Vaccitech/AstraZeneca: souring mood overshadows float plan

Vaccitech was primed and ready when the pandemic broke. The Oxford university spinout got a head start in the race to develop a Covid-19 vaccine after years of work on another coronavirus. It now wants to capitalise on its pioneering technology with a flotation. The timing is less propitious for that milestone.

News of Vaccitech’s US initial public offering filing on Wednesday was overshadowed by regulators identifying a possible link between the Oxford/AstraZeneca vaccine and very rare cases of unusual blood clots. In Britain, the under-30s will be offered an alternative jab. Experts say that the benefits outweigh the risks for the vast majority.

The decision will have little financial impact on Vaccitech. It is only due to receive a very small share of post-pandemic revenues. A link with blood clots, if proven, might have implications for other vaccines in the pipeline. These are outnumbered by treatments for cancers and hepatitis, for which there is a different balance of risk and reward. Even so, the tone for a flotation is often set by the broad public mood. This is souring towards the vaccine.

Vaccitech gave up commercial rights to the jab. The bottom line of partner AstraZeneca should emerge unscathed too. But investors are increasingly frustrated with reputational damage and claims on management’s time. Political cover in the UK for embattled boss Pascal Soriot meanwhile depends on doubts over the vaccine evaporating rather than deepening.

Clinical trials for Vaccitech’s lower-profile products are at an early stage, reflected in a $450m valuation in a recent fundraising round. While some of the froth has blown off valuations in the past two months, the S&P Biotechnology Select Industry Index is still up 70 per cent over the past year. 

Vaccitech’s plan to go public in the US is disappointing for London, which is trying to attract more listings. Since 2015, there have been more than four times the number of biotech IPOs on Nasdaq than those on European exchanges. 

New York’s deeper pool of expert healthcare investors will look doubly attractive to Vaccitech as the backlash against its best-known product gathers pace.

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