Efforts to Manufacture a COVID-19 Vaccine

Week on iTunes, SoundCloud, ol Bloomberg dot com. You can also listen to our radio show at two pm Eastern on Bloomberg Radio every weekday, or watch us on YouTube by searching Bloomberg Global News. We want to get to our virus update, which we do every day, and we've got a great guest to talk about what's going on Tonics Pharmaceuticals. It's among several drug companies working on a COVID nineteen vaccine, So let's get into it with Dr Seth leader In his chairman, President CU and founder of

the New York based specialty pharmaceutical company Tonics. He joins us on the phone in Massachusetts. Dr Letterman Leaderman, excuse me, it's nice to have you here with us. Um I want to get into and we want to get into what you guys are doing. But I've got to ask you about the latest news involving the virus. And we've all been talking about the World Health Organization coming out and talking about a symptomatic transmission of the virus and saying, uh,

it's very rare. And I know a top w h official has now come come back out and kind of downplayed her comment. So I don't know, how do you make sense of this? Well, first of all, thank you very much for having me on the show, and thank you for covering the COVID nineteen story so effectively. It's important that you know knowledge is power and everyone is in this together. Thanks for asking me about the w h O recommendations. I would say generally that people should

air on the side of caution. It's it's hard to know, um what's safe and what's not safe, but people making individual decisions should be cautious. I think that I find some of the information compelling. Being outside is better than inside with people. I think that uh, staying six ft apart, wearing a mask and hands are all very important. So

this new thought about asymptomatic transmission. It is something that people can put into an equation, but I wouldn't use that to engage in any behaviors that don't follow the

basic tenants. So, as we think about a vaccine, doctor, I mean, it is the thing everyone's looking forward to, and in so many ways, you are, as Carol said, right, and the think of us think of this help us understand what's realistic, what you are seeing and how this development, which feels different to those of us who don't normally pay so much attention to how vaccines are created, how

it is or isn't different from what you normally seek. Well, first of all, I think that there's a remarkable effort going on all over the world, many companies, and it's really exciting to see how governments, nonprofits, companies have come together with the common goal of doing something about this. I agree with the general belief that we really can't get back to work and back to school, and in the same way that we now look back on it's

called normal until there's a vaccine. So a vaccine is very important and one of the exciting aspects of this that so many different technologies are being tested. I think it's realistic that there will be a vaccine either late this year or early next year, but I'm not sure that that would be the vaccine that will ultimately win market acceptance and the confident of doctors and patients. So there's an element of the tortoise in the hair here where there are some companies that are very fast out

of the gate. They have exciting technology, but there are other companies like ours that are going more slowly and have different technologies. And I think that COVID nine team will be with us for a long time, so it will be possible to figure out which vaccines are best

in the public health sense. Explain the science. As you say, there's different technologies for the virus, so explain that, because you're right there is this huge race going on the government is involved to what are the different technologies we're talking about, you know, and how that affects the efficacy

of an ultimate vaccine. I think the simplest way to do to divide the different vaccine technologies that are out there um is to think about the two main components of the immune system, and that is either antibodies or T cells. And I think that vaccines are designed to

stimulate either antibody responses or T cell responses. Antibody responses are shorter lived and tend to stop an infection from happening, and T cell responses are longer lived but tend to eliminate an infection after it's happened and also clear the bloodstream and the body of the virus. Now, those are the extremes. Just about every vaccine will have elements of both.

But I think that dividing them up into whether something is more antibody or more T cell focused is a good way to do to divide the many technologies being thrown at this. Do we need both or do we need the T cells, which to me sounds like a bigger deal. Just quickly and then we'll come back and talk we need both and um, but but there there

are flavors within both. But for example, it's probably true that an antibody test is a good sign that someone has recovered from the illness and as some level of immunity, But antibodies without key cells is probably not a solution. Let's get back to our guest. UM continue to talk about what's going on with the virus, and of course, the search for a vaccine. Dr Seth Letterman is still with US chairman, president, CEO, and founder of Tonics Pharmaceuticals.

