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Daily Archives: September 23, 2021

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Long Read: The Tangled History of mRNA Vaccines

Elie Dolgin wrote . . . . . . . . .

In late 1987, Robert Malone performed a landmark experiment. He mixed strands of messenger RNA with droplets of fat, to create a kind of molecular stew. Human cells bathed in this genetic gumbo absorbed the mRNA, and began producing proteins from it1.

Realizing that this discovery might have far-reaching potential in medicine, Malone, a graduate student at the Salk Institute for Biological Studies in La Jolla, California, later jotted down some notes, which he signed and dated. If cells could create proteins from mRNA delivered into them, he wrote on 11 January 1988, it might be possible to “treat RNA as a drug”. Another member of the Salk lab signed the notes, too, for posterity. Later that year, Malone’s experiments showed that frog embryos absorbed such mRNA2. It was the first time anyone had used fatty droplets to ease mRNA’s passage into a living organism.

Those experiments were a stepping stone towards two of the most important and profitable vaccines in history: the mRNA-based COVID-19 vaccines given to hundreds of millions of people around the world. Global sales of these are expected to top US$50 billion in 2021 alone.

But the path to success was not direct. For many years after Malone’s experiments, which themselves had drawn on the work of other researchers, mRNA was seen as too unstable and expensive to be used as a drug or a vaccine. Dozens of academic labs and companies worked on the idea, struggling with finding the right formula of fats and nucleic acids — the building blocks of mRNA vaccines.

Today’s mRNA jabs have innovations that were invented years after Malone’s time in the lab, including chemically modified RNA and different types of fat bubble to ferry them into cells (see ‘Inside an mRNA COVID vaccine’). Still, Malone, who calls himself the “inventor of mRNA vaccines”, thinks his work hasn’t been given enough credit. “I’ve been written out of history,” he told Nature.

Inside an mRNA COVID vaccine: infographic that shows the innovations used in the mRNA and nanoparticle of the vaccine.
Nik Spencer/Nature; Adapted from M. D. Buschmann et al. Vaccines 9, 65 (2021)

The debate over who deserves credit for pioneering the technology is heating up as awards start rolling out — and the speculation is getting more intense in advance of the Nobel prize announcements next month. But formal prizes restricted to only a few scientists will fail to recognize the many contributors to mRNA’s medical development. In reality, the path to mRNA vaccines drew on the work of hundreds of researchers over more than 30 years.

The story illuminates the way that many scientific discoveries become life-changing innovations: with decades of dead ends, rejections and battles over potential profits, but also generosity, curiosity and dogged persistence against scepticism and doubt. “It’s a long series of steps,” says Paul Krieg, a developmental biologist at the University of Arizona in Tucson, who made his own contribution in the mid-1980s, “and you never know what’s going to be useful”.

The beginnings of mRNA

Malone’s experiments didn’t come out of the blue. As far back as 1978, scientists had used fatty membrane structures called liposomes to transport mRNA into mouse3 and human4 cells to induce protein expression. The liposomes packaged and protected the mRNA and then fused with cell membranes to deliver the genetic material into cells. These experiments themselves built on years of work with liposomes and with mRNA; both were discovered in the 1960s (see ‘The history of mRNA vaccines’).

Back then, however, few researchers were thinking about mRNA as a medical product — not least because there was not yet a way to manufacture the genetic material in a laboratory. Instead, they hoped to use it to interrogate basic molecular processes. Most scientists repurposed mRNA from rabbit blood, cultured mouse cells or some other animal source.

That changed in 1984, when Krieg and other members of a team led by developmental biologist Douglas Melton and molecular biologists Tom Maniatis and Michael Green at Harvard University in Cambridge, Massachusetts, used an RNA-synthesis enzyme (taken from a virus) and other tools to produce biologically active mRNA in the lab5 — a method that, at its core, remains in use today. Krieg then injected the lab-made mRNA into frog eggs, and showed that it worked just like the real thing6.

