One of the most promising Covid-19 vaccine candidates, being developed by AstraZeneca and Oxford University, had its Phase 3 trials put on hold after a patient experienced a serious adverse event. That certainly sounds like bad news for everybody eager to have a vaccine as soon as possible.
But hidden in this development is a kernel of good news, if you can call it that: This is exactly the kind of scientific rigor we want biopharma companies to practice — especially amid fears that the US approval of a Covid-19 vaccine could be compromised by politics.
The Oxford vaccine has been one of the most intriguing vaccines in development. As Bloomberg covered in its profile of the lead scientist, Oxford’s Sarah Gilbert, it is distinct from the other leading candidates because it does not need to be stored at nearly as cold a temperature. Others must be frozen to be transported; Oxford’s need only be chilled. That could be a serious advantage, considering the existing concerns about how easy it will be to widely distribute any Covid-19 vaccine.
AstraZeneca/Oxford Phase 3 trials got underway in the US in August, having already started in the United Kingdom, Brazil and South Africa. The company planned to enroll 30,000 Americans in its US trials. Phase 3 trials are the make-or-break moment for any new therapy, large-scale trials to determine whether a drug or vaccine has a meaningful effect and to monitor for any adverse effects in a much larger patient population than the earlier, smaller Phase 1 and Phase 2 trials.
STAT broke the news Tuesday evening that Oxford’s Phase 3 trial had been paused because of one patient’s medical complication. A follow-up story from STAT on Thursday conveyed the details of the patient’s case:
The participant who triggered a global shutdown of AstraZeneca’s Phase 3 Covid-19 vaccine trials was a woman in the United Kingdom who experienced neurological symptoms consistent with a rare but serious spinal inflammatory disorder called transverse myelitis, the drug maker’s chief executive, Pascal Soriot, said during a private conference call with investors on Wednesday morning.
The woman’s diagnosis has not been confirmed yet, but she is improving and will likely be discharged from the hospital as early as Wednesday, Soriot said.
The board tasked with overseeing the data and safety components of the AstraZeneca clinical trials confirmed that the participant was injected with the company’s Covid-19 vaccine and not a placebo, Soriot said on the conference call, which was set up by the investment bank J.P. Morgan.
STAT also learned that an earlier stoppage in July resulting from another patient’s adverse event had turned out to be unrelated to the vaccine: the person was diagnosed with multiple sclerosis. It is a helpful reminder that a patient developing a medical condition while participating in a clinical trial doesn’t necessarily mean their diagnosis has any relation to the vaccine being investigated.
However, as Derek Lowe, who covers drug development for Science magazine, explained, there is some reason to worry about what this particular adverse event means for the viability of the Oxford vaccine.
The vaccine uses a live virus, adapted from a virus found in primates, to produce an immune response to Covid-19. The neurological complication experienced by the patient, transverse myelitis, has been associated in the past with an autoimmune response following viral infections. That link has not been conclusively proven, but it is part of the existing body of research.
“I think this is indeed an event to be taken seriously,” Lowe wrote, “and I think pausing the trial to take stock of what’s going on is entirely appropriate.”
That was the consensus of scientists and medical journalists after the Oxford news broke.
With the world desperate for a Covid-19 vaccine, nobody wants to see a clinical trial for a promising candidate slowed down. But such stoppages are not unusual — NIH Director Francis Collins told Congress on Wednesday that it was “not at all unprecedented” — and they represent sound scientific method.
“This type of pause normally happens when there is an unexpected severe adverse event,” Angela Rasmussen, a Columbia University virologist, wrote on Twitter about the news. “It may be unrelated to the vaccine, but the important part is that this is why we do trials before rolling out a vaccine to the general public.”
And that is really the point. We want a rigorous process to produce a viable vaccine because, as Vox’s Brian Resnick explained, many people are skeptical about whether the approval of a Covid-19 vaccine will be based on good science, given President Trump’s very public agitation for a vaccine to be approved as soon as possible. If too few people take a vaccine because of doubts about the process that produced it, then the pandemic isn’t going to end just because the FDA puts its stamp of approval on a vaccine.
Drug makers seem cognizant of that risk; Vox’s Umair Irfan covered the hopeful signs that companies won’t bow to political pressure by speeding up their clinical review. This stoppage is more evidence that they will actually live up to those principles.
As AstraZeneca CEO Pascal Soriot told investors, according to STAT: “A vaccine that nobody wants to take is not very useful.”
