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Good Morning Dear Reader,

It’s quite rare for this newsletter to cover the same topic twice in successive editions.

In fact, initially, I was planning to write about the farmer protests happening in Delhi. Hopefully, I’ll cover that next week instead.

Also, thanks to a tip from Rohin, I found something quite interesting about a Covid-19 vaccine you’ve probably heard little about. Last week, I wrote at length about the Oxford-AstraZeneca vaccine—and in it, I mentioned how critical the success of the Oxford-AstraZeneca vaccine was for countries like India.

So, as it turns out, my assessment was a bit off. Yes, the Oxford-AstraZeneca vaccine is really important for India’s plans to vaccinate the nation.

But there’s another vaccine that’s even more important.

And it’s one we’ve heard little about.

Let’s dive in.

The dark horse in the vaccine race

Photo by GR Stocks on Unsplash

If you are a casual follower of news, perhaps you’re already tired of all the news about the Covid-19 vaccine. That’s fine. I understand.

But here’s something you should consider—the things that everyone is talking about on the news are mostly what vaccine companies, governments, and health officials want you to talk about.

The companies that manufacture vaccines want to tout their efficacy rates, and their manufacturing and distribution capabilities because that’s good news for you, and more importantly, for their shareholders.

Governments and health officials want to talk about how trials are going really well, how safe they are, and how there will soon be a vaccine for everybody. They usually stress the last part when there’s a state election or two around the corner.

All good, but there’s one thing that neither companies nor governments talk much about:

What happens when the vaccine is ready?

Which countries get their hands on it first?

Put another way...

Have some already paid and reserved vaccines even before they are available?

Turns out, the answer is yes.

The reservation list

So, the way to find an answer to whether some countries have paid their way to bump themselves up the reservation list for the Covid-19 vaccine arose from a concern about whether lower-income countries would be left behind when the vaccine arrives.

And there’s a study by the Duke Global Health Innovation Center which has released a fabulous, deep report about this.

Here’s what it says.

A new global assessment of purchasing agreements for COVID-19 vaccines reveals that high-income countries, as well as a few middle-income countries flush with manufacturing capacity, have already purchased nearly 3.8 billion doses, with options for another five billion.

The analysis, released by the Duke Global Health Innovation Center, shows that many of these countries will be able to vaccinate their entire populations — and some will be able to do so many times over — before billions of people are vaccinated in low-income countries.

“An ambitious effort to create a global system of vaccine equity is being undermined as a handful of countries — including those who made a commitment to equality — secure as many doses as they possibly can,” said Elina Urli Hodges, MSPH, who leads the Center’s Launch and Scale Speedometer, an initiative that identifies impediments to delivering health innovations to low-income countries.

Urli Hodges added, “Countries are hedging bets by making direct deals while also participating in multilateral platforms, which drives inequality and threatens to prolong a global pandemic.”

While other assessments have warned of potential inequalities in vaccine access, this new analysis is the first to carefully quantify the amount of vaccine doses that are being claimed by country-level agreements and how this could delay access to COVID-19 protection across large regions — including sub-Saharan Africa — until almost the middle of the decade.

Will Low-Income Countries be left behind when Covid-19 vaccines arrive?, Duke Global Health Institute

I know many people think reports are boring, but this one isn’t.

The report goes on to say that while nearly 4 billion doses have already been purchased, doses for just 250 million people have been allocated by COVAX—a global effort to ensure that vaccines are distributed globally to poorer countries.

In fact, countries like the United States have already purchased enough doses to cover over double of its total population.

Rich countries are doing this because they can afford to do this. They don’t know which vaccine will work, so they are hedging their bets by purchasing all of them.

Infuriating, isn’t it?

I was pissed off, too.

So I went to the data section of the report, and tried to find out more. Who were the countries who had gone and purchased all these doses? What was the top country on this list?

If you’d like to guess, this is where you could stop reading and take a guess.

I’ll give you a hint—it’s not a country that you’d expect.

Guessed?

Here’s the answer.