He's on the phone in Massachusetts. So, you know, when you kind of take into account UM, Dr Letterman, the reopenings that we're seeing, but we're continuing to be vigilant, wearing masks and so and so forth, do you feel like things are progressing like they should be and in a safe way. I'm optimistic, but cautious. The most of the United States still has very low levels of in

fact and exposure. So while some areas like New York City um is may be prepared to reopen, it seems like the rest of the country has to really pay attention to the guidelines of interacting and behaving with appropriate caution and so as you look at that UH, and also you look at everything that's been going on with folks going into UM public spaces, and you think ahead to kind of the broader sentiment out there of where

we are around the virus. We talked about the w h OH, we talked about UM, you know, the reopening element. How does that all factor into what we need, how we need to be acting sort of in the meantime, and you said earlier in the conversation, you know that that we're not really going to get back to anything

resembling normal till till there is a vaccine. But we don't live in this sort of binary world anymore, and so so I do wonder, Um, you know, when you think about things like I'm just gonna be very procial here, like sports in the fall, you know, whether it's youth or professional or college, when you think about people going to conferences, all those different things, is that all just

delayed until there's a vaccine. Well, I think that if regardless of this scenario is people are following the guidelines, who's staying six ft apart, wear a mask, washing hands regularly, I think a lot of activities can resume there. It's it's clear that this is a virus and it's transmitted in a certain way by the respiratory route, and if people are very cautious, they can protect themselves and others. So with that in mind, I think a lot of

activities can and should reopen. But it's there's a fear that people will become complacent or get sloppy, and that's something to really guard against. Yeah, and certainly when you see pictures as things reopen, you do see people getting sloppy. I was reading a story on the Bloomberg about I think one of our reporters who took a flight, and you know, yep, there were certainly social distancing and things

get in place. But then when there was all of a sudden a flight change, like all of a sudden, everybody's crammed next to each other, and it's very easy to go back to the ways. I do want to Dr Letterman, just you guys are working on a vaccine, So tell us where you are, how, what's the timeline you're working on, and and what kind of a vaccine it could ultimately be, Oh, thank you. Our vaccine is a live replicating vaccine, and that's particular kind of vaccine

that stimulates T cell immunity. Ours is based on the oldest vaccine. It's the same vaccine that eradicated smallpox from the world. And the core that we're working on is about two hundred and twenty years old, and we're using that as a vector to carry a piece of the of the COVID nineteen passage in in it, and we are we are expecting to be in animal studies in the second half of this year, and that will determine how quickly we can get into humans. But we're hoping

it can be in well, here's hoping. I mean, we're all looking forward to that in many ways, and as you have very well set out, Dr Letterman, it is the it is the path back towards something that looks much more normal. Dr Steth Letterman is the CEO of

Tonics Pharmaceuticals, joinings on the phone from Massachusetts. They are, of course a clinical stage biopharma company and they're working on a vaccine, and I liked what he was able to explain to us in terms of the types of vaccines that are out there, and there is the most concerted effort I think we've certainly seen in our lifetimes

to eradicate anything. Carol's fair. I hope we stay in touch because I thought the science of explaining the different because we know that there's a lot of different vaccines being worked on UM and I know they just joined it had signed a deal to support the manufacturing of

their vaccine candidate UM. But I'd love to touch base as this progressis because certainly UM, I really do feel like we get a lot of the science holes filled in on what we need to know as um, you know, individuals who are trying to get back out into our society. This is Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. I am really excited to talk about this next story and with this reporter, in part because, as you know, Carol, you're talking to bureau chief spirit

chiefs are the best. You're just saying, do the chief thing. Uh. Natalie Opaco Pearson is our Vancouver bireau chief for Bloomberg. She joins us on the phone from that gorgeous city and her story. I'm so excited about Shopify because I mean, this is a juggernaut in Canada and I really want to understand how it's gotten there and what maybe next. Natalie, Really nice to have you with us. How are you doing? Thanks for having me so tell us about shop if I remind us what this is and how it has

become so important so fast. It's this really odd Canadian story that's very big company that a lot of people have never heard of. Um, it's remained mostly invisible to consumers, but it's it's become the sort of platform of choice for any business that wants to get online quickly and cheaply. And obviously since the beginning of the year with a pandemic that pandemic, there's been a lot of businesses that suddenly want to get online very quickly and very cheaply.

