Credit Suisse’s European Pharma team https://www.credit-suisse.com on November 26, 2021, provides their thoughts on the new variant in South Africa. Initially, the variant was called B.1.1.529 but now referred to as Omicron by the World Health Organization, has caused sharp negative moves in stock markets.
Initially press reports of the spread of the new COVID-19 variant appears to be responsible for cases in South Africa. The variant was first identified in Botswana and appears to be responsible for a sharp increase in cases in South Africa, which started rising on November 19, 2021.
- The European Pharma team understands the market’s concern. Early evidence suggests a very rapid displacement of the delta variant, which is known to be dominant in South Africa. When looking back at the emergence of the delta wave, the key indicator showed how quickly delta increased in its share of sequenced cases. Modelling data presented by the Financial Times would indicate a rapid rise in B.1.1.529’s share of cases to c.90% in areas where it is prevalent
- Hospitalization/death to other countries is not clear given potentially different levels of hospital bed availability and background treatment and vaccination levels. The team’s analysts noted that vaccination levels are low in South Africa at 28%; however, the county did experience a large delta wave, which should have provided some background immunity against delta.
- B.1.1.529 shows significant mutation from existing lineages. Sequencing data suggests B.1.1.529 has a different evolutionary pathway but shares a few common mutations with the C.1.2 Beta and Delta variants. The BBC reports 50 mutations overall, with >30 present on the spike protein, which is the element targeted by most vaccines. Specifically on the receptor-binding domain (the part of the spike protein that the virus uses to enter cells.), there appears to be 10 mutations vs just 2 for the delta variant.
- Credit Suisse does not yet have data on whether existing vaccines work, but laboratory testing is already underway according to the South Africa National Institute for Communicable Diseases. Initial thoughts from the Institute are that partial immune escape is likely, a view that seems possible given the numerous mutations in comparison to the sequence that existing vaccines were designed against. Analysts expect the first view on this to be from invitro immunogenicity tests or perhaps from computer modelling of the sequence. Analysts estimate that initial lab data could take less than 1 week to generate given that the sequence is already known and work is already ongoing.
- The question is how quickly could a new vaccine be created? Previous comments from BioNTech have pointed to a six week timeframe needed to produce vaccines to new variants. Analysts assume that trials would also need to be conducted to determine if they are both safe and effective. This could add months. For mRNA vaccines, manufacturing is highly fungible so a large portion of global capacity could pivot to the new vaccine much more rapidly than it took to scale up for the first wave of mRNA vaccines
- The question is the new variant more transmissible? It is too early to say, but the high rate of rising cases clearly points to a high level of transmissibility. Data will evolve in the coming weeks. There are two main potential explanations for the rise in cases: 1) the new variant is more infectious and is therefore displacing the old delta variant, 2) the virus sequence has changed such that there is less natural immunity from past infection/vaccination so the virus has a fresh start at infecting the population without much resistance. It could also be a mix of both given the amount of genomic changes and high rate of rising cases.
- Is the new variant more deadly? It is currently too early to determine if the new variant has higher mortality than previous variants. Reported cases only started rising in South Africa on November 19, so any impact on hospitalizations and COVID-related deaths have not yet emerged.
- Treatment paradigms are significantly advanced vs the first waves of COVID but the impact of efficacy of antibodies is unknown. It is worth noting that there have been significant advances in the treatment of COVID since it emerged in the diseases waves of 2020. The use of widely available steroids, and anti-inflammatory drugs, such as Roche’s Actemra have significantly improved survival outcomes. More recently, antibody therapies targeting COVID (LLY, REGN/Roche, GSK/Vir, AZN) have significantly improved outcomes against COVID variants to date. It will need to be seen if their efficacy is equal against the new B.1.1.529 variant. Lastly, the recent positive data from oral anti-viral agents (PFE, MRK/Ridgeback) may also have the potential to slow the spread of any new waves of COVID. The effectiveness of these treatments against new variants of concern will need to be tested, but lab results should be expected relatively quickly. In-human studies should also yield results relatively quickly if they are run in areas where the prevalence of B.1.1.529 is high.
- Will testing be affected? One silver lining may come in the ease of identifying this variant via qPCR tests. B.1.1.529 has a deletion within the s-gene which can be identified easily via widely-used PCR tests. More complex sequencing analysis is needed to differentiate the delta variant. This will help track the spread of B.1.1.529 both within Southern Africa and across the globe.
Go to https://plus2.credit-suisse. /content/credit-suisse-research/us/en/shorturlpdf.html?v=4Uqy-WTBd-V for the Note published November 26, 2021 titled COVID-19: Initial thoughts on the new variant B.1.1.529: Delta displacement concerning.
To contact the European Pharma Team, call 44 207 888 0304, or email creditsuisse.pharmateam@credot-suisse.com To provide further comments, email Jailendra Singh at jailendra.singh@credit-suisse.com or call 212-325-8121.