AstraZeneca (AZN) vaccine setback removes a near-term competitor from the race - BMO

AstraZeneca (NYSE: AZN) has been forced to suspend global trials of its experimental coronavirus vaccine after it witnessed one of the trial participants falling ill. The drugmaker said it has paused trials on a voluntary basis to allow for an independent review of the situation.

"It is obviously a challenge to this particular vaccine trial. It's not actually the first time this has happened to the Oxford vaccine," Britain's Health Secretary Matt Hancock said.

The setback will likely eliminate AZN from the sprint race to offer the first COVID-19 vaccine. BMO’s George Farmer sees this situation as a “serious adverse event” that will eliminate a near-term competitor from this emerging space.

“The serious adverse event leading to clinical hold of Astra Zeneca’s Phase 3 trial evaluating AZD1222 highlights the importance of conducting large randomized trials designed to confirm safety and efficacy of any prophylactic vaccine intended for the masses. Although details are scarce, we think it is possible that the apparent case of transverse myelitis in this trial (as we read in the press) could, in fact, be related to vaccine administration,” Farmer wrote in a note to clients today.

Therefore, Farmer now sees Moderna (NASDAQ: MRNA) and Pfizer (NYSE: PFE)/BioNTech (NASDAQ: BNTX) as frontrunners in the COVID-19 vaccine race.

“We expect interim results from both companies’ studies in October (most all of the patients enrolled to date will have received a prime and boost by this time) and anticipate emergency use authorization for select high-risk populations for one or both before year-end. Approval for broader use would probably not come until mid-2021, in our view,” concludes Farmer.

BMO has an “Outperform” rating on MRNA stock, while Pfizer and AstraZeneca are not rated.

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