Both Melton and Krieg say they saw synthetic mRNA mainly as a research tool for studying gene function and activity. In 1987, after Melton found that the mRNA could be used both to activate and to prevent protein production, he helped to form a company called Oligogen (later renamed Gilead Sciences in Foster City, California) to explore ways to use synthetic RNA to block the expression of target genes — with an eye to treating disease. Vaccines weren’t on the mind of anyone in his lab, or their collaborators.

“RNA in general had a reputation for unbelievable instability,” says Krieg. “Everything around RNA was cloaked in caution.” That might explain why Harvard’s technology-development office elected not to patent the group’s RNA-synthesis approach. Instead, the Harvard researchers simply gave their reagents to Promega Corporation, a lab-supplies company in Madison, Wisconsin, which made the RNA-synthesis tools available to researchers. They received modest royalties and a case of Veuve Clicquot Champagne in return.

Patent disputes

Years later, Malone followed the Harvard team’s tactics to synthesize mRNA for his experiments. But he added a new kind of liposome, one that carried a positive charge, which enhanced the material’s ability to engage with the negatively charged backbone of mRNA. These liposomes were developed by Philip Felgner, a biochemist who now leads the Vaccine Research and Development Center at the University of California, Irvine.

Despite his success using the liposomes to deliver mRNA into human cells and frog embryos, Malone never earned a PhD. He fell out with his supervisor, Salk gene-therapy researcher Inder Verma and, in 1989, left graduate studies early to work for Felgner at Vical, a recently formed start-up in San Diego, California. There, they and collaborators at the University of Wisconsin–Madison showed that the lipid–mRNA complexes could spur protein production in mice7.

Then things got messy. Both Vical (with the University of Wisconsin) and the Salk began filing for patents in March 1989. But the Salk soon abandoned its patent claim, and in 1990, Verma joined Vical’s advisory board.

Malone contends that Verma and Vical struck a back-room deal so that the relevant intellectual property went to Vical. Malone was listed as one inventor among several, but he no longer stood to profit personally from subsequent licensing deals, as he would have from any Salk-issued patents. Malone’s conclusion: “They got rich on the products of my mind.”

Verma and Felgner categorically deny Malone’s charges. “It’s complete nonsense,” Verma told Nature. The decision to drop the patent application rested with the Salk’s technology-transfer office, he says. (Verma resigned from the Salk in 2018, following allegations of sexual harassment, which he continues to deny.)

Malone left Vical in August 1989, citing disagreements with Felgner over “scientific judgment” and “credit for my intellectual contributions”. He completed medical school and did a year of clinical training before working in academia, where he tried to continue research on mRNA vaccines but struggled to secure funding. (In 1996, for example, he unsuccessfully applied to a California state research agency for money to develop a mRNA vaccine to combat seasonal coronavirus infections.) Malone focused on DNA vaccines and delivery technologies instead.

In 2001, he moved into commercial work and consulting. And in the past few months, he has started publicly attacking the safety of the mRNA vaccines that his research helped to enable. Malone says, for instance, that proteins produced by vaccines can damage the body’s cells and that the risks of vaccination outweigh the benefits for children and young adults — claims that other scientists and health officials have repeatedly refuted.

Manufacturing challenges

In 1991, Vical entered into a multimillion-dollar research collaboration and licensing pact with US firm Merck, one of the world’s largest vaccine developers. Merck scientists evaluated the mRNA technology in mice with the aim of creating an influenza vaccine, but then abandoned that approach. “The cost and feasibility of manufacturing just gave us pause,” says Jeffrey Ulmer, a former Merck scientist who now consults with companies on vaccine-research issues.

Researchers at a small biotech firm in Strasbourg, France, called Transgène, felt the same way. There, in 1993, a team led by Pierre Meulien, working with industrial and academic partners, was the first to show that an mRNA in a liposome could elicit a specific antiviral immune response in mice8. (Another exciting advance had come in 1992, when scientists at the Scripps Research Institute in La Jolla used mRNA to replace a deficient protein in rats, to treat a metabolic disorder9. But it would take almost two decades before independent labs reported similar success.)

