By Powerscourt on 29/09/2020

Powerscourt Coronavirus Briefing – 29 September 2020


As drug developers and governments have joined the race to develop a coronavirus vaccine, it was always apparent that not all of these candidates would make it to the finish line.

On Monday the collapse in the stock price of one company pursuing a promising candidate demonstrated how much money is at risk in the coronavirus vaccine gold rush, and how betting on biology is a high-stakes game.

Inovio Pharmaceuticals, a US developer, said it had put a late-stage trial for a COVID-19 vaccine on hold after the US Food & Drug Administration had asked questions about the way the company planned to deliver the vaccine to trial subjects.

Inovio’s stock plunged by nearly 40% on Monday. The company plans to restart the trial subject to resolving the FDA’s concerns in October, but clearly investors, regulators and potentially patients, were rattled.

Like many other biopharmas, Inovio was no doubt torn between optimism about the potential for its vaccine candidate which saw investors pile in and the caution which clinical trials require.

It isn’t alone. AstraZeneca has already had to halt its vaccine trial  (since partially restarted) due to safety concerns. There are reports that more than 60 different researchers have written to pharma giant Pfizer Inc to warn it to take its time in publishing its own vaccine trial data.

They want the drugmaker, whose vaccine candidate is among the most advanced in development, to wait at least two months after all participants in its trial have received the last dose of the experimental vaccine before publishing data. Pfizer has indicated that pivotal data from the trial will be available in October.

The global death toll from coronavirus has passed one million, John Hopkins University, which is tracking the virus confirmed, and researchers warned that the true death toll is likely significantly higher.

But a new COVID-19 test which diagnoses the disease in minutes and costs under $5 a test, is a “major milestone”, according to the World Health Organisation. 120 million of the tests, produced by Abbott Laboratories and SD Biosensor, will be rolled out around the world with the support of the Bill & Melinda Gates Foundation, the WHO said. Many countries have struggled to roll out effective testing regimes for the virus.

The UK government’s increasingly onerous restrictions on its citizens to control the spread of the virus have provoked some of the Conservative Party’s backbench supporters into a revolt. Now, just as he most needs support, Prime Minister Boris Johnson is facing a backbench revolt from more than 80 MPs angry at the feeling that they have been sidelined by the Government.

The MPs, led by the Chairman of the backbench 1922 Committee Sir Graham Brady, are angered by the increasingly arbitrary nature of some of the restrictions imposed. These include significant penalties for failing to self-isolate and fines on pubs for playing music too loud.

With the UK’s daily infection rates over 4,000, further restrictions have been imposed upon parts of the country, angering politicians and leaders particularly in the North of England. Three more universities, in Aberystwyth, Exeter and Belfast, have asked students to self-isolate following coronavirus outbreaks.




Consumer & Retail

The food-on-the-go retailer announced its Q3 trading update and reported since reopening on 2 July like-for-like sales in company-managed shops have averaged 71.2% of the 2019 level in the 12 weeks to 26 September.  In the most recent four weeks to 26 September like-for-like sales in company-managed shops have averaged 76.1% of the 2019 level. With business activity levels remaining below normal for the foreseeable future, Greggs is now proposing a series of changes which are the subject of a collective consultation with union and employee representatives with the aim is to minimise the risk of job losses by negotiating reduced hours in our shops. 

Hotel Chocolat
The British chocolatier reported revenue was up 3% to £136.3m but H2 revenue was down 14% due to the pandemic. Stores typically generated 70% of its revenues so closure especially over Easter had a big impact. Post tax loss was £6.5 million (2019: £10.9m profit).  Group trading is in line with management expectations for the first 12 weeks of FY21, with digital demand up over 150% on the comparable period in the prior year. 

Card Factory 

The retailer of greeting cards announced its interim results today which saw HY21 revenue down from the prior year at £100.5m (HY20: £195.6m). However it had seen a strong online performance with +64.4% like-for-like revenue growth. In terms of outlook, Card Factory said it had “better than expected trading in stores since reopening” with transaction numbers continuing on an improving trend since the period end and with LFL down only 6.9% for the 4 weeks to 20 September 2020

Unilever updated on the new structure to its shareholder meetings and announced changes to the anticipated timetable for implementation of the cross-border merger to make the company a UK Plc. These changes are a result of restrictions on the availability of UK High Court hearings owing to the ongoing COVID-19 pandemic. As a result, and subject to the UK High Court’s approval, the Cross-Border Merger is expected to become effective on 29 November 2020.

