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The future of the health care sector – the analyst view
Laura Nelson Carney
Equity Investment Analyst
KEY TAKEAWAYS
  • The health care intervention ‘weapons’ that we potentially have to fight the COVID-19 virus might build in waves – Q2 2020 test and trace, H2 2020 repurposed therapeutics and prophylactic antibodies, 2021+ vaccines.
  • Biopharma may be more resilient than many other sectors during and beyond the pandemic – it is part of the solution both directly and indirectly.
  • Looking further ahead, the strongest biopharma companies might get stronger.

 


Can you give us an update on the knowns and unknowns of COVID-19?


SARS-nCoV2, the novel virus that causes the COVID-19 disease, is a novel pathogen that’s never before seen in humans. We have so far seen over 3.6 million known cases worldwide, with over 258,000 deaths1.


It is a highly infectious virus that has jumped to humans from other species (most likely bats via another intermediate species, maybe pangolins). Transmission rate, also known as basic reproductive rate or R0, estimates initially ranged from 1.5 to 4.5 – which putting into context is high, but not as high as viruses we’ve seen in the past (e.g. Measles:15; MERS: 5, Spanish flu & Ebola: 2). The primary goal in the public health response is to reduce the transmission rate to less than one, so that each infected person infects fewer than one other person.


The incubation time for the virus appears to vary widely between 2 to 14 days, with an average of around five to seven days. Some outliers have been reported of up to three to four weeks.


The period of infectiousness – from when a person contracts the virus and can pass to another – begins a few days before symptoms appear. This means that people can transmit the virus to others before realising they are infected themselves. The peak period of infectiousness typically lasts around a week but can be longer. Some people can become precipitously ill but others can experience no symptoms (or symptoms so mild that they don’t notice) and can still transmit the virus asymptomatically.


The attack rate – which refers to the proportion of a given population that becomes infected – varies a lot by geography and with the government’s responses. For example, we have seen rates of 2-5% in some parts of the US, and while the latest data indicates that 20% of New York City has been infected so far, the World Health Organisation’s latest estimates show that 2-3% of the Earth has been infected.


There is still a lot that we don’t know, such as whether antibodies generated against the virus will confer immunity, how long that immunity will last, whether there is any cross protection in people recently infected with other (common cold) coronaviruses, or why children respond differently to the virus (they tend to be less susceptible with milder symptoms, but just as infectious as adults).


We also don’t yet know which potential therapies or combinations will work best to slow down the virus.


 


What are the major types of testing for COVID-19 infections?


There are two major types of test. The first is molecular tests -- viral nucleic acid (RNA) test that identifies current infections. There can be very high throughput of the tests when run on large automated machines in central labs (4,000+ tests per day) or lower throughput and rapid readout with small machines at point-of-care. Testing capacity, however, remains a key constraint in many places. The accuracy of these tests varies widely. There are 100+ test kits on the market and many labs have developed their own ‘home brew’ tests.


The US is targeting carrying out three million tests a day by the end of June, with 20 million by the end of July. This seems very ambitious, and it is not clear whether this will be achieved.


The challenges of these tests are persistent shortages of consumables needed (swabs, sample collection vials, reagents), and manufacturing capacity of test kits cannot ramp up fast enough.


The second type of test is serological tests -- antibody test that detects antibodies in blood of people who are recovering from or have already recovered from COVID-19 (but it cannot identify new infections). This type of test helps to understand who may be immune and the proportion of the population that has already been infected. Again, the quality of these tests varies widely. It’s not known what level of antibody titer indicates immunity or how long immunity lasts.


There is a third type of tests called antigen tests, which detect bits of viral protein to identify current infections. They are newer, but the first one received US Food and Drug Administration’s emergency use authorisation last Friday, and can be faster, cheaper and easier to run than viral RNA testing.


1. Data as at 6 May 2020. Source: Bloomberg


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Laura Nelson Carney is an equity investment analyst with seven years of industry experience as of December 31, 2019. She holds a PhD in neurosciences from Imperial College London and a bachelor's degree in human biology from Stanford University.


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