The companies that make the shot say yes, but the answer is more complicated.
August 13, 2021
The FDA has just approved COVID-19 booster shots for people with compromised immune systems. Questions remain, however, as to whether everyone who has been vaccinated will need a third shot The CEOs of Pfizer (NYSE: PFE) and Moderna (NASDAQ: MRNA) certainly believe we will, but they’re biased to say the least.
Maxx Chatsko joined Dan Kline on the April 11 edition of “7investing Now” to look at whether a booster shot will be needed. He also breaks down how MRNA vaccines work and why boosters almost certainly won’t be an annual thing. In addition, Maxx looks at other potential uses for MRNA technology while explaining how it works and why it’s a promising platform.
A full transcript follows the video.
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Dan Kline: Maxx you wanted to talk about the need for boosters as far as I can tell. The only people who are talking about boosters in the short term are the CEOs of companies that make COVID shots. And I don’t want to downplay that. But hey, if I was Coca Cola (NASDAQ: COKE), I would probably be touting a study that says, you need more fizzy caffeine in your diet, even if it wasn’t that credible. What are your thoughts here?
Maxx Chatsko: Yeah, so I just wanted to touch this topic, again, given, the Delta variant wave that we’re going through right now, in certain parts of the country. And look, in recent months, companies have been going back and forth over what they’ve publicly said about boosters. It kind of started like Pfizer (NYSE: PFE), a couple months ago said, we’re going to need boosters, we’re going to ask, the FDA and CDC to authorize our booster shots. And federal health agencies were like, hey, before you announce things like that, and ruin our public messaging on a very sensitive topic, maybe you should give us a heads up because we don’t think you need boosters yet. So cool it Jack. And then Pfizer said, oh, we’re just gonna wait for health agencies whatever they decide. So they kind of backtrack a little bit. And then you saw all the vaccine manufacturers kind of all of them kind of backtracking. And were quiet for a little bit.
But they’ve kind of taken advantage, I think in of the Delta wave, and then with on Q2, earnings results and quarterly updates. A lot of them again, kind of made this pitch for, well, we have boosters ready, we have all these studies underway, we’re probably going to need boosters by the end of the year. And so you’re starting to see this, like swing back to all these companies, again, are saying we need boosters. Real world evidence doesn’t really say that that’s going to be true, even with the Delta variant. It just if you’re vaccinated, you’re pretty much going to be fine.
So there’s 40 states and Washington DC that have data, they published data on hospitalization rates and death rates from COVID-19. In all of them, it ranges from hospitalizations and deaths of vaccinated individuals are less than 1% to up to 6% of the total hospitalizations and deaths. So if you’re vaccinated, even with the Delta variant, this means that COVID or Coronavirus, is actually less deadly than the seasonal flu. So, this isn’t like the headlines make it seem like we’re going to need boosters, this is going to be with us for years and years, there’s going to be variants, and that’s just doesn’t really seem to be supported by real world evidence. So to me, it just seems like vaccine manufacturers kind of wanting to keep the gravy train going.
Dan Kline: And Maxx, let me be very careful when I when I introduced this, but that 1% to 6% that that’s that is vaccinated, that is getting hospitalized, and some percentage of them dying, the vast majority of that is actually people that have other issues. So that that leads to our next question. “Might it make sense to give boosters to some populations”. I would assume elderly or or people that have certain issues. I have a cousin who has leukemia, and the first two shots did not produce a robust immune response, because he’s taking other drugs that that that get in the way of that, and his doctors are trying to figure out if like he should be taking a different one or try. And I hate to say he is kind of an experiment, because obviously it’s a unique case. But might we see elderly populations or at risk populations be a good case for a booster here?
Maxx Chatsko: Yes, I think that makes sense. And that is actually what like the CDC or FDA are actually looking at, maybe boosters make sense in certain populations, the elderly, who just tend to have a less robust immune response to vaccinations in general, they might need to get boosters, obviously, if you’re immunocompromised, and that means a lot of different things, depending on how you’re immunocompromised, maybe you need a booster more frequently. In terms of the the general population, I don’t think we’ll need boosters very frequently. Meaning like, I don’t think we’ll need them every year, this is not going to be like the seasonal flu, even though, some of these strains are gonna be mutating and things like that.
So again, I’ve explained this in the past, and I’ll touch on it again. But we see a lot of these studies and we see about, effectiveness of vaccines over time, or we see things like you were vaccinated six months ago, and what are your antibody levels in your blood that we can detect, now, or what are they going to be, six more months from now. And those are a little bit misleading because your immune health isn’t just about antibodies, right? Actually, what’s more important is T cells and B cells. Those are way more important in terms of your long term immunity, that’s what actually retains memory to the vaccine or to the virus if you’ve had an infection. So after exposure to a vaccine or the actual virus, your body is going to pump up levels of antibodies because it’s going to be on high alert. But over time, it’s going to be wasteful, if you haven’t seen that threat again. So your body will eventually start to reduce the amount of antibodies that it produces. That doesn’t mean you’ve lost a memory of it. It just means it’s pouring resources into other bodily functions and other parts of immunity.
But if you saw that, the virus again, your body would start ramping up levels of antibodies again, right most likely. So, it’s possible that we got vaccinated, and it lasts for 2, 3, 5, 10 years we don’t even know yet. But, so that’s important to keep in mind when we’re talking about like antibody titers, which is something you’ll see in a lot of press releases, or articles or studies and things like that.
