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Coronavirus crisis: your questions answered

Morningstar Equity Analysts  |  02 Apr 2020Text size  Decrease  Increase  |  
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The Disease

How deadly is it, after taking varying diagnosis rates into account?

The best estimates come from South Korea, where diagnosis rates were high enough that fatality rates should be more accurate. Death rates there ranged from roughly 0.1 per cent for 30- to 50-year-olds to more than 8 per cent for those older than 80.

What determines who gets a severe case?

Generally older individuals and those with pre-existing conditions are most vulnerable, but there is also a theory that higher exposure to the virus (close contact with sick individuals, as in a household or hospital) can put individuals at risk for severe reactions, as with measles.

How contagious is it with no intervention?

Scientists use the shorthand R0 - pronounced "R naught" - to estimate the total number of infected people for each infected person, with no mitigation efforts. This virus is likely between 2 and 3, making it very contagious.

Will it be substantially reduced with warmer weather?

While flu abates in the summer, this is partly due to existing immunity in the population and letting the virus run its course among those without immunity in the winter months. There should be some benefit from warmer weather, as fewer people are in crowded indoor areas where the virus can spread more easily, but it may not be enough to significantly slow the virus; we need to watch spread in the Southern Hemisphere.

How well does it spread before patients are symptomatic?

Very sick patients shed the most virus and are probably the most contagious, but patients can also be contagious if asymptomatic (for contact tracing, assume one to two days before symptoms).

Do some patients stay asymptomatic?

Some patients in Wuhan developed antibodies but never knew they were sick.

How many people would be infected if the virus is allowed to run its course?

Herd immunity (protection of the group once most people have developed antibodies to the virus by being infected and recovering) would develop at 70 per cent infection rates, but this assumes we are all vulnerable (it's possible, although unlikely, that some of us have some defence from exposure to milder coronaviruses).

Do children still spread the disease despite few reported severe cases?

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We assume children are less symptomatic but still capable of spreading the disease, making school closures a helpful mitigation effort, although support for this is mixed.

Will there be a second wave?

If the disease burns through society and most patients develop antibodies, no. But if containment efforts hold cases down, as we expect they will, we think a second wave is inevitable; we can only hold on to extreme measures for so long.

Will patients who recover be immune to a second wave?

It is difficult to forecast, but as of now, at least some epidemiologists think that the virus is mutating slowly enough to allow continued immunity.

Will the virus return in 2021?

Given how widespread the coronavirus has become, many epidemiologists expect it to stay in circulation, resurfacing seasonally.

Nonpharmaceutical Interventions

Can we avoid future economic shutdowns with smart diagnostics and contact tracing?

This is the key question. Singapore's rebound in cases casts doubt on this idea, unless countries act together on social distancing or restrict travel to other countries, but South Korea offers more promise.

What is the right balance of interventions?

It's impossible to say what the minimum is to maintain control. Perhaps it's a combination of reduced gatherings, working from home when possible, diagnostics, and contact tracing.

How long will these need to be in place?

China was shut down for two months but took the most aggressive steps and could see a rebound after reopening. We assume three to four months of aggressive measures in the US for this first wave of the outbreak.

Is closing nonessential businesses and schools necessary for successful mitigation in the US?

We think it's necessary, given the advanced stage of spread of the disease. However, we think we might be able to avoid these measures, or at least limit how widespread they are across the country, with diagnostics and contact tracing after we contain a first wave.

How well will citizens of Western nations comply with stay-at-home orders or other recommendations?

Public cooperation is necessary for any of these measures to work. Part of this involves education on hygiene, and part on interpretation of guidelines (businesses acknowledging they are not essential). We also expect that as cases increase, citizens will instinctively distance themselves, regardless of any mandated government actions. While not perfect, data from Unacast showed a more than 50 per cent reduction in distances travelled (using cellphone data) in New York City on March 20 versus before the outbreak, which suggests social distancing.

Could Western governments begin to enforce social distancing more aggressively, like China's forced quarantine and separation of families?

We think it's unlikely that we will have cordon sanitaire in Western nations. Quarantine will likely be done at home, although it could be done at makeshift hospitals in hotels or convention centres.

Can we keep cases low enough to prevent overwhelming our critical-care system?

We think that there will be regional shortages in supplies in March and April, but that containment measures as well as treatments that reduce severity of illness will allow us to move back within our capacity after that.

Is there a way to use technology to surveil citizens without intruding on fundamental rights to privacy?

We think that voluntary location tracking (such as through an app) could be a way to achieve this, but it would require society to largely get on board with this.

Can we ramp diagnostics fast enough to slow spread of the disease?

The US got off to a slow start but is rapidly expanding diagnostic access, which should slow spread of the disease in a second wave, if it occurs, this fall.

Will we be nimbler in our response if the virus returns in 2021?

We think we not only will be nimbler with diagnostics and contact tracing, but also have more tools like powerful antibody treatments and potentially a vaccine.

Pharmaceutical Interventions

Could an existing drug be repurposed in time to help during a first wave?

With data expected in April and May for multiple drugs, we expect confirmation of a useful drug during the first wave. Several treatments are already being used preapproval, despite uncertain efficacy.

Could Gilead's remdesivir benefit a wide spectrum of patients, relieving ventilator shortages?

Gilead is testing the drug in mild and severe patients, so it could prevent the need for ventilators or allow patients to be removed from ventilators faster, if effective. However, as an antiviral, it is likely to be more helpful earlier in the disease, in our view, and patients on ventilators are more likely to respond to antibodies like Kevzara and Actemra.

How quickly could a drug be approved under the FDA's emergency use authorisation system?

There isn't a lot of precedent to judge this. The fastest approvals for priority reviews historically have been a couple of months from filing, but we assume the FDA could make an approval decision in less than a month in this pandemic.

How quickly can manufacturing be ramped up?

There is not a lot of data to judge this, as drug firms typically have many months, if not more than a year, to build inventory before a launch. We assume that Gilead and others will be able to use multiple manufacturing sites and that small molecules like remdesivir could be scaled up rapidly enough to treat a significant number of patients during this pandemic. It is less clear if antibodies could be manufactured quickly enough to be available for widespread prophylaxis, although use in very sick patients is very achievable. Assuming continued record-breaking speed, we see a best case as millions of doses of vaccines available this fall.

If some vaccines could enter larger trials by late summer, could FDA approve on this phase 2 data?

We expect high-risk citizens (older population, healthcare workers) could receive vaccines before approval (this fall), but the FDA would need phase 2 data (likely available late this year) before approving more widely. This might be different if manufacturing ramped fast enough to allow hundreds of millions of doses this fall, and if drug manufacturers can collaborate to expand capacity.

Could a treatment also be used to successfully prevent disease?

We think it's very possible that Gilead's remdesivir or antibody therapies moving into testing (from firms like Regeneron) could work to treat or prevent infection.

Will mutations cause vaccines to quickly lose efficacy?

The latest analysis leans toward no. We should be able to have a one-time effective vaccine, due to low mutation rates, for at least a few years.


Morningstar Premium members can access the full report Coronavirus: Market Temperature Check here. Or you can take a free trial to Premium and get instant access. It also includes a list of 40 global stock ideas to consider. 


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