So essentially what it is is, you know, starting with a monthly fee of about twenty nine dollars, you can set up a virtual shop and everything that's needed to run it, so you know, manage things like payments, inventory levels, shipping um. And we've seen you know, mega brands from like Heins the catchup maker, to Heineken the beer maker use there you have their online presence on Shopify down

to like a small florist in Dublin UM. And one thing that's Keita note about Shopify is it's essentially for those businesses that don't want to be selling on Amazon. So if you want to go online and keep control of your online shop in your e commerce presence, you're gonna go to something like Shopify and set up you set it up on that platform. And so today in the US, you know, one of the world's biggest e commerce markets. If you're buying anything online, that's not on Amazon.

It's most likely done on a website that's been powered by Shopify, and they've been powered by the lockdown and the virus. Right, is a lot of people quickly pivoted to digital, that's right. So since the start of the pandemic. I think it was their chief technical officer who was saying something like they were seeing Black Friday levels of traffic every day, all these businesses wanting to suddenly set up an e commerce shop and you know, wanting sample.

Actually was Hinz this on fifty year old food brand that had resisted selling online for a very long time. But in the UK, as British consumers were suddenly struggling to find pantry staples, they did this about face. It was this very speedy e commerce pivot. They they within a week they had a virtual shop online selling pasta, hoops and tomato soup and so on, and so that

has been you know, replicated in many geographies. And I think you know it was they saw like a sixty present surge and store creations over a six week period. I mean, it's unbelievable to the juggonnaut has become on the public markets. You know, vying with Royal Bank of Canada as the biggest publicly traded company. I mean, it's bigger than Uber, right, I mean, which which I feel is like the thing that like, that's the thing that you just have to say to anybody in twenty twenty

and that gets their attention. It's crazy and you know, speaking for Canadian and it's crazy for Canadians. It's an eight nine billion dollar market cap company. Yeah, it's a dressing room off. I mean, you know, it's it helps flop sixty one billion dollars worth of goods in two thousand and nineteen. It's you know, it's market value exceeds that of General Electric, and yet so few people outside of Canada have ever even heard of it. So go ahead, Well I was thinking, and so all right, so we

look at Amazon. We all know Amazon, right, we use it constantly. You know, does Amazon have to be worried? I mean, what's what's the difference the biggest difference between these two? Yeah, and that's a great question because I think you know, a lot of people who are aware of Shopify tend to compare it with Amazon. One one key difference is that if you're a merchant and you want to sell your stuff online, Amazon might be an easy choice, but you kind of lose control once you

put your wares up on Amazon. You're sort of relying on Amazon to get the web traffic to your virtual store, and Amazon sort of takes over the fulfillment of those orders. And what we actually saw during the pandemic was that as as Amazon became overwhelmed, UH, it was prioritizing essential goods.

So those merchants who were selling non essential goods were certainly finding that they were getting orders, but they couldn't fulfill them, and so that actually helped direct some traffic over to Shopify, where you are in control of your online UH shop. And the other thing to note is that you know, Shopify is is much more than just selling a few things online, like It's evolved and so essentially now it's sort of a one stop shop for

a business. So during the pandemic, it helped merchants set up curbside pickup, helped them find ways to set up local delivery. It's also expanding social media, so it set up these partnerships with Facebook and Pinterest because one of the biggest problems for businesses is finding new customers. Especially if these people aren't walking by your store every day, you know, how do you find out? How do you find new customers? So then it's trying to expand. Social

media is just another way to do online shopping. And in the past what we've seen as businesses have to kind of cobble together different applications to manage these different channels. Will Shopify really simplifies that for you. It's saying you come to us, we will help you set that all up and you can see the entirety of your business from this one plot. And it's still and it's still your site, right or is it on Shopify? It's it's Shopify.

It's sort of the provides the plumbing. But if you are a consumer you go to that site, you will never see Shopify. If you go into the code, it looks like, you know, it looks like Victoria Beckham's clothing line, or it looks like Hinds online store. So, Natalie, before we let you go, gotta ask um. Obviously all of our behavior has changed on the consumer side, and behavior is clearly changed on the merchant side. How much does Shopify a need for some version of this to continue?

