Powerscourt

By Powerscourt on 01/10/2020

Powerscourt Coronavirus Briefing – 01 October 2020

ANALYSIS

Vaccine development, until recently a sleepy backwater of the multibillion dollar pharmaceutical industry dominated by more lucrative areas such as oncology, has suddenly become the focus of a huge international arms race, with nation states scrambling to be first to the finish line and using vaccines as tools for diplomacy and propaganda.

President Trump, heading towards a Presidential election on November 3, has used the prospect of a vaccine approval as an explicit part of his campaign, and has put relentless pressure on drugmakers and regulators to see that a vaccine gets approved in time, allegedly with little regard to what the scientists say.

Now the industry, in all its forms, is making it clear scientific credibility will take precedence over the political imperatives of the US or any other world government.

Yesterday Stephane Bancel, the CEO of Moderna Therapeutics, the developer of one of the most advanced vaccine candidates, said his company wouldn’t be able to apply for authorisation until at least November, more likely January, making a vaccine unlikely for widespread use in the US before March. His comment directly contradicts statements by President Trump, who said on Tuesday at the Presidential candidates’ debate the vaccine could be available as early as November 1.

Separately, Reuters reported that the US Food & Drug Administration has widened the scope of an investigation into another late-stage vaccine study, by UK drugmaker AstraZeneca. The trial was paused earlier this month after a participant fell seriously ill. Although the trial has now restarted in the UK, the FDA continues to have concerns, the story says, and will look at historical trial data.

The head of the FDA, Stephen Hahn, told a biopharma conference on Wednesday he didn’t know when a vaccine would be ready. This was seen as a coded pushback to the Trump administration. Dr Hahn was excoriated by scientists in August over the agency’s accelerated and apparently politically driven approval of convalescent blood plasma from COVID-19 patients in the treatment of coronavirus.

It isn’t just in America where scientists are increasingly at loggerheads with politicians. in the UK, scientific advisers to the government have been accused of stoking fear in the population.

Yesterday the Prime Minister hosted a briefing in Downing Street where his medical and scientific advisers, Professor Chris Whitty and Sir Patrick Vallance, warned that the UK had so far failed to slow the second wave of the virus, as the government continued to push people to adhere to the new rules. “We don’t have this under control at the moment… there’s no complacency at all,” Sir Patrick said.

The UK government faces a revolt over the lack of parliamentary oversight into coronavirus legislation from powerful members of its own party, and as confusion grows among the public about the rules – a situation not helped by pictures that emerged showing the Prime Minister’s own father shopping without a face-covering.

A study by Imperial College London, published on Thursday, appears to suggest the growth in coronavirus cases in the UK may be slowing down since the government’s latest intervention. And there is some evidence that the most recent wave of infections has a more localised focus. Governments across Europe hope that a more tactical, regional strategy will be effective, ending the need for the unwieldy national lockdowns which crippled economies early this year: Spain has put Madrid into lockdown, with citizens restricted from travelling outside the area. Marseilles, France’s second city, has closed bars and restaurants for a fortnight.

In the US, Oscar-winning film directors have joined forces to appeal for financial help for the beleaguered movie industry.

James Cameron, Clint Eastwood and Martin Scorsese joined other industry leaders writing to Congress, warning that without funds, “theaters may not survive the impact of the pandemic”. The letter was signed by more than 70 directors and producers along with the National Association of Theater Owners, the Directors Guild of America and the Motion Picture Association.

Shares on most global indices closed up on Wednesday but Asian markets were lower into Thursday.

 

WHAT ARE COMPANIES SAYING?

 

Industrials 

United Airlines 
A day before airlines enact mass furloughs, United Airlines has said it will borrow $3bn more from the US government than previously anticipated. The Chicago airline plans to seek up to $7.5bn in loans from the US government, according to a filing on Wednesday evening with the US Securities and Exchange Commission, a 67 per cent increase on the $4.5bn in funding it originally targeted. United plans to offer slots, gates and routes as collateral for the loan from taxpayers, the filing said. The government also will receive warrants in the company, or the right to buy stock in the airline at a predetermined price. Lawmakers approved a $50bn bailout for the airline industry in March as part of the larger US Care Act. Half came in the form of grants and loans with 1 per cent interest to support airline payrolls. The other half came in the form of collateral-backed loans. On October 1, airlines are free of legislative restrictions that prevent them from furloughing employees. United, along with American and aviation unions, has been lobbying without success for a six-month, $25bn extension of the payroll support program.

Rolls-Royce
The Chief Executive of the multinational aerospace company has warned that the ongoing closure of borders and grounding of flights represent a danger of long-term damage to society, the global economy and even peace. In an open letter, he said “aviation connects and unites people, cultures and businesses, providing the lifeline of international trade, supporting development, education and global economies” adding that “aviation safeguards global peace and stability. It underpins the multilateralism, diplomacy and conflict resolution that many have taken for granted in the latter part of the 20th century”. He also warned that a “prolonged economic malaise will leave governments and businesses on a weaker footing to address the most pressing issues”

Smith & Nephew
Smith & Nephew said it expects third-quarter underlying revenue to decline by 4%. The orthopaedic, sports injury and wound management group said it was a significant recovery following an overall underlying revenue decline of 29.3% for the second quarter. Orthopaedics saw the strongest improvement thanks to global levels of elective surgery slowly returning to pre-pandemic figures. Monthly group growth rates were broadly stable through the quarter, with some seasonality and monthly variation across both franchises and regions, reflecting the continuing impact of COVID-19.

 

Financials & Real Estate 

TSB
TSB is to cut one seventh of its workforce and close a third of its branches in a drastic move to adjust to changing customer behaviour and the headwinds created by the pandemic. The bank said it was shedding 969 jobs and shutting 164 branches, with Debbie Crosbie, chief executive, announcing it was necessary to accelerate a three-year cost cutting plan first announced in November. The job cuts were mainly in branches now earmarked for closure, although these would be partly offset by the creation of some new jobs. Most of the reductions would be met by voluntary redundancy, it said. The closures will bring the branch network down to 290 by next summer, which compares with more than 630 seven years ago. The bank is already in the throes of a programme to close 82 branches by the end of this year.

Burford Capital
Litigation funder Burford Capital said the business had been “tested in the first half of 2020 by a historic global economic downturn”, causing double-digit declines in income and profit at its half-year point. The funder — which was the most valuable company on Aim before an attack from short seller Muddy Waters — said profit before tax fell by 15 per cent in the six months to June to $197.8m. “Unsurprisingly, in a world buffeted by Covid-19 and its ensuing consequences, while our team and operations have been largely unaffected, new business declined,” said chief executive Christopher Bogart. The funder said lockdowns impacted new business, with group wide commitments — that is, money to invest — down 74 per cent to $195m and deployments 42 per cent lower at $258m. Burford said it was expecting a “significant increase in disputes” at a later stage of the economic recovery as businesses fought over the fallout from Covid-19. The funder also reported a rise in cash on the balance sheet and a better mix of income, relying less on its “Petersen claim” against Argentina over nationalised oil company YPF which the company has sold interests in for cash. Realised gains, or cash from completed investments, from litigation finance and asset recovery matters were up 57 per cent to $183m.

 

IN THE NEWS

Johnson ‘will not hesitate’ to impose more virus restrictionsFinancial Times

Coronavirus could be contained locally, says chief medical officer- The Times

UK seeks to avoid national lockdown to stop unemployment in millions, minister says – Reuters




DAILY CORONAVIRUS BRIEFING - How business is responding to the crisis MENU