The Transgène researchers patented their invention, and continued to work on mRNA vaccines. But Meulien, who is now head of the Innovative Medicines Initiative, a public–private enterprise based in Brussels, estimated that he needed at least €100 million (US$119 million) to optimize the platform — and he wasn’t about to ask his bosses for that much for such a “tricky, high-risk” venture, he says. The patent lapsed after Transgène’s parent firm decided to stop paying the fees needed to keep it active.

Meulien’s group, like the Merck team, moved to focus instead on DNA vaccines and other vector-based delivery systems. The DNA platform ultimately yielded a few licensed vaccines for veterinary applications — helping, for example, to prevent infections in fish farms. And just last month, regulators in India granted emergency approval to the world’s first DNA vaccine for human use, to help ward off COVID-19. But for reasons that are not completely understood, DNA vaccines have been slow to find success in people.

Still, the industry’s concerted push around DNA technology has had benefits for RNA vaccines, too, argues Ulmer. From manufacturing considerations and regulatory experience to sequence designs and molecular insights, “many of the things that we learned from DNA could be directly applied to RNA”, he says. “It provided the foundation for the success of RNA.”

Continuous struggle

In the 1990s and for most of the 2000s, nearly every vaccine company that considered working on mRNA opted to invest its resources elsewhere. The conventional wisdom held that mRNA was too prone to degradation, and its production too expensive. “It was a continuous struggle,” says Peter Liljeström, a virologist at the Karolinska Institute in Stockholm, who 30 years ago pioneered a type of ‘self-amplifying’ RNA vaccine.

“RNA was so hard to work with,” says Matt Winkler, who founded one of the first RNA-focused lab supplies companies, Ambion, in Austin, Texas, in 1989. “If you had asked me back [then] if you could inject RNA into somebody for a vaccine, I would have laughed in your face.”

The mRNA vaccine idea had a more favourable reception in oncology circles, albeit as a therapeutic agent, rather than to prevent disease. Beginning with the work of gene therapist David Curiel, several academic scientists and start-up companies explored whether mRNA could be used to combat cancer. If mRNA encoded proteins expressed by cancer cells, the thinking went, then injecting it into the body might train the immune system to attack those cells.

Curiel, now at the Washington University School of Medicine in St Louis, Missouri, had some success in mice10. But when he approached Ambion about commercialization opportunities, he says, the firm told him: “We don’t see any economic potential in this technology.”

Another cancer immunologist had more success, which led to the founding of the first mRNA therapeutics company, in 1997. Eli Gilboa proposed taking immune cells from the blood, and coaxing them to take up synthetic mRNA that encoded tumour proteins. The cells would then be injected back into the body where they could marshal the immune system to attack lurking tumours.

Gilboa and his colleagues at Duke University Medical Center in Durham, North Carolina, demonstrated this in mice11. By the late 1990s, academic collaborators had launched human trials, and Gilboa’s commercial spin-off, Merix Bioscience (later renamed to Argos Therapeutics and now called CoImmune), soon followed with clinical studies of its own. The approach was looking promising until a few years ago, when a late-stage candidate vaccine failed in a large trial; it has now largely fallen out of fashion.

But Gilboa’s work had an important consequence. It inspired the founders of the German firms CureVac and BioNTech — two of the largest mRNA companies in existence today — to begin work on mRNA. Both Ingmar Hoerr, at CureVac, and Uğur Şahin, at BioNTech, told Nature that, after learning of what Gilboa had done, they wanted to do the same, but by administering mRNA into the body directly.

“There was a snowball effect,” says Gilboa, now at the University of Miami Miller School of Medicine in Florida.