For this behavior change to continue in order to be as successful as it has been. Yeah, and that's a great question. I think that's where the skeptics have come in because when you look at some of these multiples, they're sort of reminiscent of the the Internet boom at its frothiest period. You know, it's share prices just totally gone stratospheric um and so what the one big question

is this rush of merchants that came online. Is that is that necessarily new demand that's going to sustain or is it businesses that might have eventually come online anyway? So are they sort of his Shopify borrowed from future demand so to speak. The other big question is how many of the small merchants that have rushed onto Shopify to set up online shops are going to survive because we saw after the global financial crisis thousands of them

memo recovered and consumers spending may yet collapse. So, you know, I think one analyst put it, the Shopify gained a lot of mark could share with the pandemic, but it's biggest risk may actually be meeting investors expectations, Like it's a huge amount of pressure to have that enormous share price surge. Right, absolutely, Well, it's a great story I must read. It's on the Bloomberg and on Bloomberg dot com today, it'll be in the upcoming edition of Bloomberg

Business Week. Natalie Obaco Pierce in Vancouver, bureau chief for Bloomberg. Jos on the phone from Vancouver. Who are listening to Bloomberg Business Week, Well, it's time not to dig into the Small Business Survival Guide. It's an effort that our colleagues at Bloomberg Business Week have been undertaking. It's very useful to understand kind of what small businesses are doing throughout all of this leading the charges to meet you. Cassani's editor for Bloomberg. She joins us on the phone

from New Jersey. Along with I sat up March. She is the owner of Studio Phenomenon Hair salon on the phone as well. So Demitra, remind us what you're trying to do here, and you know, it's interesting. This obviously started, you know, primarily to look at COVID nineteen in the aftermath there, but obviously the world got a lot more complicated and a lot more troubling in the past couple of weeks. So I wonder how you guys thought about

that pivot. Sure, hi, Jason, Yeah, we well, of course we were looking at small businesses through solely the lens of the of the virus. But even you know, I mean, the world is much more complicated today, even if we solely look at the virus sort of kind of next stages, it's complicated because we're all in reopening phase right New

York City. The big news of the last two days has been phase one reopening will eventually move on to phase two and phase three, combined with social unrest, combined with what is happening in the world, how do you keep going? Do you have the money to keep going? Are your customers going to come back? How can you

make your customers feel comfortable? So we um Nick liber Mike colleague, who is a freelance contributor, and I have been talking to business owners, and he has been talking to Asada Marsh as we mentioned about her business in Brooklyn, and it's a lot more complicated than many of us realized when it comes to something like a hair salon. Well, and let's bring in a Sada Marsh. She joins us on the phone in Long Island, as Jason mentioned she's

owner of Studio Phenomenon Hair Salon. So I just thought it talked to us about some of the challenges that you're facing, and it's really you know, twofold, minimally, you know, between the virus and then of course the civil protests, and you know you are a black business owner. So tell us about some of the challenges that you are seeing firsthand. Okay, well, I'm located in the hottest Brooklyn. I serve the number of clients per week and have a number of individuals in my business space at any

given time. People are scared political social messaging from respective leaders like conflicting. We don't know what to do. Uh. They need to have some type of economics stay grounds established, and things are confused and hard to access. Like for me, UM, I have to restructure my entire space. I have to lessen the people who work for me, and UM act really distant from UH. As they say sixty, I say, timty.

People don't realize when you come inside of the celant or space, you touch everything from the door knob to the chair to the bathroom door too. You know, it's very confusing. It's confusing for me as a business own confusing as a client a customer, and my demographic reach from a seventeen to seventy nine. So I have to be very weary of my older clientele because I don't want them to get sick because they're right at the at the war zone of the virus affecting them. So

it's very difficult. You know, I'm at wits end on what exactly is real or not. I myself went into the COVID nineteen test. It came back negative, and some people say it's a negative positive resummer to come back negative COVID nineteen, but then they're squad their nose and then they come back positive. Whole thing is absolutely confusing. I don't know. I mean, each client that comes in, I have to mask up myself. I have to give them a mask. It's just this whole every day, you know,

socialization with POOL. It's just it feels like literally I have to retrain myself. It's like learning how to read or do uh first or second grade math. You have to retrain everything that you thought was normal um to make it the norm. Right. So I decided just shifting gears slightly. I mean, so you're in the process of doing all of this, and then you know, here comes the last two weeks which have totally turned the world