Everybody wants a vaccine as soon as possible. But science cannot be rushed. So strange as it may seem, the abundance of caution shown by AstraZeneca and Oxford after this adverse event is the kind of response we need to build and preserve public trust in a Covid-19 vaccine.
This story appears in VoxCare, a newsletter from Vox on the latest twists and turns in America’s health care debate. Sign up to get VoxCare in your inbox along with more health care stats and news.
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Tourmaline to expand in Montney with C$1.1 billion deal for Black Swan
Canada‘s Tourmaline Oil Corp said on Friday it would buy privately owned Black Swan Energy Ltd in a C$1.1 billion ($908.79 million) deal, as the oil and gas producer looks to expand in the Montney region, one of North America’s top shale plays.
Tourmaline said the deal represents a key part of its ongoing North Montney consolidation strategy and the company sees the area as a key sub-basin for supplying Canadian liquefied natural gas.
The company in April acquired 50% of Saguaro Resources Ltd’s assets in the Laprise-Conroy North Montney play for $205 million and entered into a joint-venture agreement to develop these assets.
Analysts at brokerage ATB Capital Markets called the Black Swan assets a “hand in glove” fit with its recent acquisitions.
Tourmaline stock rose 4.5% to C$32.1.
The deal value consists of 26 million Tourmaline shares and a net debt of up to $350 million, including deal costs.
Tourmaline will acquire an expected average production capacity of over 50,000 boepd when the deal closes, likely in the second half of July.
The company, which also raised its dividend by 1 Canadian cent per share, expects the Black Swan assets to generate free cash flow of $150 million to $200 million in 2022 and beyond.
The Canadian energy sector has seen a flurry of deals with companies expecting to benefit from the rebound in oil prices as global fuel demand picks up.
ARC Resources Ltd in April bought Seven Generations Energy Ltd for C$2.7 billion to create Montney’s largest oil and gas producer.
($1 = 1.2104 Canadian dollars)
(Reporting by Rithika Krishna in Bengaluru; Editing by Vinay Dwivedi)
Exxon losing veteran oil traders recruited to beef up profit
Exxon last year reversed course on a major expansion of its oil and petroleum products trading as fuel demand tumbled during the pandemic. It suffered a $22.4 billion loss in 2020 from its oil production and refining businesses, leading to deep cost cuts across the business.
Veteran oil traders Michael Paradise and Adam Buller, both of whom joined the company in 2019 after lengthy careers elsewhere, resigned last week, the people said. Paul Butcher, an Exxon trader in Britain, plans to leave in September, another person familiar with the operation said.
Butcher was recruited by Exxon in 2018 to advise it on North Sea oil markets and on accounting for trading transactions. He earlier worked for BP Plc, Glencore Plc and Vitol SA.
Exxon declined to comment on the departures, citing personnel matters.
“We’re pleased with our progress over the past couple of years to grow our team and capabilities,” said spokesman Casey Norton. Exxon’s scale and reach “give our trading teams a broad footprint and unique knowledge and insights” that can generate value for shareholders.
Paradise was a highly regarded crude oil trader who joined Exxon from Noble Group and earlier was director of crude oil trading at Citigroup Inc and BNP Paribas. Buller joined Exxon in late 2019 after trading oil for Petrolama Energy Canada and Spain’s Repsol SA. He earlier was director of international oil trading at BG Group.
Exxon recruited a cadre of experienced traders hoping to replicate rivals BP and Royal Dutch Shell in trading. Both generated enormous trading profits last year by buying oil during the downturn. They sold it at higher prices for future delivery, posting multibillion-dollar profits for the year.
In contrast, Exxon began restricting the group’s access to capital as the pandemic accelerated, laid off some staff and offered early retirement packages to others, Reuters reported. Exxon does not separately report the performance of its trading unit.
(Reporting by Gary McWilliams in Houston, Devika Krishna Kumar in New York and Julia Payne in LondonEditing by David Evans and Matthew Lewis)
G7 global tax plan may hit corporate titans unevenly
An agreement by wealthy nations aimed at squeezing more tax out of large multinational companies could hit some firms hard while leaving others – including some of the most frequent targets of lawmakers’ ire – relatively unscathed, according to a Reuters analysis.
Finance ministers from the Group of Seven leading nations on Saturday agreed on proposals aimed at ensuring that companies pay tax in each country in which they operate rather than shifting profits to low-tax havens elsewhere.
One proposed measure would allow countries where customers are based to tax a greater share of a multinational company’s profits above a certain threshold. The ministers also agreed to a second proposal, which would levy a minimum tax rate of 15% of profits in each overseas country where companies operate, regardless of profit margin.
