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Coronavirus – The Mutated Strain (Q&A)

In our third Q&A segment on COVID-19, Cambiar Senior Analyst Charmaine Chan provides insights into the mutated version of the virus and the efficacy of vaccines.

Describe the new mutated strain of COVID that has emerged in the U.K.

This strain B.1.1.7 was first identified in September 2020, but is now dominant in the U.K. causing the most severe lockdowns in the country (e.g. headlines of “Christmas is cancelled”, “40+ countries banning flights from the U.K.”).

Researchers have notedI:

  1. This strain represents a lineage that shows adaptive (vs just random) mutations that could be worrisome,
  2. Protein-protein modeling and animal studies indicate that amongst the 17 unique mutations in this strain, some are likely to increase transmission and infectivity.
  3. The observations that this is ‘more deadly’ and ‘increased ability to infect younger populations’ are preliminary at this point.

Fig 1. B.1.1.7 strain has accumulated more mutations than is expected from the basal rate, suggesting that evolutionary pressures are causing the virus to adapt for fitness/survival. In particular, the N501Y and P681H mutations in the spike protein increases infectivity and virulence of the virusII.

Do vaccines work against these new, adaptively-mutated/truncated strains (e.g. B.1.1.7.)?

Based on our research, we believe they will work with decreasing efficacy until they do not and we need a version 2.0 and so on. This is logical, as both antibodies and T-cells are specific to the sequence/structure of the target (i.e. spike protein). As the virus accumulates mutations, the more likely the structure of the target protein becomes unrecognizable to our immune system. However, as of now, the World Health Organization believes that our newly created vaccines should work well enough vs these new strainsIII.

The hypothetical advantage of mRNA-based vaccines is that as scientists sequence the genomes of these new strains, they can swap out the “cassettes” of the spike proteins (from which our bodies use as instructions to generate antibodies and T-cells against) to reflect these changes for a new version of the vaccine.

However, our ability to thoroughly test the efficacy/safety of subsequent versions of vaccines would be limited. Repeated administration of mRNA-based vaccines might have different risk/reward profiles. While just swapping out the cassettes and making initial new batches might take only 1-2 months, scaling/distribution takes 3 months+, and clinical trials could take 6 months+. In a way, we might always either be:

  1. playing catch-up to emergent strains, or
  2. making predictions on what new strains might emerge next season (e.g. similar to updated flu vaccines every year), making subsequent vaccines potentially less effective.

In our COVID update in June (Coronavirus – What You Need to Know II), we discussed that if COVID was not contained quickly, a certain percentage of the population might always be infected, creating fertile ground for the virus to adapt to evolutionary pressures inside their hosts (e.g. patients infected with COVID for long durations). There is a good chance that COVID will be endemic and we have to acclimate/live with it. An optimist would say this is like the common cold or the flu. The pessimist would say we do not quite know what the evolutionary path of this virus is yet.

 

Have you been surprised by the efficacy of the approved vaccines?

Yes, we are pleasantly surprised by how efficacious these vaccines are – lowering the risk of contracting COVID by 90-95%, (our base case was 50-70%).  We still have some reservations and need to better understand the side-effects profile. Normally vaccines are not approved until we have 6 months of safety data, while these EUA (emergency-use-approved) vaccines only have 2 months of data. We are also just beginning to uncover who might be allergic to mRNA-based vaccines, possibly those reactogenic to a chemical compound polyethylene glycol (PEG) used to increase vaccine stabilityIV.

 

Charmaine Chan is an Investment Principal at Cambiar Investors.  Prior to joining Cambiar in 2016, Ms. Chan worked at Arrowpoint…

Since your last update in June, has anything surprised you with regards to the virus or response?

From a biology point of view, progress is constant but incremental – we are learning every day as to why COVID has such a wide range of effects and duration of symptoms. From the markets’ point of view, I think investors anchor to certain facts (e.g. COVID “fearful” to “not concerning”, no vaccine vs vaccine) and titrate their risk-tolerance rapidly, with more of a black and white approach. The current narrative is as vaccines are widely distributed by the summer of 2021 that ‘normality’ as we know it will return with a catch-up of growth, consumer spending, and investments.  This should usher in a new cycle, with little regards to the economic damage that will likely take years to repair. The virus is likely to keep mutating/adapting, potentially throwing us new curveballs to tackle from a public health perspective, with many shades of grey in between.

 

Disclosures

Source:

Ihttps://www.sciencemag.org/news/2020/12/mutant-coronavirus-united-kingdom-sets-alarms-its-importance-remains-unclear | https://www.statnews.com/2020/12/21/looming-questions-new-variant-coronavirus/

IIhttps://virological.org/t/preliminary-genomic-characterisation-of-an-emergent-sars-cov-2-lineage-in-the-uk-defined-by-a-novel-set-of-spike-mutations/563

IIIhttps://globalnews.ca/news/7535146/coronavirus-vaccine-variant-protection-who/

IVhttps://www.sciencemag.org/news/2020/12/suspicions-grow-nanoparticles-pfizer-s-covid-19-vaccine-trigger-rare-allergic-reactions

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