Start-up accelerator

Hoerr was the first to achieve success. While at the University of Tübingen in Germany, he reported in 2000 that direct injections could elicit an immune response in mice12. He created CureVac (also based in Tübingen) that year. But few scientists or investors seemed interested. At one conference where Hoerr presented early mouse data, he says, “there was a Nobel prizewinner standing up in the first row saying, ‘This is completely shit what you’re telling us here — completely shit’.” (Hoerr declined to name the Nobel laureate.)

Eventually, money trickled in. And within a few years, human testing began. The company’s chief scientific officer at the time, Steve Pascolo, was the first study subject: he injected himself13 with mRNA and still has match-head-sized white scars on his leg from where a dermatologist took punch biopsies for analysis. A more formal trial, involving tumour-specific mRNA for people with skin cancer, kicked off soon after.

Şahin and his immunologist wife, Özlem Türeci, also began studying mRNA in the late 1990s, but waited longer than Hoerr to start a company. They plugged away at the technology for many years, working at Johannes Gutenberg University Mainz in Germany, earning patents, papers and research grants, before pitching a commercial plan to billionaire investors in 2007. “If it works, it will be ground-breaking,” Şahin said. He got €150 million in seed money.

The same year, a fledgling mRNA start-up called RNARx received a more modest sum: $97,396 in small-business grant funding from the US government. The company’s founders, biochemist Katalin Karikó and immunologist Drew Weissman, both then at the University of Pennsylvania (UPenn) in Philadelphia, had made what some now say is a key finding: that altering part of the mRNA code helps synthetic mRNA to slip past the cell’s innate immune defences.

Fundamental insights

Karikó had toiled in the lab throughout the 1990s with the goal of transforming mRNA into a drug platform, although grant agencies kept turning down her funding applications. In 1995, after repeated rejections, she was given the choice of leaving UPenn or accepting a demotion and pay cut. She opted to stay and continue her dogged pursuit, making improvements to Malone’s protocols14, and managing to induce cells to produce a large and complex protein of therapeutic relevance15.

In 1997, she began working with Weissman, who had just started a lab at UPenn. Together, they planned to develop an mRNA-based vaccine for HIV/AIDS. But Karikó’s mRNAs set off massive inflammatory reactions when they were injected into mice.

She and Weissman soon worked out why: the synthetic mRNA was arousing16 a series of immune sensors known as Toll-like receptors, which act as first responders to danger signals from pathogens. In 2005, the pair reported that rearranging the chemical bonds on one of mRNA’s nucleotides, uridine, to create an analogue called pseudouridine, seemed to stop the body identifying the mRNA as a foe17.

Few scientists at the time recognized the therapeutic value of these modified nucleotides. But the scientific world soon awoke to their potential. In September 2010, a team led by Derrick Rossi, a stem-cell biologist then at Boston Children’s Hospital in Massachusetts, described how modified mRNAs could be used to transform skin cells, first into embryonic-like stem cells and then into contracting muscle tissue18. The finding made a splash. Rossi was featured in Time magazine as one of 2010’s ‘people who mattered’. He co-founded a start-up, Moderna in Cambridge.

Moderna tried to license the patents for modified mRNA that UPenn had filed in 2006 for Karikó’s and Weissman’s invention. But it was too late. After failing to come to a licensing agreement with RNARx, UPenn had opted for a quick payout. In February 2010, it granted exclusive patent rights to a small lab-reagents supplier in Madison. Now called Cellscript, the company paid $300,000 in the deal. It would go on to pull in hundreds of millions of dollars in sublicensing fees from Moderna and BioNTech, the originators of the first mRNA vaccines for COVID-19. Both products contain modified mRNA.

RNARx, meanwhile, used up another $800,000 in small-business grant funding and ceased operations in 2013, around the time that Karikó joined BioNTech (retaining an adjunct appointment at UPenn).

The pseudouridine debate

Researchers still argue over whether Karikó and Weissman’s discovery is essential for successful mRNA vaccines. Moderna has always used modified mRNA — its name is a portmanteau of those two words. But some others in the industry have not.