Yes.

India.

India has pre-purchased more doses of the vaccine than any other country. More than the United States. More than the entire European Union.

Now I know what you are thinking—how did India get the money to buy all these vaccine doses?

Well, the answer is quite interesting…

Among high-income countries, those with in-country vaccine development capacity were the first to secure large advance market commitments. Most high-income countries have been able to negotiate purchases through the investment of large amounts of public funds into research and development of COVID-19 vaccines and leveraged purchasing power to make large-scale deals across a portfolio of vaccine candidates.

With limited purchasing power, middle-income countries are using other strategies to get to the front of the queue for advance market commitments.

Countries with manufacturing capacity, such as India and Brazil, have been successful in negotiating large advance market commitments with leading vaccine candidates as part of the manufacturing agreements. For countries without manufacturing or vaccine development capacity, those with the infrastructure to host clinical trials, such as Peru, have used that as leverage to negotiate purchase deals.

Mapping Covid-19 Vaccine Pre-Purchases Across the Globe, Duke Global Health Innovation Center

In case you didn’t know, India is the largest manufacturer of vaccines in the world. So, India has basically said to vaccine manufacturers—well, we can help you...provided we get something out of it too.

This is quite impressive.

Next, I wondered which vaccines has India purchased? Remember, India has purchased nearly 1.6 billion doses.

Luckily, the Duke Global Health Innovation Center gives us this breakdown. All in neat interactive tables and graphs powered by Tableau. All updated until last week.

Here’s what I found.

India has purchased 1.6 billion doses from three manufacturers.

Third on the list is the Gamaleya Center. 100 Mn doses.

That’s the Russian vaccine. Also known as Sputnik.

(Also quite questionable. Long story. Google is your friend.)

Second on the list is the Oxford-AstraZeneca vaccine. 500 Mn doses.

As some of you may remember, I wrote about the Oxford-AstraZeneca vaccine last week. Not surprising to see it on this list.

First on the list is a company called Novavax.

India has apparently purchased a whopping 1 billion doses from Novavax.

That’s nearly 10 times more than the second country on the list of top purchasers of Novavax—the United States, which has ordered just 110 million doses from the company.

Now at this point, you are probably wondering what I’m wondering.

What on earth is Novavax?

Novavax is India’s secret vaccine bet.

What does India know that the rest of the world doesn’t?

Novavax is one of several biotech companies that have been attempting to create a vaccine for Covid-19. Remember, different companies are adopting different strategies. Some, like Pfizer and Moderna are ahead in the race and have completed their Phase-3 trials, and are ready to start distribution pending approval. Others are behind in the race to get to a vaccine.

Novavax is one of those that’s behind.

Initially, it expected to have its Phase-3 trials earlier.

But things haven’t gone according to plan.

Vaccine maker Novavax Inc said on Monday it has pushed back the start of a US based, late-stage trial for its experimental Covid-19 vaccine and now expects it to begin in the coming weeks instead of November.

It is the second time that Novavax, which already has a late-stage UK trial underway, has rescheduled the Phase 3 trial after first flagging an October start, hampered by issues in scaling up its manufacturing.

Covid-19 Vaccine : Novavax delays late-stage US trials again, Business Today

In fact, the company expects results for the Phase-3 trial to be available only by the first quarter of the next year. Remember, Novavax has missed its earlier schedule, so it may well be longer.

Also, unlike Oxford-AstraZeneca, Novavax hasn’t even started its Phase-3 trial in India. In fact, the only source I could find that referenced a Phase-3 trial by the company in India mentioned that just 100 volunteers will be a part of a planned trial in the School of Tropical Medicine (STM)—a hospital in Kolkata.

Okay.

You’d probably think that this wouldn’t be good news for Novavax, and unlike its peers like Pfizer and Moderna, investors would be quite bullish on the company.

So, I decided to check.

And once again, I was surprised.

Here’s the stock price of Novavax over the last year.

Novavax’s share price has risen by over 3000% so far this year.

