Peloton produces profit for the first time amid pandemic-demand spike, stock pushes toward new record


Peloton Interactive Inc. reported fiscal fourth-quarter earnings Thursday afternoon.


MarketWatch photo illustration/iStockphoto

A year after its initial public offering, Peloton Interactive Inc. is pedaling toward new highs amid a pandemic that is forcing people into their homes and away from gyms, creating demand for at-home fitness equipment.

Peloton
PTON,
-3.75%

on Thursday wrapped up its fiscal year by reporting that sales and subscribers roughly doubled in the 12-month period, and revealed its first profitable quarter as a public company and record quarterly revenue a little less than a year after its September 2019 IPO. Shares fell 3.8% Thursday from Wednesday’s record closing price of $91.17 — more than three times the IPO price of $29 a share — but pushed back toward record highs in after-hours trading following the release of the report, with gains of more than 7%.

Peloton reported fiscal fourth-quarter profit of $89.1 million, or 27 cents a share, on sales of $607.1 million, up from $223 million a year ago. Peloton reported a net loss of $47 million in the fiscal fourth quarter a year ago, just ahead of its IPO. Analysts on average expected earnings of 10 cents a share on sales of $586 million, according to FactSet.

“It has been another staggering year of growth, and I know all parts of the organization have had to work together to do everything possible to meet the incredible demand for our products and services,” Chief Executive James Foley said in a conference call Thursday. “The strong tailwind we experienced in March as the COVID-19 pandemic took hold has continued to propel demand for our products into the fourth quarter and first couple of months of Q1 fiscal year 2021.”

While still attempting to catch up to a flood of orders amid the COVID-19 pandemic — Peloton said Thursday it does not expect order-to-delivery times to normalize until around the end of the calendar year — the company is also looking to expand its customer base. On Monday, Peloton announced that it will reduce the price of its standard exercise bike and introduce a lower-priced treadmill, which could clear a path for potential buyers who were not willing to pay the large upfront costs for its products. It will also introduce a premium bike for fans who want top-of-the-line equipment.

Wedbush analysts noted that in a previous survey of 1,200 people, they found that Peloton could “dramatically improve” sales at a lower price point, especially in treadmills.

“42% of non-Peloton owners that were interested in fitness and familiar with the brand showed some level of interest in a $2,500 Tread, compared to just 30% showing interest in the current Tread,” the analysts wrote in a Sept. 9 note, after Peloton announced its new lineup. “Among existing Peloton bike owners, the number of respondents saying they would be ‘very interested’ in owning a treadmill from Peloton doubles based on the lower price, from 14% based on the $4,295 price point to 28% assuming a theoretical (at the time) $2,500 price point.”

While lower sales prices could hurt hardware margins and average selling prices, much of Peloton’s long-term prognosis focuses on the subscriptions for interactive workout media that owners continue to pay after they have received the equipment. Peloton announced Thursday that it now has 1.09 million subscribers, nearly doubling the 511 million that it reported at the end of its last fiscal year, topping its forecast of 1.04 million to 1.05 million.

In total for the fiscal year, Peloton collected revenue of $1.46 billion from the sale of equipment and $363.7 million from subscription services, up from $719 million and $181 million, respectively, in the previous fiscal year. Combined with other revenue from merchandise and other offerings, Peloton ended the year with $1.83 billion in sales, up from $915 million.

“By the end of FY 2020 our Peloton membership base grew to approximately 3.1 million, compared to 1.4 million members in the prior year,” Peloton detailed in a letter to shareholders Thursday. “Fueled in part by the challenges associated with COVID-19, member engagement reached new highs with 164 million Connected Fitness Subscription workouts completed in FY 2020.”

For the current fiscal year, which began in August, Peloton predicted htat subscribers and revenue would roughly double yet again. The company guided for revenue of $3.5 billion to $3.65 billion, with connected subscribers swelling to 2.05 million to 2.1 million. Analysts on average were predicting revenue of $2.74 billion and subscribers of 1.78 million ahead of the report, according to FactSet.

Peloton stock has gained more than 260% since its IPO; the S&P 500 index
SPX,
-1.75%

has returned 17.7% in that time. In after-hours trading Thursday, shares topped $94 following the release of the report.



