The R&D World Index (RDWI) for the week ending October 1, 2021, closed at 5,308.12 for the 25 companies in the R&D World Index. The Index was down -2.47% (or -134.97 basis points) from the week ending September 24, 2021. The stock of seven R&D World Index members gained value from 1.39% (Roche Holdings) to 10.58% (Merck & Co.). The stock of 18 R&D World Index members lost value from -0.08% (Sanofi SA) to -3.99% (Alphabet/Google).
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RDW Index member Merck & Co., Kenilworth, N.J., and its partner Ridgeback Biotherapeutics, Miami, announced last week that their drug molnupiravir had performed so well in late-stage trials that they stopped enrolling subjects after discussions with the U.S. Food and Drug Administration (FDA) and the experimental COVID-19 pill is now on track to be authorized by the end of 2021. The pill cuts the risk of hospitalization or death in study subjects with mild to moderate COVID-19 by about 50%. The companies plan to ask the FDA in the coming weeks for emergency authorization. The drug is seen as a kind of Tamiflu for COVID-19 which can be dispensed when patients first start to develop symptoms. Molnupiravir is also likely to be effective against known variants of the coronavirus including the highly transmissible Delta, according to the companies. It should also be equally effective to the virus as it continues to evolve. Unlike the Pfizer and Moderna vaccines which target the virus’s spike proteins, this drug targets the viral polymerase and introduces errors into its genetic code.
The FDA also last week authorized the first artificial intelligence (AI) software tool designed to help doctors diagnose prostate cancer. Developed by Paige.AI (founded by researchers from New York City’s Memorial Sloan Kettering Cancer Center), the Paige Prostate software analyzes digital scans of prostate biopsy slides and compares them to data sets of cell and tissue patterns previously identified as indicators of tumors. Over the past 20 months, the FDA has authorized about 150 AI-based medical systems.
Federal Reserve Chairman Jerome Powell last week told members of the U.S. House Financial Services Committee that he expects the current high inflation rates to abate in 2022. The factors causing the current rise in rates are a function of the COVID-19 pandemic and the reopening of the U.S. economy which are temporary factors, according to Powell. The Chairman admitted to lawmakers that the Fed could face difficult financial decisions in 2022 if inflation remains high (3.6% in July 2021 and higher than the Fed’s 2.0% target) while unemployment is also elevated. This current environment is dramatically different than that during traditional, non-pandemic, times.
The U.S. Department of Commerce last week reported that the value of new orders for durable goods (capital spending) rose 1.8% in August 2021 from July 2021. Compared with 2020 figures for the same period, those orders were 13.7% higher in August 2021. However, the U.S. Department of Labor stated that the prices private companies paid for capital goods in August 2021 was 4.6% higher than in August 2020 — the largest inflationary gain since the 1982 high inflationary period. Therefore, while overall capital spending continues to increase, those monies being spent are purchasing a smaller amount of capital (and R&D equipment).
The University of Vermont and Larner College of Medicine last week had a groundbreaking for a new 62,500 ft2 Firestone Medical Research Building. This event was mostly ceremonial since actual construction of the building began in September 2020. When completed the research building will house 225 personnel, including 42 principal investigator offices and 150 wet bench laboratories. It is expected to receive LEED (Leadership in Energy and Environmental Design) Silver certification for new construction. The building’s cost is about $45 million with centers supported by National Institutes of Health (NIH) grants.
RDW Index member Ford Motor Co. last week announced that it plans to build two battery factories in Kentucky as well as a third in western Tennessee alongside a new truck factory which will begin producing electric F-Series pickup trucks by 2025. Ford expects to spend $7 billion on this project, its largest manufacturing investment in its history. It will collaborate with battery manufacturer SK Innovation Co. of South Korea to construct the battery facilities. SK will also invest $4.4 billion in the facilities which will create about 11,000 new jobs and build enough capacity for one million electric vehicles (EVs) annually. Overall, Ford has committed to spend $30 billion on EVs through 2025, which is roughly equivalent to that being invested by its automotive rivals (i.e., GM and Toyota). Mercedes Benz also announced last week that it was taking a 33% stake in Automotive Cells, a European battery startup.
RDW Index member Sanofi SA announced last week that it will not proceed with the development of its experimental COVID-19 vaccine, citing an already crowded market for mRNA vaccines by Pfizer and Moderna. It has canceled its Phase 3 trials for its vaccine in development. The company instead will pivot its mRNA research efforts toward other infectious diseases, such as the flu. Sanofi is continuing development of a traditional vaccine against COVID-19 in partnership with GlaxoSmithKline with late-stage trial results due later this year.
The current semiconductor chip shortage in the automotive industry is expected to continue for several years, according to a report last week in the Wall Street Journal. Even the major production improvements being announced by chip makers are not expected to focus on the microcontrollers used in automotive vehicles, thereby limiting their overall effects. Research firm IHS Markit has already slashed its 2022 automotive production forecast by 8.5 million vehicles from its previous forecast of 82.6 million global vehicles.
Academic institutions are announcing that their endowments have seen their biggest double-digit year-over-year investment gains in decades, boosted by large venture capital gains and the soaring stock market. Endowments are used to pay university researchers’ salaries, among other things.
R&D World’s R&D Index is a weekly stock market summary of the top international companies involved in R&D. The top 25 industrial R&D spenders in 2019 were selected based on the latest listings from Schonfeld & Associates’ June 2020 R&D Ratios & Budgets. These 25 companies include pharmaceutical (10 companies), automotive (6 companies) and ICT (9 companies) who invested a cumulative total of nearly 260 billion dollars in R&D in 2019, or approximately 10% of all the R&D spent in the world by government, industries and academia combined, according to R&D World’s 2021 Global R&D Funding Forecast. The stock prices used in the R&D World Index are tabulated from NASDAQ. NYSE, and OTC common stock prices for the companies selected at the close of stock trading business on the Friday preceding the online publication of the R&D World Index.
