Insights

CanSino Biologics Closes in on Covid-19 Vaccine

Here are some key developments on the latest Covid-19 vaccine being developed by CanSino Biologics Inc (SEHK: 6185). – Covid-19 coronavirus impact stocks

Shares of CanSino Biologics Inc (SEHK: 6185) have been volatile lately, rallying and declining as the race to secure a coronavirus vaccine nears the finish line.

Russia already has a Covid-19 vaccine approved and many think more vaccines will be approved in the coming quarters.

Among Chinese companies, CanSino Biologics is one of the furthest along in terms of its potential vaccine candidate for Covid-19.

In August, China’s intellectual property regulator granted a patent for its Covid-19 vaccine candidate, the first in the country.

Despite the company’s progress, CanSino Biologics may not have moved as fast as some bullish investors had hoped.

According to a clarification announcement made by CanSino Biologics on 18 August:

“The Company is currently liaising with several countries and plans to drive the international multi-center phase III clinical trial for Ad5- nCoV as soon as possible.

As at the date of this announcement, enrollment of phase III clinical trial has not started.”

That slight lag in phase III enrollment and the progress of other vaccine candidates could explain why shares of CanSino Biologics haven’t been as strong.

Given the company’s recent volatility, here are some key developments for CanSino Biologics.

Star Market listing

One key recent development for CanSino Biologics is that the company listed on Shanghai’s Star Market in August.

By selling 24.8 million shares at a price of RMB 209.71 (HK$234.89) per share, CanSino Biologics raised valuable capital that it can use to:

“Provide full support to the construction of the second phase manufacturing facility, vaccine research and development, vaccine traceability, the construction of a cold chain logistics system and an information system, as well as the supplementary working capital.”

CanSino has also garnered a higher valuation in Shanghai than in Hong Kong. As of late August, CanSino Biologics traded for RMB 349.03 (HK$390.93) on the Star Market, or HK$390.93.

Meanwhile, CanSino Biologics’ shares in Hong Kong traded for HK$201.2.

Given the higher Star Market valuation, CanSino Biologics could potentially raise growth capital there rather than in Hong Kong in the future.

 Sinopharm vaccine cost

Another relevant development is CanSino Biologics competitor, Sinopharm Holding Co Ltd (SEHK: 1099), reportedly planning to price its potential Covid-19 vaccine at a high price point.

According to the South China Morning Post, Sinopharm’s two-shot regimen vaccine could cost around US$145 in total if it hits the market.

Given Sinopharm’s high price point, there may be more of an opportunity for CanSino Biologics to capture more of the market in China.

Although other companies producing potential vaccine candidates for Covid-19 are planning to price their vaccines at a far lower price than Sinopharm, many of those same companies aren’t Chinese, and the bulk of their initial production is unlikely to go to China.

Covid-19

Another development for CanSino Biologics is the belief among some experts that Covid-19 could stick around well past the pandemic period.

Professor Mark Walport, UK’s former chief scientific adviser, said of COVID-19:

“This is a virus that is going to be with us forever in some form or another and almost certainly will require repeated vaccinations. So, a bit like flu, people will need revaccination at regular intervals”.

If Covid-19 sticks around a lot longer past the pandemic period, the total market demand for vaccines will likely be far higher.

For vaccine makers, the post-pandemic preventative vaccine market could be higher margin than the actual pandemic period because there isn’t as much pressure on vaccine makers to price vaccines at a low price point.

Foolish bottom line

Most experts don’t think that approved Covid-19 vaccines will be 100% effective in the near future.

CanSino Biologics’ vaccine candidate might not be perfect either. According to data released, high pre-existing immunity to the adenovirus, which is used to deliver CanSino’s vaccine candidate, and increasing age lowered immune responses.

How well CanSino Biologics does will depend on how well its vaccine candidate does in terms of safety and efficacy.

If CanSino Biologics’ vaccine candidate lasts longer or is more effective, it will likely have higher demand.

More reading

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Jay Yao doesn’t own shares in any companies mentioned.

The Motley Fool Hong Kong Limited(www.fool.hk) 2020

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