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NYC restaurants can reopen indoor dining on Sept. 30, Gov. Cuomo says


Just one day after referring to indoor dining in New York City as a “reckless” proposition, Gov. Andrew Cuomo announced on Wednesday that such service will return to the city at the end of the month.

As of Sept. 30, restaurants will be allowed to serve guests indoors at 25% of their usual capacity, the governor said. The reopening plan includes a series of new safety measures and restrictions. Diners will be required to wear face coverings when not seated; at least one member of each party must provide information for contact tracing; temperature checks will be given at the door; no bar seating will be permitted; and restaurants will close at midnight. Businesses will also be required to operate with enhanced air filtration systems, a requirement similar to one of the stipulations used for gym reopenings.

The positivity rate in New York state — or the percentage of tests coming back positive for the virus — has remained below 1% for 33 days as of Tuesday. In New York City, that rate was 0.7%, down from a peak of more than 60% at the height of the crisis in March and April, when the city was the nation’s viral epicenter. 

Don’t miss: I went to the Met, and here’s what I saw

The governor previously cited concerns about the city’s failure to come up with a plan to enforce safety compliance for indoor dining, suggesting at one point that several thousand police officers be deployed to ensure good behavior in restaurants. It appears a mixture of improving compliance on outdoor dining rules and a promise of additional enforcement from the city cleared the way for Wednesday’s decision. 

“Because compliance is better, we can now take the next step,” Cuomo said.

The city will provide 400 enforcement personnel to monitor indoor dining in addition to compliance officers with the State Liquor Authority, Cuomo said. It wasn’t immediately clear which city agencies would be staffing that beefed-up enforcement. 

The governor also called for New Yorkers themselves to aid in enforcement at the 10,000 restaurants that are expected to require inspection. Restaurants will be required to publicly post capacity limits and phone numbers for patrons to report violations: 833-208-4160, or text ‘VIOLATION’ to 855-904-5036.

“I trust that if they have the right information, they will do the right thing,” he said, warning that if the infection rate in New York City spikes, the state can always close indoor dining again. 

If the infection rate has not increased by Nov. 1, indoor dining may be allowed to expand to 50% capacity, Cuomo said.

Also see: Welcome to New York! Don’t you dare go outside!

Pressure to reopen also came from the restaurant industry itself; in August, a group of more than 300 restaurants filed a class-action lawsuit against the state for the ongoing closure mandates, seeking more than $2 billion in damages.

James Mermigis, the attorney representing the restaurants in the suit, did not immediately respond to request for comment.

“The New York City restaurant industry has been financially devastated by the Covid-19 pandemic, and a safe return to indoor dining is critical to help save these vital small businesses and jobs,” NYC Hospitality Alliance executive director Andrew Rigie said in a statement emailed to MarketWatch. “We’re thankful to Gov. Cuomo for announcing a return to indoor dining with a blueprint for future expansion. Restaurants are essential to New York’s economic and social fabric, and indoor dining is a key component to the industry’s recovery.”

Read next: There are seven coronavirus vaccine candidates being tested in the U.S. — here’s where they stand



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Welcome to New York! Don’t you dare go outside!


“Nobody asked me to fill out anything.”

Roberto Gonzalvo, 33, had just stepped off Peter Pan 8733, the afternoon nonstop from Baltimore. He was still adjusting his eyes to the harsh fluorescent glare of New York City’s Port Authority Bus Terminal and about to ride the A train to his cousin’s apartment in Washington Heights. “I gave the man my ticket and that was it.”

He might have gotten in just under the wire.

This was a few hours after Mayor Bill de Blasio and Gov. Andrew Cuomo announced — separately, of course — their latest efforts to shore up New York’s defenses against the coronavirus. Though the state’s infection rate has remained below 1% for a month and counting, things aren’t going nearly so well in many other places. And that has New York officials glancing warily across the map.

On Tuesday, Cuomo said that Maryland and three other eastern states — Delaware, Ohio and West Virginia — were being added to the quarantine list, meaning that anyone arriving from any of those places is supposed to remain isolated for 14 days before stepping outside in New York.

