Vaccine Research & the Stock Market
There has significant progress towards a COVID-19 vaccine over the last week, with both Moderna and Pfizer reporting promising clinical trials.

The market responded positively to these results as a whole, but some companies (i.e. Zoom) suffered significant losses after the announcements. Vaccine research is sure to continue to have a huge impact on the stock market over the coming months, and there will be clear winners and losers if the pandemic is eventually ended.

In this newsletter, we'll be taking a closer look at the companies leading the way in vaccine development, and introducing a data-driven approach for predicting how companies and sectors will respond to a "return to normalcy".
Research Progress
Here's a brief summary of the companies leading the way in vaccine research, their progress, and how their stock has responded to key events:

Pfizer / BioNTech

Some of most promising news to date has come from American pharmaceutical company Pfizer and the German biotechnology firm BioNTech. On November 9, the partnership announced that their vaccine candidate is 90% effectiveness. There are still many questions around how long immunity will last, distribution logistics, how the vaccine will behave in the “real world,” and how the vaccine performed in more vulnerable populations (i.e., the elderly or people with co-morbidities).


Exactly one week after Pfizer and BioNTech announced the effectiveness of their candidate, Moderna broke the news yesterday that their own vaccine is 94.5% effective. The first U.S. company to begin human study of its vaccine, Moderna is employing a  messenger RNA technology which can deliver a vaccine faster than traditional methods. As a result, the stock has been a favorite throughout the pandemic, and the company is viewed as one of the most likely to put out an effective vaccine. Shares jumped on yesterday's announcement, following a steady climb in recent days on the expectation of the just-released news.


After pausing trials on September 8 due to an unexplained neurological illness in a study participant, AstraZeneca has resumed Phase 3 and expects results later this year. The company is working on a non-replicating viral vector vaccine in partnership with Oxford University. The study resumed in the U.K. on September 14, and the FDA gave approval for U.S. trials to resume on October 23. 


One of the first companies to begin working on a coronavirus vaccine, Novavax saw its shares climb substantially in late May after receiving a generous grant from the Coalition for Economic Preparedness Innovations. In late July, the share price climbed yet higher after the U.S.  government pledged support to the tune of $1.6 billion to fund late-stage testing and to buy 100 million doses.

Johnson & Johnson

J&J announced in late January that they would be pursuing a COVID vaccine, initially expecting to begin clinical study in September but achieving that milestone much earlier in late July. The company sets itself apart from other firms in the vaccine race by aiming for a one-shot vaccine, and data released in September indicated that this goal may be possible. On October 12, J&J paused its trial following an unexplained illness in a study participant. On October 23, the study resumed after an independent monitoring board found no evidence to connect the vaccine to the participant’s illness.

GlaxoSmithKline / Sanofi

GlaxoSmithKline and Sanofi have partnered up to commit to delivering 200 million doses of an adjuvanted, recombinant protein-based COVID-19 vaccine. The first supply is expected in the first half of 2021; and, while they won’t be the first on the scene with an effective vaccine, they could play an important role in global distribution. 
Market Impact
As a whole, the stock market is almost certain to respond positively to an effective vaccine and a "return to normal". However, there are some companies that have thrived due to COVID-19 lifestyle changes, and may suffer if social distancing and working-from-home become less necessary.

To quantify how different companies and sectors would be affected, we drew inspiration from "COVID-19 Beta" (Reasonable Deviations, Robert Martin).

By regressing a company's daily stock returns against market price changes and daily changes in COVID-19 cases, we can quickly estimate how much they have been hurt (or helped) by the pandemic. A higher COVID-19 Beta value suggests that a stock responds positively to increases in case counts, while a negative value implies that they have been hurt by the pandemic's spread.

With this data, we can create a heatmap to quickly find outliers and visualize trends across industries. Click here to see the full interactive heatmap.
Many of the trends in the data are fairly unsurprising. For example, e-commerce companies (such as Amazon and Alibaba) show much higher COVID-19 Beta values than more traditional retailers (such as Walmart and Home Depot).
There are also some surprises. Zoom is one of the clearest examples of a company that has benefited from the pandemic, yet they have a very neutral COVID Beta. Daily new cases isn't a perfect proxy for the expected length or severity of the pandemic, which could be an explanation for these anomalies.
Although this method doesn't fully account for forward-looking expectations, it still serves as an effective starting-point for quantifying how companies and sectors have been affected by the pandemic's spread.

This data can be useful for managing your portfolio's exposure to COVID-19, and also finding new investment ideas based on your views on the vaccine timeline.
Visit our COVID-19 Beta Dashboard to find the Beta values for specific stocks, and see who could stand to be the biggest gainers and losers from an effective vaccine and an end to the pandemic.
See COVID-19 Beta Dashboard
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