ArkMalibu Weekly Update: Assessing the Impact of COVID-19

Below are our weekly summary thoughts on the M&A market, the economic outlook, selected opportunities, and reasons to be optimistic. These thoughts are additive to our previous weekly updates.

We will update you every Friday as the global COVID-19 pandemic continues to unfold.

Reasons for Optimism as the World Plans for an Economic Re-Start

  • 131 deals closed in the U.S. & Canada over the past 7 days
  • The S&P 500 climbed 24.7% in the last week as the index recovered nearly 50% of the value it lost since its market low on March 23rd, pushing P/E multiples to pre-pandemic levels of 16x 2021 consensus earnings
  • Falling investment-grade yields and easing conditions within muni markets are encouraging signs of stability in the fixed income market
  • Central banks have been swift to ease monetary policy with the U.S. Federal Reserve buying nearly $900B of securities in the past three weeks and the European Central Bank buying nearly $100B of securities per month
  • Economists at PIMCO expect a rebound in the second half of 2020 as the economy gradually reopens and monetary/fiscal policy remains accommodative

Good News We’ve Been Reading:

Signs of Economic Recovery in Hotspots Across Globe

  • Efforts to reopen United States and restart economy underway as Trump gives governors clearance to re-open states with a three-phase process that is dependent on scope of outbreaks
  • France, Germany, Italy, and Spain reporting slowdown in new COVID-19 cases and governments continue to seek ways to safely ease lockdowns
  • Denmark reopens schools and nurseries for children up to age 11; thousands of smaller shops in Austria reopen; various regions in Italy reopen bookshops and children’s clothing stores

Vaccine Development Update

  • Sanofi and GSK developing vaccine with increased potency and scalability
  • Pfizer will begin human trials in late 3Q20; currently testing old antibiotic, azithromycin, as potential treatment
  • Johnson & Johnson partnering with U.S. Department of Health & Human Services for vaccine human trial in September, aiming to supply 1 billion+ doses of vaccine globally
  • Gilead Science’s promising antiviral medication remdesivir has proven successful in treating CVOID-19 patients in initial trials
  • Roche’s arthritis drug Actemra appears to be effective at mitigating the damage from “cytokine storms”, a dangerous, uncontrolled immune response that some COVID-19 patients can develop

Updates in Testing

  • UC Health Precision Medicine Laboratory quadruples in-house testing capacity for the coronavirus with new equipment that processes results in 90 minutes
  • Christ Hospital to use plasma donated by people who have recovered from COVID-19 to treat hospitalized patients who are acutely ill
  • Latest antibody tests in Europe show large numbers of unreported infections, suggesting herd immunity may increase earlier than expected

Advancements in Personal Protective Equipment

  • United by a shared cause and at warped speed, many large companies in the US have innovated to join the fight by producing personal protective products
  • Battelle deploys its “Critical Care Decontamination System” to hospitals at no cost. The system supports daily decontamination of up to 80,000 protective masks, and other personal protection equipment

We believe that we will see a surge of new ideas as we emerge from this global catastrophe. Entrepreneurs will propel society and the economy forward through the creation of innovative new solutions addressing many of the new challenges that have revealed themselves.

ArkMalibu is happy to answer any questions you may have and to offer guidance during this challenging time. Please visit our website (https://www.arkmalibu.com) for more information.

Until our next update, we send best wishes to you and yours for safety and health.

 

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