Gonzalvo sounded surprised when he heard that. “It includes Maryland? Are you sure?”

It does now. It’s 34 states in all, including a lot of places that traveling New Yorkers used to like to go. Sure puts a damper on those spontaneous jaunts to Miami or Vegas or New Orleans, the current legal requirement to self-isolate for two weeks after returning to New York. Meanwhile, three former COVID-19 hot spots — Washington, Oregon and Arizona — have managed to earn their way off the bad list. So feel free to book a flight to Portland, Oregon, for some peace and quiet.

Or maybe not.

But give the Oregon city this much credit: After more than 100 days of protests and street violence over policing practices, the positivity rate is 4.8%, well below the 10% quarantine threshold.

Coronavirus update: Global death toll edges toward 900,000 as AstraZeneca halts vaccine trial after patient struck by illness

The whole point is to keep New York’s infection rate where it is or send it even lower, and the test data rules. “The infection rate is a pure function of what New Yorkers are doing,” Cuomo told reporters at his office in Manhattan on Tuesday, a refrain he’s been sounding for months.

So can all this quarantining possibly be enforced? Can’t people just come and fade into the New York crowd? The massive numbers seem to say, “Well, duh!”

Travel is still down because of the virus, but just by way of comparison: The Port Authority terminal counted 8,000 buses on an average weekday last year. To that total, add the 290,000 vehicles that crossed from New Jersey into New York City per day, on the George Washington Bridge, Lincoln Tunnel, Holland Tunnel, Goethals Bridge, Outerbridge Crossing and Bayonne Bridge. And then there are the airports, Amtrak, the commuter rail lines, the ferries and — well, it’s a lot of people to notify on their way into New York.

And some of them may not even know the latest wrinkles in the rules, as at least one Port Authority arrivee seemed not to on Tuesday.

For his part, de Blasio said that he was expecting universal voluntary compliance. But just in case, he was sending New York City sheriff’s deputies to provide “educational” presentations on interstate buses and remind everyone of the potential $2,000 fines. Riders on those buses, he said, will be asked to fill out forms detailing where they’ve been, as well as their contact information and quarantine plans while in New York.

“This is so important to keeping us safe,” de Blasio has emphasized.

The efforts don’t stop there. Last month, the city ordered hotels and short-term rentals to require visitors to complete quarantine forms at check-in. Again, universal voluntary compliance is the hoped-for result with fines — and even potential arrest — for those who loudly refuse to comply or whose noncompliance causes harm. One Brooklyn couple was hauled off an NYC Ferry in handcuffs over the weekend at Brooklyn Bridge Park when they refused the captain’s request to wear face masks.

Also see: Why an approved coronavirus vaccine may not end the pandemic quickly

But when the numbers are this large, city and state officials really have no choice but to lean on moral persuasion. In fact, most people seem inclined to cooperate, even if a few never will. At the Port Authority’s north terminal, most people were wearing face masks. Though the crowds at the terminal are noticeably larger than even a week or two ago, they are still down from a normal early September.

“What exactly am I supposed to do?” Roberto Gonzalvo asked before he headed off to the subway. “Stay in the apartment for two weeks?”

He didn’t say one way or another whether he’d be meeting that requirement. But he did keep his black face mask across his mouth and his nose as he walked toward the Eighth Avenue trains.



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Coronavirus update: Global death toll edges toward 900,000 as AstraZeneca halts vaccine trial after patient struck by illness


The number of confirmed deaths from the coronavirus that causes COVID-19 worldwide edged closer to 900,000 on Wednesday, and the U.S. death toll moved close to 190,000, as AstraZeneca halted trials of its vaccine candidate after one participant was struck by an unexplained illness.

The news sent AstraZeneca shares
AZN,
-1.13%

AZN,
-0.53%

lower, while the stocks of other drug makers developing vaccines, including Pfizer Inc., BioNTech SE and Moderna Inc.
MRNA,
+4.17%

rallied.

In an emailed statement, AstraZeneca said: “As part of the ongoing randomized, controlled global trials of the Oxford coronavirus vaccine, our standard review process was triggered and we voluntarily paused vaccination to allow review of safety data by an independent committee.”

