Markets have in recent weeks applauded the monumental efforts taken by Congress and the Federal Reserve to insulate the U.S. economy from the impact the coronavirus. But to traders across Wall Street, a vaccine, or at least an effective therapy, remains the No. 1 focus for the market to have a shot at clawing back more of the historic decline and one day reclaim a new high.
Below is an updated rundown of who is working on drugs to combat the coronavirus and how close they are. Efforts to develop a vaccine appear promising at Moderna, Johnson & Johnson and Pfizer, while Gilead Sciences drug remdesivir made headlines into the weekend on an anecdotal report of its success treating symptoms.
Though big-ticket spending and small-business loans may provide some short-term market levity, investors say the speed at which the nation's biggest health-care companies can produce a Covid-19 remedy and get Americans back to work is key.
"All the while, as the cases continued to climb, the Federal Reserve came in such force and diligence that it helped underpin market stability along the entire financial structure," Quincy Krosby, chief market strategist at Prudential Financial, wrote in an email.
"This is where the science comes in: Until there are therapies that are effective and readily available, fear of a second wave will keep the economy from heading back to what was normal," she added.
The eradication of the coronavirus is so critical to the health of the U.S. economy that investors have snapped up stocks (both the broad market and individual companies) at the earliest of signs that the number of new cases could be slowing.
And bullishness was on full display this week, when a report stated that a Chicago hospital using Gilead's remdesivir in a trial appeared to ease Covid-19 symptoms in the majority of patients treated with the drug.
The University of Chicago's phase 3 drug trial indicated that most of its patients had "rapid recoveries in fever and respiratory symptoms," two telltale Covid features, according to the report. Most patients were discharged in less than a week, health-care publication STAT News reported, citing a video it had obtained of doctors discussing the trial.
Though the company later warned that such anecdotal evidence does not prove remdesivir is a reliable therapy for Covid, Gilead's stock popped nearly 10% on Friday and helped carry the major stock indexes to robust week-to-date gains.
"The ultimate phase for the market and for the overall trajectory of the economy — and the path towards a more 'normal' normal — is the vaccine," Prudential's Krosby wrote. "This is crucial and will be the most important inflection point for the market — this is why during this earnings season it will be headlines regarding therapies and vaccines that will be guiding investors."
Renewed hopes for an effective therapy helped the S&P 500 close above its 50-day moving average for the first time since Feb. 21 on and gain more than 3% for the week by Friday's close. The index is up more than 19% over one month as the number of new COVID-19 cases in the U.S. continues to decelerate.
Moderna spiked more than 15% on Friday after the biotech company announced that the federal government had approved $483 million in funding for its efforts to produce and distribute a vaccine.
"We're in a trading range, a sloppy trading range, until we have confidence that we've got a vaccine or a treatment that can guarantee that consumer behavior won't be severely impaired," said Dennis DeBusschere, head of Evercore ISI's portfolio strategy, who has been tracking the incremental drug developments closely for clients.
"As long as you don't have a strong treatment or vaccine, you're under the cloud of second-wave risk and people being more cautious about how they interact," the Evercore strategist said. He added that until such a time, restaurants, malls and other retailers that can't guarantee social distancing could be in for persistent financial headwinds.
Trying to price in a treatment is tricky, DeBusschere said, depending on how much it would require of patients. More-involved treatments, such as a trip or two to a hospital for an intravenous remedy, could take time to roll out to the population and require a significant amount of effort.
"The destination's easier than the journey: It seems the odds of a vaccine in the next 12 to 18 months are relatively high as are the odds of an interim treatment to help bridge the gap," he said.
Still, DeBusschere credited expectations of a pharmaceutical remedy for a significant portion of the market's rally since its bottom on March 23.
"I would say the vast majority of the move off the low is related to health-care developments," he said. "Most people believe that we're going to get some sort of vaccine."
The race is most intense for a vaccine, a competition that thus far includes major drugmakers Johnson & Johnson, Pfizer and Moderna.
1) Johnson & Johnson
As one of the leading pharmaceutical companies working on a vaccine, Johnson & Johnson said Tuesday that it's aiming to produce between 600 million and 900 million doses of its own pending cure by the end of the first quarter of 2021 for emergency cases.
J&J also said it has committed more than $1 billion of investment in partnership with the federal Biomedical Advanced Research and Development Authority, which is part of the Department of Health and Human Services, to co-fund vaccine research.
Company executives said that if Phase I trials scheduled for September go according to plan it could wind up producing 1 billion or more doses annually. "We have very good early indicators that not only can we depend on this to be a safe vaccine base but also one that will ultimately be effective," J&J CEO Alex Gorsky told CNBC in March.
Moderna was perhaps the first company to deliver the first experimental virus vaccine to U.S. government researchers when it shipped the maiden batch in February.
The company said in late February that it expected to start a clinical trial of about 20 to 25 healthy volunteers by the end of April in an attempt to see whether two doses of the remedy are safe and effective in developing immunity.
The U.S. government reinforced Moderna's research and development efforts with an additional $483 million in funding, which the company announced on Friday.
Moderna CEO Stephane Bancel said Friday on CNBC's "Squawk Box" that the funding is particularly critical in aiding manufacturing efforts. "Instead of waiting for the data and then scaling up with manufacturing process ... we can make as many doses as we can. We are doing both in parallel," he said. The company plans to hire up to 150 people to support the effort.