The Reuters review of corporate filings by Google-owner Alphabet Inc suggests the company could see its taxes increase by less than $600 million, or about 7% more than its $7.8 billion global tax bill in 2020, if both proposed measures were applied. Google is among the companies that some lawmakers have criticized as paying too little tax.
Meanwhile, medical group Johnson & Johnson, which is also U.S.-based, could see its tax bill jump by $1 billion, a more than 50% rise over its $1.78 billion global tax expense last year, according to Reuters’ calculations.
Both Google and J&J declined to comment on the calculations.
In a statement Saturday following the G7’s agreement, Google spokesman José Castañeda said: “We strongly support the work being done to update international tax rules. We hope countries continue to work together to ensure a balanced and durable agreement will be finalized soon.”
Determining the exact impact the new rules will have on companies is difficult, in part because companies don’t typically disclose their revenues and tax payments by country. And key details about how the rules would be implemented are still pending, tax specialists say, including to which countries profits would be reallocated and to what degree taxes generated by the new measures would offset taxes owed under the current system.
The proposed rules themselves also face hurdles. In the United States, several top Republican politicians have voiced opposition to the deal. Details of the agreement are also due to be discussed by the wider Group of 20 countries next month.
Four tax specialists concurred with Reuters’ methodology but noted that there is still uncertainty about how the measures would be applied, including which tax breaks are included in the 15% minimum overseas tax.
The G7 comprises Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.
“The deal makes sure that the system is fair, so that the right companies pay the right tax in the right places,” said a spokesperson for the UK Treasury, which hosted the G7 meeting. “The final design details and parameters of the rules still need to be worked through.”
The first proposed measure focuses on large global firms that report at least a 10% profit margin globally. Countries in which the companies operate would have the right to tax 20% of global profits above that threshold in an effort to stop companies reporting profits in tax havens where they do little business.
Applying that formula to Google could result in as much as $540 million in additional taxes, according to the Reuters analysis.
Based on Google’s 2020 global profits of $48 billion, Reuters calculated what portion of that income could be reallocated based on the G7’s proposed formula. Reuters then calculated how much more the company would pay if tax was levied on that portion of income at the rate of 23% – which is the average tax rate for developed nations as identified by Paris-based research body the Organization for Economic Cooperation and Development – rather than the average overseas tax rate of 14% that Google said it paid last year.
Applying the same methodology to J&J, and its 2020 global profits of $16.5 billion, the healthcare company would see its global tax bill rise by about $270 million as a result of the first measure.
The exact impact on each company’s tax bill would depend on how much income is actually reallocated. Also at issue is which country the profit is moved from and to – and therefore what the increase in tax rate is. If all the reallocated profit comes out of zero-tax jurisdictions, the impact could be greater.
MINIMUM TAX OVERSEAS
U.S. and UK officials say the other measure, involving a 15% global minimum tax, will have a bigger total impact on how much in taxes governments collect. But its effect on companies will vary widely. In recent years, Google-parent Alphabet, like some other targets of tax campaigners, has reorganized its international tax structures and last year reported over three-quarters of its global income in the United States compared to less than half in each of the previous three years, according to its corporate filings.
Google reported $10.5 billion of dollars of earnings from outside the United States last year and an average overseas tax rate of 14%, which is one percentage point below the G7’s proposed minimum tax.
If Google’s overseas earnings were all taxed at 15%, the additional tax due would be $100 million. The impact could be higher if a large proportion of the money is earned in zero-tax jurisdictions like Bermuda, where Google used to report over $10 billion a year in income. Conversely, the impact of the minimum tax would be reduced if the first measure prompted Google to reallocate some of its non-U.S. earnings out of tax havens.
Excluding the impact of the first proposed measure, increasing the tax rate on overseas income to 15% would mean $45 million of additional tax.
The situation for J&J would be very different. It earned 76% of its 2020 income outside of the United States and paid 7% tax on average on that overseas profit. Applying a 15% tax rate to that overseas income figure would result in $990 million in additional taxes, according to Reuters’ calculations.
While the reallocation of profit under the first measure would reduce this impact, the combined result of the two measures would be more than $1 billion.
Academics say businesses are adept at mitigating the impact of measures that are designed to reduce tax avoidance and therefore could re-organize in order to limit the impact of the proposed measures. And, in reality, tax incentives offered by governments mean companies may end up paying less in practice.
(Reporting by Tom Bergin; Editing by Cassell Bryan-Low)
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