COVID-19 deaths around the world are dropping, with much of that being attributed to the availability of vaccines. Tarik Aeta, Healthcare Analyst at TD Asset Management, discusses the latest vaccine developments and how that plays into the larger healthcare sector.
- Yeah, thanks, Kim.
- Let's just start with maybe where we are with COVID, because I would like very much to say we're done. But we're not done.
- So yeah, the fact that we're sitting here in person is just a testament to how much things have improved over the past year. If you go back to January and look at the Omicron wave, hospitalisations are down 85% since then, and that's despite things having reopened and mandates having been repealed. But going into the Fall, there will be an increase in cases and hospitalization, and that's--
KIM: More people together, right?
- Yeah, and that's being driven by a couple of things. So, first of all, kids are returning to school, more time indoors as the weather cools, so that's driving transmission. There's seasonality to it.
Second, it's been almost a year since the Omicron wave and third shots that many Canadians had, so that immunity is waning. And third, as we enter the Fall, we're entering flu season. Australia just had the worst flu season they had in five years, and probably, we'll see something similar here in the northern hemisphere as well. So directionally, I think, cases and hospitalizations will increase throughout the Fall and winter, but we're much better positioned as a society today than we were last year or the year before.
- Yeah, night and day, I mean, with everybody boosted up. Let me ask you, in the recent weeks, as I mentioned, we've seen updated COVID vaccines getting approved. How are these boosters different from the original vaccines, and maybe what should we think about or what should we expect with the rollout in the Fall?
- Yeah, so until just a few weeks ago, all the vaccines out there, whether it was Pfizer or Moderna, others, they were all targeting the original COVID virus. That said with the data out of Israel early this year, we saw that within six weeks, that immunity wanes with Omicron. So yeah, these latest boosters, as you mentioned, target-- are a bivalent vaccine, so they target both Omicron, as well as the original vaccine. And it's designed that way, because it creates a stronger immune response when you include them both together.
The first one was approved by Health Canada, Moderna's BA-1 vaccine on September 1. That's rolling out as we speak, but more importantly, we have BA-4 and BA-5 vaccines currently awaiting approval from Moderna and Pfizer. And as we enter the Fall, that will probably be the gold standard in terms of vaccine just given they target the latest version of Omicron.
- Let me shift gears a bit from the health perspective, which you need to understand to ask the next question, which is the stock perspective. What do these vaccines mean for the vaccine makers? And I will put an asterisk beside this, because I know you and I were chatting earlier. Do they matter as much, or is it more the technology in the vaccine and what it leads to later on?
- Yeah, so while these boosters are important for society, from a stock perspective, they're not that important for Pfizer and Moderna given that investors were anticipating these boosters for many months. They've been talking about that many months. More importantly, going forward is how we leverage this mRNA technology in other use cases.
So, for instance, when it comes to flu, both Pfizer and Moderna are looking to target the flu market. Moderna has a 23,000 individual trial starting this Fall. Pfizer has a 25,000 individual clinical trial, phase three, for flu this Fall. So by the time we have reached next Spring, we'll then have a good sense of whether mRNA can be used for flu, as well, and the end game for these companies to try to do a combined flu plus COVID plus RSV vaccine, something that you can give to someone, target many viruses at the same time, and increase adherence that way.
But longer term, Moderna is also trying to target many other diseases, whether it is shingles, HIV, cystic fibrosis. The one that, I think, is most important to watch, though, is cancer. So Moderna has a personalized cancer vaccine that they're working on. We'll get phase two results for that this Fall and--
- Can I ask, what does personalized vaccine mean?
- Yeah, so the idea is that they would take a sample of your tumor. They would sequence it, and they would try to figure out what unique protein markers are on that surface of that cancer cell. So the same way we found the unique properties of the spike protein when it came to COVID, we want to see what's unique about an individual's cancer, and then they would program that into an mRNA vaccine. So they can target up to 20 unique markers.
So they'll say, what are the 20 unique things about your cancer? They'll program that into a vaccine, and that would be provided to that individual directly. So there's a lot of risk, of course, with this clinical trial program. There's much more risk than a COVID shot or a flu shot. But if it does work, it would be a very important tool kit for society in combating cancer.
- It's incredibly exciting just to hear you describe it in terms of where it can go, and I think that's something that, I think, people sometimes miss in terms of actually what we're talking about.
I should mention, as well, I think, it's been about a year since, I think, the ETF has been launched, the TD Global Health Care's Leaders Index. And this is a T doc. Give me a sense of just your thoughts on the broader sector, because there's health care costs I know were some of the things that were going up when we looked at inflation numbers. What do you see as you look out in the business sector?
- Yeah, so the sector has held up well over the past year given all the macro uncertainty, and inflation, and interest rates. But I guess, yeah, what's driving the structural growth in health care is the same thing I've mentioned many times before. It is demographics, as well as innovation. That's continuing to drive the sector going forward. And when it comes to TD Global health care leaders index, ETF, we've designed the ETF in a way that an individual can capture those benefits through broad exposure to pharma, biotech, medical devices, life science tools, and also, with a unique index methodology that tries to take away some of the weight from the slower growing mega-cap pharma companies and redistribute some of those weights to the other companies in the portfolio. So yeah, I'm still very constructive on the health care sector over the long run, and I think it's a unique solution to try to capture that growth.
- Well, we'd love to have you back and get a little deeper into what parts of that health care sector are the most compelling, but we're up against the clock right now. Thanks so much, Tarik.