Researchers at the human-genetic-therapies division of the pharmaceutical firm Shire in Lexington, Massachusetts, reasoned that unmodified mRNA could yield a product that was just as effective if the right ‘cap’ structures were added and all impurities were removed. “It came down to the quality of the RNA,” says Michael Heartlein, who led Shire’s research effort and continued to advance the technology at Translate Bio in Cambridge, to which Shire later sold its mRNA portfolio. (Shire is now part of the Japanese firm Takeda.)

Although Translate has some human data to suggest its mRNA does not provoke a concerning immune response, its platform remains to be proved clinically: its COVID-19 vaccine candidate is still in early human trials. But French drug giant Sanofi has been convinced of the technology’s promise: in August 2021, it announced plans to acquire Translate for $3.2 billion. (Heartlein left last year to found another firm in Waltham, Massachusetts, called Maritime Therapeutics.)

CureVac, meanwhile, has its own immune-mitigation strategy, which involves altering the genetic sequence of the mRNA to minimize the amount of uridine in its vaccines. Twenty years of working on that approach seemed to be bearing fruit, with early trials of the company’s experimental vaccines for rabies19 and COVID-1920 both proving a success. But in June, data from a later-stage trial showed that CureVac’s coronavirus vaccine candidate was much less protective than Moderna’s or BioNTech’s.

In light of those results, some mRNA experts now consider pseudouridine an essential component of the technology — and so, they say, Karikó’s and Weissman’s discovery was one of the key enabling contributions that merits recognition and prizes. “The real winner here is modified RNA,” says Jake Becraft, co-founder and chief executive of Strand Therapeutics, a Cambridge-based synthetic-biology company working on mRNA-based therapeutics.

Not everyone is so certain. “There are multiple factors that may affect the safety and efficacy of an mRNA vaccine, chemical modification of mRNA is only one of them,” says Bo Ying, chief executive of Suzhou Abogen Biosciences, a Chinese company with an mRNA vaccine for COVID-19 now in late-stage clinical testing. (Known as ARCoV, the product uses unmodified mRNA.)

Fat breakthrough

As for linchpin technologies, many experts highlight another innovation that was crucial for mRNA vaccines — one that has nothing to do with the mRNA. It is the tiny fat bubbles known as lipid nanoparticles, or LNPs, that protect the mRNA and shuttle it into cells.

This technology comes from the laboratory of Pieter Cullis, a biochemist at the University of British Columbia in Vancouver, Canada, and several companies that he founded or led. Beginning in the late 1990s, they pioneered LNPs for delivering strands of nucleic acids that silence gene activity. One such treatment, patisiran, is now approved for a rare inherited disease.

After that gene-silencing therapy began to show promise in clinical trials, in 2012, two of Cullis’s companies pivoted to explore opportunities for the LNP delivery system in mRNA-based medicines. Acuitas Therapeutics in Vancouver, for example, led by chief executive Thomas Madden, forged partnerships with Weissman’s group at UPenn and with several mRNA companies to test different mRNA–LNP formulations. One of these can now be found in the COVID-19 vaccines from BioNTech and CureVac. Moderna’s LNP concoction is not much different.

The nanoparticles have a mixture of four fatty molecules: three contribute to structure and stability; the fourth, called an ionizable lipid, is key to the LNP’s success. This substance is positively charged under laboratory conditions, which offers similar advantages to the liposomes that Felgner developed and Malone tested in the late 1980s. But the ionizable lipids advanced by Cullis and his commercial partners convert to a neutral charge under physiological conditions such as those in the bloodstream, which limits the toxic effects on the body.

What’s more, the four-lipid cocktail allows the product to be stored for longer on the pharmacy shelf and to maintain its stability inside the body, says Ian MacLachlan, a former executive at several Cullis-linked ventures. “It’s the whole kit and caboodle that leads to the pharmacology we have now,” he says.