upside down. And I wonder how you view that, you know, as a as a resident, as a business owner, but also as a human being and candidly as a mother. Right, well, it's hard as a business owner. I like, I shut my place down in March because it was it was so many mixed messages that were going on. You I'm a news watch of CNN, MSNBC. I watched the news just to know current events and things that have happened

in the world today. So it went from from the higher up the president, this virus is nothing, so oh it's only fifteen, so oh it's gonna be gone on such and such today. I had to really sit down and like real lies and tell myself, you know, when they said there was possibility of shutting down the Salmant. I had to go into thinking moment, as as other young business owners do. It's the hustle moment, because when you're a young entrepreneur, everything is about hustle, hustle, hustles.

So I've been in a business for over twenty years, so me I had to rethink my situation where I'm gonna go, what I'm gonna do, How am I going to service my customers. I went from actually doing here to making wigs right and trying to get my clients to buy the piece of wig pieces just until this entire pandemic is over. So it's you know, you have

let me think your brain right I started. We unfortunately have about forty seconds left, but you do have two black sons, and we just want to get your perspective of the protest, and we apologize. We really do only have about forty seconds here. Yes, okay, So as far as the protests going along, I'm a very ad I'm sorry. I'm a very oddly believer with protests and I stand bys on one hundred percent. The only thing that I

don't like is dismantle of your own community. You can't come in protests and destroy your community, destroy your stores, destroy in the places that you eat, work and buy your food. That it's affecting the older generation. These people need uh prescription medications from the local pharmacy. They need to know where they can go buy the groceries in the morning. If you destroy things in your own communities,

this is no whales to go my people like sounds. Yes, they have protested one protest protested in your protested in mind him, it's a different of demographic. Well, we would listen. We're so glad we got time with you, and we do wish you well and maybe we can check in with you again as things hopefully start to go back to normal. Asada Marsh, owner of studio Phenomenon Hair Salon, on the phone in Long Island, along with our own Bloomberg News editor, did meet your kess and needy? Im

a journal now that you let me drive? Oh no, no, no no, no please, I'll do the writing. Let me. I want to drive, Just drive the question getrankend. This is the drive to the globes to think well dry us Jo, Bloomberg Radio, and it's time for the Drive to the closes. Joinning this once again, David Deet's President and chief investment strategists at Point View Wealth Management, joining on the phone from Lovely Summit, New Jersey. David, how are you? How are you coping with this market that

really can't give us a straight answer? It feels like, well, certainly, um people are nervous. At this point. We've seen a tremendous jump of close to off the apparent bottom March, but of course the headlines are still horrendous. We've just been told by the NBR that we are in a recession that perhaps started in February. Um, the States, they're starting to open up quite slowly, but hotspots are increasing, certainly um double digit percentages of people out of work.

So people are trying to balance this tremendous rebound by the stock market with some of the most horrendous economic headlines we've heard in a generation. But so what do you choose to focus on, David? You know, are you really you know, the equity market tends to look forward, and I do wonder, um, do you think that's right? And do you think the trade justifies what we might

be getting or is it you know, too uncertain. We certainly talked to our Bloomberg Economics team, and you know, the expectations are not necessarily that high for what we might ultimately get, But there's also a wide gap in terms of you know, what might happen next. Yeah, absolutely, so I think the most important thing for people to

realize is a medical crisis. Um. And that makes it particularly difficult for economists and portfolio managers to get their arms around, because that's the province of uh research, scientists and so forth. But by all accounts, the silver bullet, which is the vaccine, is getting closer and closer. There's

apparently about a hundred firms worldwide working on it. It's becoming like the space race the Chinese we talked to what we actually talked to one earlier today, you're right, and and then you know, we were trying to get to the science behind because it's they're not all the same. Yes, So there's there's national pride, there's big bucks. You've got three inities by merk Morena's offering, a partnership between Astra Zeneca and Oxford University was just received the billion in

US funding. So I think that's right around the corner. That's the silver bullet. But of course the therapeutic if we can take death off the table. Gilly Ed's working on a great offering there, and each day we're finding testing is becoming more plentiful, more available, cheaper um. So that's one area. The other area is we're seeing just the seat change in consumer attitudes. Initially, of course, people were scared to death that they should have been from

the COVID risk, they stayed in their home. Now we're saying just as much focus on people's economic health and their mental health as opposed to the COVID risk. And they want to get out, they want to get back to work, they want to recreate the states all fifty of them are now letting them to do that. And we've seen great metrics suggesting that people are clamoring to Vegas. Even air traffic is starting to get better. So those those are some fundamentals that are moving in the right direction.