Another reason this is kind of interesting and newer, for why we might not be rolling out, these vaccines across the general population, if you look at some of the studies, and these are still very new and early of the booster shots, there’s some other concerns. So Moderna (NASDAQ: MRNA) has been testing two different versions of a booster. So this would be a third dose, and there’s two different compounds they’re looking at. Well, in that study, they saw a 10%, or a 15% rate of grade three adverse events. So that just means a grade three adverse event means it’s a side effect that often requires medical intervention, so you need another treatment, or you need maybe even hospitalization, because of that reaction, that’s a pretty high rate of a grade three event for something you’re going to roll out across the entire country. if you think there’s vaccine hesitancy now. 15% of people or 10% of people that might, end up in the hospital, because they get really sick from a side effect to a vaccine, which is really just going to be their immune response. But they still might feel terrible and need to go to the hospital, there’s, that’s going to cause a lot of confusion and hesitancy for boosters.
So that does make some suggestions that we can’t just be rolling out mRNA technology is a very valuable tool, but we can’t just be rolling it out like candy. And then every six months, we need boosters, just because the company said we do. That could cause some problems, we might need to space these out much further due to the immune reactions that are causing, or this is also going to cause companies to maybe, go back to the drawing boards and innovate and create booster shots or mRNA technology that creates less, side effects over time. But there’s also suggest to like, we want to roll this out for seasonal flu. And it’s a bit different, because the fluid changes so much. But, that could cause some problems for mRNA vaccines for seasonal flu. If three years later, after you get your third mRNA flu vaccine in the future, you’re gonna have some really terrible reaction. So we want to really be good stewards of this tool and technology. It’s great. It’s powerful. It was a very amazing technology for, handling the pandemic, but we have to be very careful with it going forward. It’s not just, it’s not a free ride. It’s not a silver bullet.
Dan Kline: So Maxx, I have one last question here. But first I’d like to share, and put Maxx on the screen if you could JT. I want this as a reactionary thing. I pictured my T cells, as full on A-Team, B.A. Baracus taking on the virus and my B cells as Sully the Bruins fan, who had a few too many before the game against the Flyers. So So I picture there was a lot of excitement going on in my body battling the possible COVID infection.
But let me ask one last question. I asked you this on Slack, and it got lost in the shuffle here. If you’ve had an mRNA vaccine, might it make sense to get the Johnson and Johnson vaccine? And conversely, we have seen in some cases, people who have had the Johnson and Johnson (NYSE: JNJ) vaccine, at least they’re testing this, get a booster of an mRNA vaccine. Is there? Can you be too safe? Can you wear too many raincoats in the rain? Or is this? Again, Maxx is not a doctor? Matt Maxx has a master’s degree. He’s researched this stuff. If you don’t know the answer, that is okay. But I’m somebody who really believes in science. So getting another vaccine is a thing. I’d be happy to do that because I’m going to Vegas Sunday, I’m going to cruise in September, I want to go places.
Maxx Chatsko: Yeah, I’ll say I don’t know, it could make sense to to mix and match the vaccines within certain settings. I know actually, I think I think it’s Germany. One country is actually giving boosters of an mRNA vaccine to individuals, I think health care workers, if they received like the AstraZeneca (LON: AZN) vaccine. So again, those work a little bit differently. The immune responses should be about the same. But yeah, that’ll be interesting to see. I mean, again, we have these tools, so we could use them. We’re just going to require some more studies and some more, work from regulators and things. But that could be possible. I think if you got two doses of the mRNA vaccines, or one dose of Johnson and Johnson, all the studies so far say you’re pretty much going to be fine. So hopefully we won’t need to mix and match at all, but that could be possible.
Dan Kline : And let me throw out one last thing. Don’t buy Pfizer, Johnson and Johnson or Moderna because of the COVID vaccine. Maxx has talked about this that even if we do take a booster and they get another benefit, another 20%, 30% profit, significant short term profits. Maxx has explained to me why it’s unlikely we would ever get a fourth and if we ever did that would probably be the max. So this is not going to be the flu shot. This is not going to be a pure on revenue producer. Maxx, I’ll give you 45 seconds to close out here.
Maxx Chatsko: Yeah, some of those valuations make sense if you’re looking at like revenue for this year next year, but this idea that we need billions of doses of mRNA vaccines for Coronavirus for a decade plus is probably not correct. So it’s gonna be very difficult to sustain those levels of revenue. And that’s how we value drug developers. So I think, a lot of these are trading on momentum right now, like Moderna is like a $200 billion market valuation, that’s more than Amgen (NASDAQ: AMGN) and Merck (NYSE: MRK). It kind of makes sense based on the sales now, but it’s gonna be hard to sustain. So I think you’ll just be reasonable think about three years, five years from now, that valuation will be quite a bit lower, if things don’t work out. Also, a lot of the vaccines, that are in the supply now have guaranteed purchase prices from governments a year from now or a booster shot. That might not be the case, they might be at the will of the market. There’s more competition. So those profit margins and the revenue they can get from each subsequent mRNA vaccine for Coronavirus might be quite a bit lower. So a lot of these things factor into the equation.
Dan Kline: Mike Fee gives a little bit of explanation here on something Maxx said earlier the bottom comment if you want JT. “Thrilled that German health care workers, I think that’s the German flag. I can’t quite see it. So I’m just guessing are getting AstraZeneca boosters, third shots after receiving two doses of the, yeah, I think it’s fair to call it the controversial China Sinovac vaccine”. Yep, I think that is, I think that is what happening. We’re seeing some mixing and matching in Australia as well, where there is supply issues. So this is a story that is still developing.
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