That’s more than Pfizer. Or Moderna. It’s not even close.

In fact, if you’d invested $25,000 in the company at the beginning of 2020, you’d be a millionaire today.

So, what are investors seeing in Novavax? Why are they so optimistic?

Specifically, for two reasons:

First, Novavax’s early-stage results were really, really good. In fact, multiple experts believed that it was the best one out there. This is partly due to the technology that Novavax uses to craft its vaccine.

Second, Novavax is doing a two-for-one combo. In October, it announced that it was attempting to seek approval not just for a Covid-19 vaccine but also for a flu vaccine candidate called NanoFlu. The company said that it would attempt to pair NanoFlu to result in a combination vaccine.

Novavax is betting on the fact that the Covid-19 virus isn’t going anywhere, and it will be a seasonal virus—just like the flu.

And only Novavax will have this combination vaccine. Not Pfizer. Or Moderna.

These two reasons are good enough.

But there’s a third reason.

U.S. drug developer Novavax Inc said on Tuesday it was doubling its potential COVID-19 vaccine manufacturing capacity to two billion doses annually under an agreement with Serum Institute of India, sending its shares up about 7%.

In August, Novavax signed a deal with Serum Institute, the world’s largest producer of vaccines, to produce a minimum of one billion doses of its vaccine candidate, when approved, for low- and middle-income countries and India.

As part of the expanded agreement, Serum Institute will also manufacture the antigen component of the vaccine, dubbed NVX‑CoV2373, which Novavax said will bring its manufacturing capacity to over two billion doses by mid-2021.

Novavax aims for two billion Covid-19 vaccine doses with expanded India deal, Reuters

No manufacturer, apart from Oxford-AstraZeneca, has a manufacturing capacity greater than Novavax. No wonder investors are excited.

It’s not just investors who have placed their bet with Novavax.

It’s also India.

One way to think about this is to assume that India has figured out what Novavax’s investors have—that Novavax is going to deliver on its potential. And India has decided to help it get there by placing a massive purchase order even before the Phase-3 trials are completed. By doing this, India has acted smartly and presciently, and taken a calculated bet which may pay off because it expects the final stage trials to be positive.

Another way to think about it is that India had no real choice in this matter, and would have pushed just about anyone who wanted to access India’s massive manufacturing capacity, and that Novavax just happened to be it.

You can choose what you believe.

I’ll end with a final story about Novavax.

While I was researching the company, I went back and checked how the
company had performed earlier.

Turns out, Novavax had a golden period. It’s not a rags to riches story—it’s a riches to rags to riches story.

This is how the company’s stock price looks like when you zoom out in time.

Pay attention to the left side of the graph.

Clearly, something happened to the company in late 2016 for its stock price to fall off the cliff. Whatever it was, it affected the company deeply—it didn’t recover for the next 4 years.

In fact, one could reasonably argue that if not for the pandemic, Novavax may have never recovered.

So I googled a bit. And this is what I found in a CNBC article from September 2016.

Shares of Novavax plummeted more than 83 percent in early trading Friday after disappointing news on the vaccine trial for people with a serious infectious respiratory disease.

Novavax shares had dropped more than 84 percent in after-hours trading Thursday after the company’s announcement that its experimental respiratory syncytial virus (RSV) vaccine failed in a late-stage study.

The company said its trial “did not demonstrate vaccine efficacy” in the prevention of a lower respiratory tract disease in older adults. It said it will look into additional data to better understand the trial results.

Novavax plunges 84% after failed trial, analysts downgrade, CNBC

Gulp.

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Take care.

Regards,
Praveen Gopal Krishnan

The Nutgraf is a paid weekly emailer that explains fundamental shifts in business, technology and finance that happened over the last seven days in India. In a way you’ll never forget.

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What’s The Nutgraf all about?

The Nutgraf is a 10-min newsletter sent at 10 AM sharp IST every Saturday. It connects the dots and synthesizes one big event in business, technology and finance that happened over the week in India. In a way you’ll never forget.