It added that it is working to expedite the review of the single event to minimize any potential impact on the trial timeline. “We are committed to the safety of our participants and the highest standards of conduct in our trials.”

See:Vaccinating children against the flu is ‘more important than ever’ this year: pediatricians

A report in the New York Times said that the volunteer in the U.K. trial received a diagnosis of transverse myelitis, an inflammatory syndrome that affects the spinal cord. “However, the timing of this diagnosis, and whether it was directly linked to AstraZeneca’s vaccine, is still unknown,” the NY Times said. The British drugmaker declined to the comment.

For more, read:AstraZeneca stock falls as drugmaker pauses vaccine trial after volunteer’s ‘unexplained illness’

The news comes a day after AstraZeneca and eight other drug makers working on vaccines made a joint pledge to “stand with science” on coronavirus vaccines, making clear that they would not move forward with such products before demonstrating their safety and efficacy. The unusual pledge comes amid concerns the Trump administration may try to rush out a vaccine before the November presidential election.

Don’t miss: There are seven coronavirus vaccine candidates being tested in the U.S. — here’s where they stand

The World Health Organization reiterated Wednesday that safety has to come first with vaccine development. Dr. Soumya Swaminathan, chief scientist at the WHO, said at a news briefing that regardless of the speed with which drug makers are working, “it doesn’t mean that we start compromising or cutting corners on what would normally be assessed.”

Dr. Anthony Fauci, head of the National Institute for Allergies and Infectious Diseases and a member of the White House Task Force created to manage the pandemic, agreed.

In an interview with CBS, Fauci said it’s routine for a late-stage trial of a vaccine to be put on hold because of side effects, describing it as a safety valve, as the AP reported.

Fauci said a safe and effective coronavirus vaccine may be ready in early 2021.

“The more likely scenario is that we will know by the end of this calendar year and hopefully we’ll be able to start vaccinations in earnest as we begin early 2021,” he said.

In other news:

• French Prime Minister Jean Castex tested negative for the coronavirus in an initial test. Castex was tested after he spent part of the weekend with the head of the Tour de France cycling race, Christian Prudhomme, who tested positive, according to Reuters. France’s cabinet is holding its weekly meeting remotely for the first time since the end of the virus lockdown, AFP reported, and Castex is self-isolating at his official Paris Matignon residence for seven days.

• The British government is banning gatherings of more than six people in England, as officials try to keep a lid on daily new coronavirus infections after a sharp spike across the U.K. that has been largely blamed on party-going young adults disregarding social distancing rules, the AP reported. The law in England will change from next week to reduce the number of people who can gather socially from 30 to six, with some exemptions.

The number of confirmed cases of the virus rose to almost 3,000 on Sunday, before dipping to 2,460 on Tuesday. Failure to comply could result in a 100-pound ($130) fine. The U.K. has the fifth highest death toll from COVID-19 in the world at 41,675, according to data aggregated by Johns Hopkins University. On a per capita basis, it has the fourth highest mortality rate in the world with 61 deaths per 100,000 people, after Peru, Belgium and Spain, according to AFP data.

• Greece’s largest migrant camp on the island of Lesbos was destroyed in a fire that has left more than 13,000 asylum seekers homeless, the BBC reported. The Greek government has declared a four-day state of emergency. It’s unclear how the blaze began with some locals blaming migrants and others blaming locals.

The UNHCR, the UN refugee agency, said it was aware of “tensions” between nearby townsfolk and the migrants. “We urge all to exercise restraint,” it said, and asked anyone who had been at the camp “to restrict their movements and stay near [the site], as a temporary solution is being found to shelter them.”

• Former Italian Prime Minister Silvio Berlusconi, who is in hospital in Milan after testing positive for COVID-19 last week, said doctors treating him have told him he has was “No. 1” for the severity of his viral load, the Guardian reported. Berlusconi, 83, said that of the thousands of coronavirus tests carried out at San Raffaele hospital, doctors told him that he had the worst viral load. “[The virus] is very bad,” he said. “I’m giving it my all, I hope to make it and to get back on track,” he said in a phone call to a candidate from his Forza Italia party, the paper reported.

