality sector had collapsed during the lockdown but improved supermarket sales partially offset that.
Europe’s biggest travel group has warned that with the choice of destinations largely dependent on government policy on the coronavirus, the trading backdrop was likely to remain volatile “for the next few quarters”. Tui Group, which is cutting 8,000 jobs as part of a €300 million cost-saving programme, said that, having successfully restarted operations in mid-June, carrying 1.4 million customers, it had been affected by “continuous changes in travel advice by various governments across our markets”. It said it had responded by “remixing and trimming” its capacity in the fourth quarter from 30 per cent to 25 per cent, diverting holidaymakers to “alternative low-risk destinations”. Fritz Joussen, Tui’s chief executive, said: “We expect travel advice . . . to remain highly fluid, and we subsequently expect short-term bookings to continue until customers are able to plan with more certainty.” He called for a regional risk assessment policy to be applied by each government rather than a blanket travel policy and for Covid testing to be made more widely available on arrival and departure. “This would also help to avoid compulsory quarantine and movement restrictions.”xx
The airline is terminating its 30-year sponsorship of Australia’s national rugby union team, plunging the sport’s finances into a deepening crisis. It said today that it had no choice but to reduce the cash cost of its five main sports sponsorship to zero, as it dealt with the fallout from the pandemic. Stephanie Tully, Qantas chief customer officer, said: “In an environment where thousands of our people have lost jobs and thousands more are stood down while they wait for flying to restart, we can’t maintain these sponsorships in the way we have in the past…while we’re dealing with this crisis and its aftermath, the cash cost of our sponsorships has to be zero.
Aeroflot said it would restore some flights between Moscow and destinations in Asia from this week. The Russian airline will begin service to Bishkek in Kyrgyzstan on Wednesday, and Nur-Sultan, formerly Astana, in Kazakhstan on Sunday. The carrier would also restart a weekly service to Seoul next week, spokeswoman Olga Kuzmina said. Aerofolot suspended regular international air services in late March in a bid to curb the spread of coronavirus. Flights to the UK and some European nations such as Switzerland and Turkey have been gradually resumed since August 1.
The technical products and services provider, is to buy Windy City Wire Cable and Technology Products to extend its presence in the United States, and will resume dividend payments. In a stock market announcement after the close of trading yesterday, the company said it will fund the deal, valued at up to £357 million, by a placement of up to 10 per cent of Diploma’s share capital and with new debt facilities. The acquisition of the US-based wire and cable distributor is expected to enhance Diploma’s earnings from the first year. Diploma, which had suspended its interim dividend in May, also recommended a payment of 30p per share for the year to the end of September. It said the price at which the shares are placed will be determined at the close of the bookbuilding process. In London the shares closed down 10p, or 0.6 per cent, at £17.11, valuing it at £1.9 billion.
Financials & Real Estate
Brookfield is planning to cut one in five jobs at its 2,000-person retail unit and dispose of an undisclosed number of properties as part of a drastic overhaul that underscores the damage the coronavirus pandemic has wrought on one of the largest US operators of malls. In an email to staff, reviewed by the Financial Times, Jared Chupaila, Brookfield’s retail chief executive, said job cuts at head office and in the field were necessary “to align with the future scale of our portfolio”. The Canadian asset manager revealed in June that it had collected only 35 per cent of the rent due on its retail properties in the second quarter, as some retailers filed for bankruptcy and others took an assertive stance with landlords.
TransferWise doubled profits in the last financial year and said it had continued to grow in 2020 despite the “volatility” brought by the coronavirus pandemic. The 10-year-old money transfer company has expanded rapidly since co-founders Kristo Käärmann and Taavet Hinrikus started it as a way to reduce the fees they paid to move funds between London and their native Estonia. In the 12 months to March 31 it reported a pre-tax profit of £20.4m, up from £10.1m in the previous year. Revenues rose 70 per cent to £302.6m.
Fujifilm Holdings disclosed trial data today that showed its anti-flu drug was effective in reducing Covid-19 symptoms, raising hopes for regulatory approval of the treatment in Japan. The positive results came after the Japanese government, despite its early enthusiasm for Fujifilm’s favipiravir, was forced to delay the drug’s approval in May following a disappointing showing from another trial. In a statement, Fujifilm said a Phase 3 trial of 156 patients showed that those treated with the drug, sold under name Avigan, showed improved symptoms after 11.9 days. That compared with 14.7 days for the control group, which received a placebo. Shares in the Japanese group briefly rose 4.5 per cent following the announcement. Fujifilm, which produces Avigan through its pharmaceuticals unit, is also conducting a Phase 2 trial in the US, but the company plans to apply for regulatory approval of the drug for coronavirus treatment with the latest trial results in October.
IN THE NEWS
Sunak draws up new plan to subsidise workers’ wages – Financial Times
House visits might need to be banned, says Chris Whitty – The Times