The Financial Times reported that Boots is facing accusations of using the UK’s moratorium on evictions during the pandemic as cover for aggressive lease renegotiations. Although the high street pharmacy chain kept most of its more than 2,000 stores open throughout lockdown, it is withholding rents and service charges, according to several landlords.

LMVH called Tiffany’s propects “dismal” after its performance during the pandemic, according to a new lawsuit by the group. The Financial Times reported that LVMH argues that Tiffany’s decisions to slash capital and marketing investments, take on additional debt and pay cash dividends despite the pandemic have made it a different business from the one it had agreed to buy. LMVH launched the lawsuit late on Monday in a 97 page court filing as it sought a judge’s blessing to abandon the deal. 



The leading specialist distributor of plumbing and heating products announced its FY results and reported that ongoing revenue was 2.0% ahead of last year with continued market share gains in the US. Pre-tax profits were $1.37 billion, down from $1.41 billion, in the 12 months to the end of July. Revenue over the same period decreased to $21.8 billion, down from $22 billion. It announced it would resume its dividend payment as it had “better than expected trading.”  Bill Brundage, current CFO of Ferguson Enterprises to succeed Mike Powell as Group CFO on November 1, 2020.

Cairn Energy
Cairn Energy said that “the impact of COVID-19 has been managed safely across the business” in its Half-Year report. During H1, Cairn saw strong production from its UK assets, generating oil and gas sales of US$172m and cash inflows from oil and gas production of US$132m.  Cairn said its “exit from its interests in Norway and Senegal, together with swift re-alignment of its capital programme in early 2020, has given the Group strategic flexibility at a vital point in the commodity and industry cycle” and was “strongly positioned to capture further opportunities for near term development, growth and cashflow.”


Financials & Real Estate 

Amigo Holdings
The leading provider of guarantor loans in the UK will hold its AGM today. Roger Lovering, Acting Chair, said that “trading since the end of the first quarter of the financial year has been in line with management expectations.” As at the end of August, Amigo approximately 41,000 customers on Covid-19 related payment holidays with 9,000 customers having returned to making regular payments and over 3,000 having repaid their loan in full. Cash collection remains robust at over 80% of pre-Covid-19 expectations. 

The largest listed residential landlord, today provided a trading update which pointed at strong rental growth (3.0% year to date) and 95% cash collections on time.  By adopting innovative approaches in routes to market, Grianger said it was able to continue with property sales throughout lockdown and have delivered sales profits consistent with prior year.

AA said it was reiterating its full year guidance of delivering a robust performance in FY21 (year ending 31 January 2021), only slightly below that of the prior year, demonstrating its “confidence in our resilient and flexible business model.” Revenue stood at £478m, a 2.6% decrease from the previous year but pre-tax profit slipped 38.2% to £26m (2019: £42m). As part of the refinancing process the Group is continuing to progress discussions with TowerBrook Capital Partners and Warburg Pincus International regarding a possible takeover of the breakdown group. The deadline for the Consortium to make a decision has been extended to 27 October 2020.

The insurer made a statement regarding appeal of the FCA’s business interruption test case which said that it had followed the necessary procedure to seek permission to appeal the court’s findings in the FCA’s recent business interruption test case at the Supreme Court. RSA said it understood that the FCA and other insurers who were party to the court case have also filed similar applications, the deadline for which expired yesterday. A court hearing in relation to these applications will take place on 2 October. 

The insurer provided an update on the UK insurance industry test case on the contractual interpretation of business interruption wording in certain UK property insurance policies.  It said that the FCA and the Insurers agreed to explore the possibility that the Test Case would be suitable for a so-called ‘leapfrog’ appeal direct to the Supreme Court to ensure an expedited resolution of any appeal. In order to preserve the ability of any appeal to proceed straight to the Supreme Court, Hiscox, together with certain other Insurers and the FCA, has taken the necessary procedural step of applying to the High Court for a leapfrog certificate before yesterday’s statutory deadline for doing so had passed. However, Hiscox has not yet made a decision on whether it will seek to appeal.



Johnson to outline new measures to retrain unemployed – Financial Times 

U.K. Set for Tax Hikes as IFS Sees Bigger State Outlasting Covid – Bloomberg

Coronavirus: Household mixing in any setting made illegal in North East as cases continue to rise ‘sharply’ – Sky News