Read now: How Black doctors are answering the call to reform medical education — and bringing COVID-19 vaccine trials to communities of color

Latest tallies

There are now 27.6 million confirmed cases of COVID-19 worldwide, the Johns Hopkins data shows, and 898,426 people have died. At least 18.6 million people have recovered.

The U.S. has 6.3 million cases and 189,718 deaths. The U.S. added 28,550 new cases on Tuesday and 462 deaths, according to a New York Times tracker. That was down from an average of 36,704 over the past week, which was down 13% from the average two weeks earlier, the paper said. There are concerns those numbers could start to tick up if infections were spread by people gathering in large numbers over the Labor Day weekend, according to the Washington Post.

Brazil has the second-highest death toll at 127,464 and 4.16 million cases. India is third with 73,890 deaths and 4.37 million cases.

Mexico has fourth-highest death toll at 68,484 and 652,860 cases.

China, where the illness was first reported last year, has 90,087 cases and 4,733 deaths, according to its official numbers.

Is there other medical news?

Pfizer Inc.
PFE,
+0.83%

and BioNTech SE
BNTX,
+3.62%

plan to pursue regulatory review for their COVID-19 vaccine candidate BNT162b2 in October, depending on the success of the vaccine in late-stage clinical trials, MarketWatch’s Jaimy Lee reported.

However, the companies did not say what countries they plan to seek review in.

“When the [Phase 3] study reads out will depend on multiple variables but right now, our model, our best case, predicts that we will have an answer by the end of October,” Pfizer CEO Albert Bourla said Tuesday on the Today show, later noting that he means a clinical answer, not a regulatory one.

See also:To defeat COVID-19, ‘we need a unified national strategy,’ says public health expert Dr. Howard Koh

The companies also announced findings from the preclinical study of BNT162b2, which were published as a preprint, showing that when the vaccine was tested in macaques it prevented infection with the virus.

The companies also concluded exploratory talks with the European Commission (EU) for a proposed deal to supply 200 million doses of their vaccine candidate to the EU. The deal would include an option for an additional 100 million doses. T

he deliveries would start by the end of 2020, subject to regulatory authorization. Financial terms under discussion were not disclosed.

“We have activated our supply chain, most importantly our site in Belgium, and are starting to manufacture so that our vaccine would be available as soon as possible, if our clinical trials prove successful and regulatory approval is granted,” said Pfizer Chief Executive Albert Bourla.

What are companies saying?

• Alaska Air Group Inc.
ALK,
-4.18%

expects third-quarter capacity to be down about 55% from the year-earlier period as the pandemic continues to weigh. The airline expects September revenue to be down 70% to 75%, after a 72% decline in August. It expects its passenger load factor to come to 40% to 45%, after 46% in August. It expects available seat miles to be down about 50% after being down 51% in September. The company’s cash burn is expected to total about $150 million in September, after $80 million in August. The carrier had about $3.6 billion in cash as of Sept. 8.

• G-III Apparel Group Ltd.
GIII,
+0.69%

swung to a loss in the second quarter from a profit a year ago and posted sales that fell short of expectations, as the pandemic weighed. Second-quarter losses include a 53-cents-per-share loss due to the liquidation of 110 Wilsons Leather and 89 G.H. Bass stores. Other G-III brands include Donna Karan and Andrew Marc, and licenses for brands like Guess, Cole Haan and Calvin Klein. “We have reset our order book for the balance of the year and shifted our product assortment to athleisure, jeans, casual sportswear and coats,” said G-III Chief Executive Morris Goldfarb in a statement. For the second half of the fiscal year, G-III forecasts a sales decline in the range of 28% to 33%. The company did not provide additional guidance due to uncertainty from the pandemic.

• Hawaiian Airlines parent Hawaiian Holdings Inc.
HA,
-5.65%

provided an update on recent developments, including a modified reinstatement of a 14-day quarantine requirement imposed on passengers traveling from the Island of Oahu to the counties of Maui, Kauai and Hawaii, given an increase in COVID-19 case counts on Oahu. The requirement is effective Aug. 11. Separately, the air carrier expects capacity for the third quarter to be down 87% from the same period a year ago, which is slightly lower than previous forecasts, as a result of reduced travel demand resulting from government actions. Regarding demand, the company said flow passengers for the third quarter through Aug. 31 were down 87% and revenue passenger miles were 96% below last year’s levels. Hawaiian said it received confirmation that its allocation of the Coronavirus Aid, Relief and Economic Security (CARES) Act funds increased to $420 million from $364 million. The company has until Sept. 30 to determine whether it will draw any portion of those funds.

