‘The scrutiny is extraordinarily high,’ says Nick Mazing, director of research at Sentieo, talking about the media and market focus on pharmaceuticals and biotech firms involved in the fight against Covid-19. ‘And it’s not just scrutiny. It is interference.’
As the world waits with hope for big pharma and its smaller, more dynamic biotech cousins to free us from the confines of the coronavirus, the companies involved in producing vaccines or therapeutics have seen demanding new stakeholders – governments – enter the scene like never before. At the same time, the media and market focus is intense. Turn on the news anywhere in the world on any given day and Covid-19 is most likely the lead story.
Mazing – talking in mid-October, just weeks before the US presidential election – says there is a ‘dangerous confluence of factors’ for pharma companies. ‘General business disruptions due to Covid-19, scrutiny, interference in the vaccine development process globally, and the US presidential election right in the middle of earnings season,’ he notes.
The challenge for the sector, he says, lies in exactly how transparent companies can be – and some have been doing a good job. ‘Pfizer recently did its first investor day since 2008. That’s a good example of transparency,’ Mazing says. ‘Bayer introduced 2021 guidance. Gilead has been extremely straightforward with Remdesivir, including saying, Hey, we don’t know whether this works.’
Others have not fared so well. Moderna, the US biotech that develops drugs and vaccines based exclusively on messenger RNA (mRNA) – which, while promising, is at time of writing yet to deliver any approved drug – found itself in the news for the wrong reasons. Its coronavirus vaccine trial was slowed because the company had failed to recruit sufficient minorities, while its executives were widely criticized for stock sales under prearranged plans. Regeneron also saw its prearranged stock sales in the news after US President Donald Trump spoke about his Covid-19 treatment with the company’s drug cocktail.
‘Typically, these 10b5-1 sales never attract much attention, even if modified,’ notes Mazing. ‘Executives at pretty much every company of size get equity compensation, and they then sell out of it. But now, all of a sudden, it is national news.
‘This is a highly abnormal situation. These examples really point to the crazy level of scrutiny. It’s not just vaccine timelines, it's not just emergency-use authorizations, it's not just vaccine pricing. You have the entire Covid-19 disruption in terms of the regular flow of business. And on top of that you have things that would never have been headlines at all becoming national headlines.’
It’s in our DNA
This philosophy of under-promise and over-deliver is something Thomas Kudsk Larsen, head of investor relations at UK pharma giant AstraZeneca – which is licensing one of the most promising vaccines, at time of writing, with Oxford University in the UK – says is ‘in our DNA as an IR team’.
‘I’m from Denmark and half the company is from Sweden and we bring with us this sort of approach to life: don’t be too flashy, don’t promise too much,’ he says. As such, the discipline in communications since joining the Oxford vaccine development has really been a ‘good example of being true to your fundamental habits.’
AstraZeneca’s day job is in cancer, heart disease, renal disease and respiratory disease. But it saw potential in some of its existing medicines and some in its pipeline to work against acute respiratory distress syndrome. ‘This is what people die from: people are not dying from a virus – they die because they cannot breathe and develop organ failure,’ says Kudsk Larsen. Then AstraZeneca saw that it could also potentially help with the Oxford trial. ‘We chose to license that vaccine from Oxford University,’ Kudsk Larsen continues. ‘That was our decision, so we asked for more attention and we got it.’
But the company has been clear from the start that not only was there the possibility that the vaccine might not work, but that even if it did, AstraZeneca would not be making any money from it – or incurring any costs, as the company is being reimbursed by various governments.
‘Any vaccine is for the people, and analysts should not add any numbers to the spreadsheet,’ says Kudsk Larsen. ‘We even got our CEO to say this at our half-year results: Do not put any numbers in your spreadsheet. We are doing this for mankind, not to make a profit. It’s our obligation as a company.’
Despite this, the inevitable side effect of AstraZeneca’s decision to license the vaccine was an exponential increase in interest in the company.
While the AstraZeneca IR team doesn’t deal directly with the media, Kudsk Larsen says that now more than ever you cannot talk about one without the other. This is something that was really driven home in July when the company discovered that trial data had been leaked.
‘About one week before releasing our half-year results, Oxford University and AstraZeneca released the first data from the combined Phase I and II trial (we have combined Phase I and Phase II to speed it up), which was set to be published in The Lancet.
'That data leaked, and we had something like 10 percent volatility, with the share price going over £100 ($132) for the first time, because people were trading vaccine companies.’
This is an extract of a feature from the Winter 2020 issue of IR Magazine. Click here to read the full article.