So what are you buying? So what are we buying? So? I mean, you know, we basically like to to you know, is if you are very nervous about the outlook, you stick with that stay at home and the secular tech growers. But on the other hand, if you're more constructive and see the benefits of historic policymaker stimulus built from the Federal Reserve and from um Congress, then I think you look for some of the blue chip cyclicals. The one we like best quite frankly is Boeing. And why, first

of all, you've got that valuation advantage. It was over four hundred right now it's just over two hundred. So you know, the question is not whether any airline will make It is whether people over the next five to ten years will want to take to the skies again. And we think the answer is yes. You basically got to duopoly. You've got airbust over in Europe, You've got Boeing because of the compliance issues, because of the capital required,

no one else is going to compete with them. And we just saw a crash over in Pakistan, unfortunately with an Airbus plane, So no one wants to just rely on them, and so we think that Boeing ultimately has um the upper hand and will benefit. Now it's a cyclical business, but a backlog of close to five thousand planes. You know, David Deet's one of the things I love about you is like you you love these down and

out every now and again. I remember, for almost a year or so we're talking about Wells Fargo, you were, you were behind them all the way. I do want to talk to about Coca Cola. You know, that's one that I grew up with down in Atlanta, and I wonder how you feel about it now. So you know, it's the chicken way to play a rebound. Here's why, because it is a consumer staple, so no matter how bad things get, people will turn to their inexpensive luxury,

which is a nice coat. Unfortunately, they make a little bit more money when you buy it at a bar or a restaurant and when you consume it at home. And that's taking their stuck down from sixty into the upper forties, which by the way, is only six point above where it was twenty two years ago. Um, so

we think that. And remember Coke is three times the size of its nearest competitor in terms of non alcoholic beverages, most of the businesses overseas, so it's got a distribution system, a high marginal one because it basically they just give the provide the concentrate and let others do the bottling and and getting it to your door business. And and so you have a wide wide moat. You've got a

three point two percent dividends. So if things get better, we see it drifting up from that forty nine sixty. That's game plus your dividend. But if things continue to stay tough, because of its size, because of that dividend, because of its basically nonstick of coll we think the downside risk is low. So I think it's a chicken way to take advantage of a general reopening of the economy. And again, three percent dividend versus less one percent of the ten year treasury. Where are you going to be

after a couple of years? Hey, one last name, PNC Financial is another name that you like, and that's got a three point six dividend yield. Stocks down about this year y p NC specifically Bursted. They're based obviously out in Pittsburgh. Because of the big news, they sold their stake in black Rock, so one third approximately other market value is now in cash. That means that dividend at three point seven percent is sake. That gives them the

option to buy back stock. It's now about was one sixty at the start of the year, so this could be an opportune time to do that or during the cat first to make an acquisition. We all know the financial stockture um under pressure. So they could go to the sun Belt, they could continue in the Midwest where they could get some service fintech play. They've got a lot of options. You don't have to worry about financial stress with PNC because of that successful and timely sale

of black Rock. Well, the company CEO was making some remarks at a Morgan Stanley conference actually today and said they're gonna be patient to deploy capital from that sale of black Rock. Uh and they said they consider stock buybacks quote at the margins, and that will ideally expand geography, focus on C and I in real estate. So you're right, they've got some breathing room. They've got a lot of breathing room, and expand geography sounds a lot like they're

going to buy another bank. I mean, that's what I would say. It's like maybe if we want to be in the South, it's like, we're not gonna open a bunch of P ANDC branches and there are some banks for sale down there. Good stuff, David Beats, thank you so much. Always good to catch up the top of the summit. President, Chief Investment Strategists for Point View Wealth Management,

Thanks so much for listening to Blueberg Business Week. Download the podcast on iTunes, SoundCloud, Bloomberg dot com, or wherever you get your podcasts. And of course you can always listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube by searching Bloomberg Global News