Quick thoughts: Promising COVID-19 research underway

Stephen Dover, Head of Equities discusses signs of hope for a global recovery from the COVID-19 pandemic.

Stephen H. Dover, CFA

Stephen H. Dover, CFAHead of Equities,Franklin Templeton

As COVID-19 continues to transform our daily lives, there are many signs of hope. Multiple pharmaceutical companies recently announced that if their trials continue to be successful, as many as 900 million vaccines could be available by April 2021. New studies reveal countries with universal tuberculosis immunization programs have lower COVID-19 infection and mortality rates. Many communities seem to have passed through their peaks or bent their COVID-19 curve.

However, there still is no clear treatment strategy, vaccine, nor panacea for COVID-19. Physical distancing and addressing the social determinants of health remain key for recovery and to reducing any future pandemics. Globally, there are many promising clinical trials in progress. Dr. Sandy Nairn, CEO of our Templeton Global Equity Group, recently had a discussion with Professor Gerry Graham, a world expert in immunology who shared his thoughts on current COVID-19 research:

  • Stop the virus in the future: Search for a vaccine. Indications are that COVID-19 is a slowly mutating virus, raising hopes that vaccination strategies may induce long-term protection.
  • Combat condition: Antiviral treatments. Antivirals directly block viral function by interfering with key viral molecular mechanisms. Clinical trial data will be available soon after some anecdotal evidence suggesting positive results.

  • Reduce mortality: Stop ‘cytokine storms’ with anti-cytokine blockers. COVID-19 patients can have a dangerously overdeveloped inflammatory response in the lung driven by a ‘cytokine storm.’ Trials examining existing anti-cytokine therapies developed for other inflammatory and autoimmune diseases, such as rheumatoid arthritis, are underway. Very well-developed therapeutic agents capable of inhibiting cytokines may be repurposed for use in COVID-19 patients and are easier to deploy than new treatments.

Their longer discussion can be found in the Templeton Global Equity article titled, “COVID-19: WHAT CAN SCIENCE TELL US AND WHAT ARE THE IMPLICATIONS? A Dialogue with Professor Gerard Graham.”

Before too long, the markets will treat the virus as a ‘bounded problem’—allowing risk/reward decisions to be made with less uncertainty. I believe this will ignite a significant relief rally.

What Are the Risks?

All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Investments in foreign securities involve special risks including currency fluctuations, economic instability and political developments. Investments in emerging market countries involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Such investments could experience significant price volatility in any given year.