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What drives the glove bull run?

Answer: The Covid19 pandemic.

It is as simple as that. The virus does not care about human sentiment, or political opinion. The SARS-Cov2 virus is.



Why does the glove market have more to run?

Answer: Because there are more humans to infect.

Currently 26 million people have been officially infected. Increase that by a factor of 10 to account for people who are asymptomatic and it is just 260 million people. There are 7800 million people alive and humanity does not have immunity to this virus.

So, do not look at this like an economic bubble with greater fools, look at this as a pandemic with doctors having to contend with a contaminated work environment and hospitals that are flooding with Covid19 patients. It is bad in developing nations because hospitals there are poor and it is bad in developed nations because hospitals are not built to have excessive spare capacity. There are another 7500 million more people to go.



How long does it take to make a vaccine?

Vaccines typically take 5-10 years to develop. The fastest vaccine ever developed took 4 years (Mumps). The Ebola vaccine with all the modern technology of the late 2010s took 6 years to develop and test. It applied for FDA approval in December 2019. So when politicians and company CEOs say they will have a vaccine within a year, they are talking BS. Imagine a politician claming that if 1 woman takes 9 months to give birth to a baby, then they will have 9 women working together to give birth to a baby in 1 month. It simply cannot be done. You cannot rush biology, be it a pregnancy,  the immune system or vaccine development.

As it is, vaccine companies are no longer conducting vaccine trials consecutively as they should, rather they are doing all the trials concurrently at the same time. This removes the very reason of why we do the trials in the first place; to test the vaccine candidate and catch any harmful side effect using as few people as possible.

Take Moderna as an example.

Phase1             Start: 16 March 2020              End: 22 November 2021

Phase2             Start: 29 May 2020                  End: March 2021

Phase3             Start: 27 July 2020                  End: 27 October 2022

And moderna is aiming for an aggressive timeline of producing a vaccine by early 2021, aided by a FDA emergency use authorization, a moved incentivised by a $300 million bonus.

In effect, Moderna has not completed its phase I trials yet, but has started its Phase II and III trials.  Moderna's mRNA-1273 vaccine will not have completed any of its trials before Moderna aims to mass produce its vaccine and distribute it via FDA emergency authorization. Perhaps shame and the potential of bad publicity will eventually stop Moderna from becoming the American equivalent of the Gamaleya Institute in Russia with its equally untested but government approved vaccine.

https://clinicaltrials.gov/ct2/results?cond=COVID-19&term=mRNA-1273&cntry=&state=&city=&dist=&Search=Search



But... but we make new Influenza vaccines every year! So why can't we make a covid19 vaccine in a year.

Well that is because by 2020 we have nearly 75 years of experience and infrastructure build up to make the influenza vaccine in massive quantities. In addition, we aren't actually making a new vaccine; we are modifying an existing influenza vaccine to compensate for the new mutations. With the SARS-Cov2 virus, we will need to make a new vaccine from scratch and we know very little about this virus as we just discovered it in January 2020.  There are also further complications in vaccine development as the SARS-Cov2 virus is a member of the Coronavirus family which has displayed ADE behaviour (explained later in this article)



Are vaccine bad for glove sales?

Nope. Vaccines increase glove sales.

Right now, doctors and nurse only need to see 20% of the people infected by Covid19. That is the 20% of 26 million people so sick that they need to go to the hospital. 80% are mildly ill,  they are sent home and told to stay self-isolated for 14 days.

Now imagine if doctors and nurses needed to see 7800 million people because we have just started a mass vaccination program. Doctors will need more gloves and other PPE. Why? (1) Because they do not want to spread the SARS-Cov2 virus. THe mass vaccination means that suddenly the entire population is going to come into contact with a few health workers. It is almost certain that these health workers will meet an infected person. And if that worker gets infected they will be meeting and thus spreading the SARS-Cov2 virus to a lot of uninfected people. It takes 2 weeks after vaccination is completed before immunity develops. (2) So far all Covid19 vaccines need 2 doses of the vaccine, with the second dose given 2 weeks after the first. Meaning that the doctors will be seeing the same person twice. It also likely means a person remains susceptible to the virus for at least a month after the first dose is given.