• HD Supply Holdings Inc.
HDS,
+3.56%

reported fiscal second-quarter profit that beat expectations while sales fell in line with forecasts. The industrial distributor company’s facilities maintenance sales fell 8.3% to $761 million, but topped the FactSet consensus of $752.2 million, while construction and industrial sales slipped 0.3% to $793 million to miss expectations of $802.3 million. The company said it was not providing a financial outlook for the third quarter or the full year, given uncertainties over the effects of the COVID-19 pandemic, but said August sales were $518 million, representing an average daily decline of 0.7%.

• LVMH Moet Hennessy
MC,
-0.11%

will not be able to complete the previously announced takeover of U.S. luxury goods retailer Tiffany
TIF,
-10.12%

“as it stands.” LVMH cited both a letter from the French government asking for a delay in light of the threat of tariffs on French products by the U.S., as well as Tiffany’s request to extend the deadline from Nov. 24 to Dec. 31. Tiffany for its part filed a lawsuit in Delaware to enforce the acquisition. “The lawsuit not only makes clear that LVMH is in breach of its obligations relating to obtaining antitrust clearance, but also refutes LVMH’s suggestions that it can avoid completing the acquisition by claiming Tiffany has undergone a Material Adverse Effect (”MAE”) or breached its obligations under the Merger Agreement, or that the transaction is in some way inconsistent with its patriotic duties as a French corporation,” said the Tiffany release.

• MasterCraft Boat Holdings Inc.
MCFT,
-19.98%
,
the recreational powerboat maker, reported a narrower-than-expected fiscal fourth-quarter loss and provided an upbeat sales outlook. Sales for the quarter, which is historically the lowest of the year, dropped 58% to $51.1 million, due primarily to lost production as a result of COVID-19-related shutdowns, but was above the FactSet consensus of $36.8 million. Dealer inventories at the end of the fiscal year were 40% to 50% lower than a year ago. For the first quarter, the company expects sales to be down in the low-to-mid teens percentage range, while the current FactSet consensus of $86.2 million implies a 21.5% decline.

• Rocket Companies Inc.’s
RKT,
+4.63%

Quicken Loans subsidiaries are planning to offer $1.25 billion in senior notes due 2029 and 2031. The mortgage and financial services company, which went public last month, said it expects to use the proceeds from the debt offerings to pay down all of the $1.25 billion of 5.75% senior notes due 2025. Rocket joins the many companies issuing record levels of debt during the pandemic.

• United Airlines Holdings Inc.
UAL,
-4.03%

lowered its outlook for third-quarter capacity and passenger revenue, and but said it has witnessed “a moderate improvement” in travel demand over the past couple of weeks. United now expects third-quarter capacity to be down 70% from a year ago, compared with previous guidance for a 65% decline. Passenger revenue is now expected to be down 85%, versus previous guidance for an 83% decline. “The company does not currently expect the recovery from COVID-19 to follow a linear path. As such, the company’s actual flown capacity may differ materially from its currently scheduled capacity,” United said. The company affirmed its Q3 average daily cash burn rate of $25 million, and said it still expects total available liquidity to be over $18 billion at the end of the quarter.

• United Parcel Service Inc.
UPS,
+2.15%

expects to hire more than 100,000 employees for the holiday season, which is the same as last year despite expectations of record seasonal volume. . The seasonal hires will support expected increase in package volume that is expected to begin in October and continue through January. “We’re preparing for a record peak holiday season. The COVID-19 pandemic has made our services more important than ever,” said Chief Human Resources Officer Charlene Thomas. The package delivery giant said that over the past three years, about 35% of seasonal hires were later hired for permanent positions. About one-third of UPS’s current 123,000 employees started in seasonal positions.



