Pfizer and BioNTech make breakthrough with coronavirus vaccine

• Pharmaceuticals firms Pfizer and BioNTech say their vaccine candidate has been found to be ‘more than 90% effective in preventing Covid-19’ during an ongoing Phase 3 clinical trial
• The trial will continue but the pair could gain emergency approval for the vaccine, if successful, before the end of this month and 50 million doses could be ready to go before the end of 2020
• Pfizer and BioNTech shares surge, with the news providing a major relief to financial markets
• The stocks that have been hardest-hit by the pandemic this year, such as airlines and pubs, record the biggest gains on the back of the news

Breakthrough for Pfizer and BioNTech vaccine candidate

Pfizer and BioNTech have provided the first glimmer of hope that the world could have a vaccine for the coronavirus after announcing its candidate was found to be ‘more than 90% effective in preventing Covid-19’.

‘Today is a great day for science and humanity. The first set of results from our Phase 3 Covid-19 vaccine trial provides the initial evidence of our vaccine’s ability to prevent Covid-19,’ said Albert Bourla, chairman and chief executive of Pfizer.

‘We are reaching this critical milestone in our vaccine development program at a time when the world needs it most with infection rates setting new records, hospitals nearing over-capacity and economies struggling to reopen. With today’s news, we are a significant step closer to providing people around the world with a much-needed breakthrough to help bring an end to this global health crisis. We look forward to sharing additional efficacy and safety data generated from thousands of participants in the coming weeks,’ he added.

The news sent both share prices higher, with Pfizer shares surging over 14% while BioNTech shares climbing 4.6%.

What has Pfizer and BioNTech achieved?

It is nothing short of impressive that this much progress has been made in just ten months. This is certainly a breakthrough in the fight against Covid-19, but the vaccine is not yet over the finish line.

The vaccine candidate, named BNT162b2, is currently undergoing a Phase 3 trial - the last and hardest stage of the testing process to complete. The trial started on 27 July and involves over 43,500 people, all of which have not had Covid-19 before. They were given the candidate and 90% of them were protected from the virus within 28 days of having their second dose, with just 94 of them having a confirmed case of Covid-19 so far.

The two companies said they will continue with the trial until it has analysed 164 confirmed cases, and explore if it can be used to help people who have already had Covid-19 to prevent them from catching it again.

The trial is regarded as comprehensive considering 42% of participants in the trial are of ‘racially and ethnically diverse backgrounds’, addressing concerns that the virus could pose a bigger threat to certain people.

Will the world have a vaccine in 2020?

The vaccine candidate is one of many that governments hope to fast-track approval for using emergency powers, and Pfizer and BioNTech have said they will be in a position to publish the data needed to get the green light from the US Food & Drug Administration ‘by the third week of November’.

Although the candidate could be the first widely accepted vaccine to be approved, the trial will continue to monitor participants for the next two years to ensure it is safe over the long term. Meanwhile, the pair are drawing up plans to outline how the vaccine will be produced if its approved.

Ultimately, if everything goes to plan, the pair are hoping to produce up to 50 million doses of the vaccine by the end of 2020, before raising the stakes by producing 1.3 billion doses in 2021. It is important to remember that the trial suggests people will need two doses of the vaccine for it to work, meaning there is only enough capacity at present to potentially treat around 650 million people by the end of next year.

Vaccine hopes prompt surge in hardest-hit stocks

Today’s news provides a major shift in focus for investors, with the prospect of a swift vaccine seemingly setting a vague finishing line for this crisis. While it could take some time to vaccinate a huge swathe of the global population, there is the hope that this breakthrough could help avoid any further lockdowns and allow businesses to return to some sense of normality.

A quick look at today’s top performers serves to highlight the sectors which are particularly interesting for the coming months, with traders finally happy to jump into sectors which have been the focus of selling pressure throughout this crisis. The top performers Rolls-Royce, SSP, Cineworld, IAG, Carnival, and easyJet are a who’s who of 2020 underperformers. It seems traders are now seeking out those stocks that have been hit the hardest in the hope they will be able to claw back those losses in the coming months. Particular areas of focus are travel (both land and air), services (cinemas, pubs, restaurants), and bricks and mortar retail.

Travel stocks come back into play: technical analysis

Technical analysis by IG’s senior market analyst, Josh Mahoney:

The airlines grabbed some of the most significant early upside, with IAG gaining almost 40% on the week. The recovery has been very varied for the sector thus far, with the likes of Wizz Air and Ryanair well ahead of names such as IAG, easyJet, and Jet2.

easyJet looks particularly interesting here, with the stock having jumped through £6.59 resistance to bring a clear end to the downtrend seen over recent months. With the stock still 50% down on the February peak, further upside odes look likely as investors look towards a return to a more normalised level of global air travel. The next major level of note comes in the form of the £9.54 peak from early-June, with further upside looking likely as traders scramble for a piece of the action.

Another form of travel that is of interest is the provision of largely domestic land travel. Firstgroup, Stagecoach, the Trainline, and Go-Ahead Group have all gained significantly over the course of the day thus far.

Stagecoach is of particular interest with RBC having attached a 100p target on the stock. The current price of 53p remains well short of that target, highlighting the potential for major upside. Interesting the chart says the same, with the price 66% down on its 2020 high. The break through 44p appears to bring an end to the downtrend, signalling the potential for significant upside from here on in.

So do services

The prospect of a more normalised world allows traders to be more optimistic about firms that have to rely on physical transactions. Cinemas are a prime example of that, with the industry unable to simply go online.

Everyman is a prime example of a stock in the sector that looks particularly interesting. Unlike Cineworld that has huge global costs, Everyman is a higher quality, nimble outfit. Their stocks remain 55% below the pre-crisis levels, with the rise through 82p providing us with a strong buy signal as traders look beyond the current lockdown. While some will fear that this could simply be a retracement of the selloff from 141p, today’s news looks likely to push us beyond that peak as traders look towards the light at the end of the tunnel.