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Here’s why the FDA may approve a Covid-19 vaccine before the November elections, according to Jefferies’ biotech-research team

If true, any approval may not actually benefit a vaccine company, but instead other parts of the stock market

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By Michael Brush, MarketWatch

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As fears of a second wave of Covid-19 weigh on stocks, here’s some potentially good news: A vaccine may be approved before the November election, according to a major biotechnology investing research firm.

The prediction is a big deal for investors for three reasons.

1. It’s credible because it comes from Jefferies, a high-profile brokerage in biotech and pharma that’s wired in to literally hundreds of companies in the group, including the major vaccine developers. Jefferies has nine analysts covering the industry.

2. Food and Drug Administration (FDA) approval of a vaccine ahead of voting could have an impact on the elections, possibly swaying the outcome in favor of President Trump.

3. For investors, early vaccine approval would be bullish for biotech stocks, cyclical stocks, travel stocks, the economy and the market overall. The S&P 500 Index /zigman2/quotes/210599714/realtime SPX +1.27%  and the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.55%  have recovered most of their March losses, and the Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.88%  recently hit new highs. They’ll need some good news to support further advances.

Ironically, early vaccine approvals probably won’t mean much for investors who have already enjoyed good runs in vaccine developers. It might not mean much for most people worried about contracting the virus, either. Weird, right? We’ll get to that later in this column.

Bold prediction

We hear time and again that vaccines take 10 to 15 years to research and bring to market. So given the limited timeline of Covid-19 vaccine safety and efficacy studies to date, the following is a bold projection.

“We believe the FDA will likely approve at least one vaccine prior to the November election,” Jefferies health-care strategist Jared Holz said in an interview. “Perhaps multiple vaccines could get the go-ahead at some point early in the fourth quarter and quell fears of a second wave of Covid-19.”

But this isn’t too off the wall, even if Covid-19 vaccines have only been investigated for under a year. That’s because Holz is basing his prediction, in part, on signals from vaccine-development companies.

He says New York-based Jefferies has heard from several vaccine developers — including Moderna /zigman2/quotes/205619834/composite MRNA +3.74% and AstraZeneca /zigman2/quotes/200304487/composite AZN +1.23% — that an emergency authorization may happen before the elections. And just as important, they’ll be close to having the capacity to produce millions of doses.

“That sets a very high bar, which no one is asking them to set,” says Holz.

Efficacy studies will continue. Moderna is moving into Phase II Covid-19 vaccine trials now, and it will start a larger Phase III clinical study at the beginning of July, the company has said. Both trials look at efficacy, and they will continue to examine safety. Many other vaccine companies are on a similar timeline.

Machiavellian maneuver

Here are three other reasons we may well see Covid-19 vaccine approval before early November.

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