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AstraZeneca stock falls as drugmaker pauses vaccine trial after volunteer’s ‘unexplained illness’


Shares in AstraZeneca fell on Wednesday after the drugmaker said it has paused late-stage trials of its coronavairus vaccine candidate following an unexplained illness in one of the trials’ volunteers.

AstraZeneca
AZN,
-1.07%

said it was a “routine action” and that unexplained illnesses can happen “by chance” in large trial and must be independently reviewed.

In an emailed statement, AstraZeneca said: “As part of the ongoing randomised, controlled global trials of the Oxford coronavirus vaccine, our standard review process was triggered and we voluntarily paused vaccination to allow review of safety data by an independent committee.”

It added that it is working to expedite the review of the single event to minimize any potential impact on the trial timeline. “We are committed to the safety of our participants and the highest standards of conduct in our trials.”

A report in the New York Times said that the volunteer in the U.K. trial received a diagnosis of transverse myelitis, an inflammatory syndrome that affects the spinal cord. “However, the timing of this diagnosis, and whether it was directly linked to AstraZeneca’s vaccine, is still unknown,” the NY Times said. The British drugmaker declined to the comment on the location and the diagnosis.

Shares in AstraZeneca
AZN,
+2.10%
,
which fell 6% in New York in after-hours trading on Tuesday after STAT first reported that the trial had to be stopped, were down 1% in early European trading.

Analysts at Citigroup said the risk of a serious adverse event (SAE), potentially vaccine-related, was always “a high probability event” in one of the multiple large Covid-19 trials.

“We have limited information on the single SAE aside from it occurred in the UK trial and the patient is expected to recover albeit almost certainty currently hospitalised,” the analysts wrote in a research note on Wednesday.

“[Tuesday’s] development may negatively impact timelines for other Covid-19 vaccine sponsors. While AZN’s current share price is discounting little economic value from Covid-19, we expect an initial negative stock and broader market reaction today in response to the news,” the analysts added. But they cautioned that they are “hesitant” to draw any conclusions in the absence of further information.

Analysts at Jefferies said they envisage a short-term stock correction “which may prove misplaced”.

On Tuesday the CEOs of nine companies, including AstraZeneca, BioNTech
BNTX,
+2.15%
,
Johnson & Johnson
JNJ,
-0.89%
,
Moderna
MRNA,
-13.19%

and Novovax
NVAX,
-8.20%

made a joint pledge to “stand with science” on coronavirus vaccines, making clear that they would not move forward with such products before demonstrating their safety and efficacy.

AstraZeneca’s halts covers studies in the U.S. and other countries and could derail the plans of President Donald Trump, who reportedly hopes to fast-track approval of the vaccine in a bid to make it available to Americans before November’s election.

The news comes just two days after Britain’s health secretary Matt Hancock said the vaccine, which is being developed in collaboration with the University of Oxford, would “most likely” be available in the first few months of 2021.

Read: AstraZeneca vaccine ‘most likely’ to roll out in the U.K. early next year

On Wednesday, British Prime Minister Boris Johnson is set to announce new measures aimed at curbing the spread of the virus after a sharp rise in daily coronavirus cases in the country.

Since Sunday, there have been 8,396 new cases reported – with 2,460 reported on Tuesday alone, according to government data. There were also 32 deaths reported, though these will not relate to the most recent rise in cases.

The new rules will include banning social gatherings of more than six people in England from Sept. 14. The new rule applies to private homes, indoors and outdoors, and places such as bars and cafes, but will not apply to schools and workplaces.

Michael Hewson, chief market analyst at CMC Markets UK, said, it was only a matter of time before a setback like this were to happen, given the complexities of trying to get a vaccine to a virus that is still very new.

“We already know from the number of flu vaccines that an immunization program is not a magic bullet, and with the UK looking to re-tighten social gathering restrictions from the beginning of next week, investors will have to come to terms with the idea that the path out of the current crisis is likely to be choppy and much more prolonged than previously thought,” Hewson said.

Read:U.K. signs deals with BioNTech, Pfizer, and Valneva for COVID-19 vaccines

The U.K. has placed orders for six experimental vaccines, taking its potential stockpile to 340 million doses. In August, the government announced in August that it will buy 90 million doses of potential Covid-19 vaccines from Johnson & Johnson and U.S. drug developer Novavax.



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