And if you prefer history  just looks at TG profits in the 2009 H1N1 pandemic

    February 2009          TopGlove Profit After Tax (PAT)    37.0 million (Before pandemic)
    April 2009                 WHO warns of H1N1 influenza
    August 2009             TopGlove Profit After Tax (PAT)     56.8 million
    September 2009       FDA approves four influenza vaccines
    November 2009        TopGlove Profit After Tax (PAT)    65.2 million
    December 2009         Mass vaccinations in US begins
    January 2010             Mass vaccinations in Brazil begins
    February 2010          TopGlove Profit After Tax (PAT)     70.5 million
    August 2010              WHO declares H1N1 pandemic over
    August 2010              TopGlove Profit After Tax (PAT)     45.0 million (After pandemic)

Compared to what we have now.

    November 2019        TopGlove Profit After Tax (PAT)    111.4 million (Before pandemic)
    January 2020            WHO warns of SARS-Cov2
    May 2020                  TopGlove Profit After Tax (PAT)     347.9 million

FDA has yet to approve a Covid19 vaccine... and when it does... we would expect a significant jump in glove demand.



Taking an untested vaccine candidate, what do you have to lose?

There are 4 different possible outcomes.

    The vaccine candidate works. You have immunity to the virus and that immunity is long lived and last more than 1 year.
    The vaccine candidate works. You have immunity to the virus but the immunity is short lived and fails within months.
    The vaccine candidate fails. No immunity to the virus.
    The vaccine candidate fails. Antibody Dependent Enhancement (ADE) occurs. ADE is a situation where the virus is able to use the antibodies that coats it to more efficiency enter and infect cells. Hence people who are vaccinated become even sicker than people who are not vaccinated.

Outcome (1) is what we hope for.

Outcome (2) is useful for high risk medical workers. It can even be used to control flare up of the virus and prevent it from becoming an epidemic. Useful in countries where the virus is mostly under control like China, New Zealand etc.  But alone such a vaccine is insufficient to stop a pandemic.

Outcome (3) is a waste of time, money and resources.

Outcome (4) is what we hope not to happen. ADE is observed in several different families of viruses, and is the reason why we do not have a vaccine against  Lentivirus (eg HIV), Flavivirus (eg Dengue) and Coronavirus (eg. SARS). We have put 10 year of work to develop a vaccine against 2003 SARS with no sucess, and a lot longer against HIV. A failed vaccine candidate with this outcome can make people more suspectible to infection and increase mortality rate, due to increase severity of the infection.

So yes...given SARS-Cov2 is a coronavirus, a member of a familiy that has previously displayed ADE behavior, there is a risk of that a poorly design vaccine candidate can go horribly wrong.



The Swedish option; Let it go. Let it grow. Don’t care about it anymore.

Before one considers implementing the Swedish option… which is the do nothing and let the virus ravage the population… one has to consider 2 factors.

(1) While the mortality rate of Covid19 is on average ~1%, this is only true if the hospitals are fully functional. 20% of people infected need medical care... as simple as antibiotics to as severe as ICU. When hospitals are pushed to their limit, the mortality rate goes up. Hospitals run of out essentials and common items, drugs, oxygen, even stuff as common as gloves. At its height the mortality rate of Covid19 in Italy was 8%, and people were saying China was hiding the true deaths as it had reported only 3.4% mortality rate.

(2) If we somehow keep the average mortality rate to 1%, this is still 1% of 7800 million people. That means 78 million people dead worldwide. This is more deaths than the 1918 pandemic, more deaths than WW2. In Malaysia, it means 310,000 deaths. And given the exponential growth of the virus, most of the deaths will occur very close together. In New York, there were so many dead people, that the four crematoriums within the city had to run 16 hours a day 6 days a week. Excess bodies had to be buried in mass graves and there were still bodies found rotting in the sun because Covid19 infected bodies could not be processed fast enough. If the idea of bodies roting in the sun is not distrubing, consider this, Sweden has 20x more deaths than its neighbours. It is easier to make a sacrifice if you aren't paying the price.

It is likely a vaccine will not be developed in time to stop the current Covid19 outbreak. However it does not mean we should let the virus spread as it pleases. Such a move will result in an pandemic that will grow exponentially and will almost certainly overwhelm the local healthcare system and crash the global medical supply chain. This will send the average mortality rate soring to levels we have only glimpsed in Italy (~8%). Instead, we must try to constrict the virus's growth as much as we can. We will probably not escape paying Covid19 with the deaths of ~1% of the global population but we may escape paying any higher.

https://klse.i3investor.com/blogs/Pblue/2020-09-07-story-h1513349065-Topglove_A_Response_to_Choivo_Capital_The_Greatest_Fool.jsp
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