Chairman Noubar Afeyan told CNBC earlier in April that the drug had entered Phase I trials and hoped to advance to Phase II by late spring or early summer. Dr. Anthony Fauci, a central White House health advisor and director of the National Institute of Allergy and Infectious Diseases, said Moderna's Phase I trial was launched at "record speed."
New York-based Pfizer is also working on a vaccine, which the drugmaker hopes to begin testing in patients in summer 2020. Chief Scientific Officer Mikael Dolsten said earlier in April that the vaccine candidate works by restricting the virus's ability to replicate or expand.
Pfizer had initially planned to begin clinical trials for its Covid-19 candidate by the end of the year, but it's moved up that timeline to start in the third quarter.
On top of that effort, Pfizer is working with BioNTech SE of Germany to generate a vaccine based on cutting-edge gene-based technology. Pfizer expects trials for that vaccine to commence as early as the end of April.
Though the monthslong hunt for a viable, effective drug candidate may appear slow to those unfamiliar with the health-care industry, Jefferies health-care strategist Jared Holz cautioned that the current forecasts represent breakneck speed.
"Typically, vaccines from start to finish may take as long as ten years to complete; here we have been talking about two years or less," he wrote in an email. "The primary factor(s) aiding optimistic thinking are government authorities (including the FDA) intent to fast track the process in order to salvage the country/world from this epidemic."
"Moderna, Johnson & Johnson and Pfizer seem to be in the lead, so to speak," he added. "In this scenario, given how dire, the first to market advantage could be pretty significant."
Rockville, Maryland-based Novavax's vaccine candidate, dubbed NVX-CoV2373, neutralizes a protein "spike" that virus can induce in patients. The company said on April 8 that the vaccine candidate showed a robust immune response in the animals that it tested and that its phase 1 trial in about 130 adult humans should begin mid-May.
Inovio Pharmaceuticals, meanwhile, said on April 6 that the Food and Drug Administration had accepted its vaccine candidate, INO-4800, setting the stage for phase 1 human trials. The company added that the phase 1 study will enroll up to 40 healthy adult volunteers in Philadelphia and that each participant will receive two doses of INO-4800 four weeks apart. Initial immune responses and safety data from the study are expected by late summer.
There's also a fierce competition to develop and roll out therapies for those suffering with Covid-19 within the next year. A few of the largest companies working on treatments include Gilead Sciences, Eli Lilly and a partnership between Regeneron and Sanofi.
1) Gilead Sciences
Gilead drug remdesivir continues to show promising results in small groups of patients, the latest detailed in the aforementioned study at the University of Chicago. In addition to those findings, the company said on April 10 that a cohort of 53 patients with severe cases of Covid-19 received the treatment through the "compassionate use" program and that a majority of those treated "demonstrated clinical improvement and no new safety signals were identified."
Though Gilead has repeatedly cautioned that more rigorous studies need to be conducted before naming remdesivir a treatment, the promising early results have both fueled unprecedented demand for the drug and the company to ramp production. It aims to produce enough doses to provide treatments to more than 500,000 patients by October and another 500,000 by the end of 2020.
The drugmaker said on April 4 that it had 1.5 million individual doses on hand, enough to supply more than 140,000 patients.
2) Regeneron and Sanofi
The research seeks to determine whether a class of drugs already on the market to treat immune disorders like rheumatoid arthritis could also be taken to mitigate damage to the lungs caused by the immune system's overreaction to the virus that causes Covid-19. Some doctors think that drugs that can suppress the immune system might be helpful for limiting the body's destructive response to the novel coronavirus.
The partnership initiated trials in Italy, Spain, Germany, France, Canada, Russia and the United States. Regeneron said last month that U.S. trials would begin in New York and that the Phase II/III trial was expected to enroll up to 400 patients.
3) Eli Lilly
Eli Lilly is working with the National Institute of Allergy and Infectious Diseases to see if its own FDA-approved rheumatoid arthritis drug could serve as another option in the arsenal for health-care providers. The company said Friday that it's agreed to investigate whether baricitinib could prove an effective and safe treatment for hospitalized patients diagnosed with Covid-19.
The study, which is slated to begin in the U.S. this month, will later be expanded to Europe and Asia with results expected by the end of June. The company theorizes that baricitinib's anti-inflammatory effects could curb the body's reaction to the virus.
"Lilly is moving at top speed and using all available resources to help fight this pandemic," Daniel Skovronsky, Eli Lilly's chief scientific officer, said on April 10.
There are also a number of other possible antiviral remedies in the works, including hydroxychloroquine and chloroquine, two generic anti-malarial drugs.
Proven to work in treating Lupus and rheumatoid arthritis (like those being tested by Regeneron, Sanofi and Eli Lilly), President Donald Trump has trumpeted hydroxychloroquine as a potential "game changer" in the nationwide fight against the coronavirus.
Researchers at NYU Langone launched one of the largest formal studies in the U.S. on March 24 to assess the drug and aims to test 2,000 adults who have been in close contact with confirmed Covid patients.
But chloroquine (from which hydroxychloroquine is derived) can have serious side effects such as muscle weakness and heart arrhythmia. A small study in Brazil was halted this month for safety reasons after coronavirus patients taking chloroquine developed arrhythmia, including some who died.
Read all of CNBC's coronavirus coverage here.
Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.