By the mid-2000s, a new way to mix and manufacture these nanoparticles had been devised. It involved using a ‘T-connector’ apparatus, which combines fats (dissolved in alcohol) with nucleic acids (dissolved in an acidic buffer). When streams of the two solutions merged, the components spontaneously formed densely packed LNPs21. It proved to be a more reliable technique than other ways of making mRNA-based medicines.

Once all the pieces came together, “it was like, holy smoke, finally we’ve got a process we can scale”, says Andrew Geall, now chief development officer at Replicate Bioscience in San Diego. Geall led the first team to combine LNPs with an RNA vaccine22, at Novartis’s US hub in Cambridge in 2012. Every mRNA company now uses some variation of this LNP delivery platform and manufacturing system — although who owns the relevant patents remains the subject of legal dispute. Moderna, for example, is locked in a battle with one Cullis-affiliated business — Arbutus Biopharma in Vancouver — over who holds the rights to the LNP technology found in Moderna’s COVID-19 jab.

An industry is born

By the late 2000s, several big pharmaceutical companies were entering the mRNA field. In 2008, for example, both Novartis and Shire established mRNA research units — the former (led by Geall) focused on vaccines, the latter (led by Heartlein) on therapeutics. BioNTech launched that year, and other start-ups soon entered the fray, bolstered by a 2012 decision by the US Defense Advanced Research Projects Agency to start funding industry researchers to study RNA vaccines and drugs. Moderna was one of the companies that built on this work and, by 2015, it had raised more than $1 billion on the promise of harnessing mRNA to induce cells in the body to make their own medicines — thereby fixing diseases caused by missing or defective proteins. When that plan faltered, Moderna, led by chief executive Stéphane Bancel, chose to prioritize a less ambitious target: making vaccines.

That initially disappointed many investors and onlookers, because a vaccine platform seemed to be less transformative and lucrative. By the beginning of 2020, Moderna had advanced nine mRNA vaccine candidates for infectious diseases into people for testing. None was a slam-dunk success. Just one had progressed to a larger-phase trial.

But when COVID-19 struck, Moderna was quick off the mark, creating a prototype vaccine within days of the virus’s genome sequence becoming available online. The company then collaborated with the US National Institute of Allergy and Infectious Diseases (NIAID) to conduct mouse studies and launch human trials, all within less than ten weeks.

BioNTech, too, took an all-hands-on-deck approach. In March 2020, it partnered with New York-based drug company Pfizer, and clinical trials then moved at a record pace, going from first-in-human testing to emergency approval in less than eight months.

Both authorized vaccines use modified mRNA formulated in LNPs. Both also contain sequences that encode a form of the SARS-CoV-2 spike protein that adopts a shape more amenable to inducing protective immunity. Many experts say that the protein tweak, devised by NIAID vaccinologist Barney Graham and structural biologists Jason McLellan at the University of Texas at Austin and Andrew Ward at Scripps, is also a prize-worthy contribution, albeit one that is specific to coronavirus vaccines, not mRNA vaccination as a general platform.

Some of the furore in discussions of credit for mRNA discoveries relates to who holds lucrative patents. But much of the foundational intellectual property dates back to claims made in 1989 by Felgner, Malone and their colleagues at Vical (and in 1990 by Liljeström). These had only a 17-year term from the date of issue and so are now in the public domain.

Even the Karikó–Weissman patents, licensed to Cellscript and filed in 2006, will expire in the next five years. Industry insiders say this means that it will soon become very hard to patent broad claims about delivering mRNAs in lipid nanoparticles, although companies can reasonably patent particular sequences of mRNA — a form of the spike protein, say — or proprietary lipid formulations.

Firms are trying. Moderna, the dominant player in the mRNA vaccine field, which has experimental shots in clinical testing for influenza, cytomegalovirus and a range of other infectious diseases, got two patents last year covering the broad use of mRNA to produce secreted proteins. But multiple industry insiders told Nature they think these could be challengeable.

“We don’t feel there’s a lot that is patentable, and certainly not enforceable,” says Eric Marcusson, chief scientific officer of Providence Therapeutics, an mRNA vaccines company in Calgary, Canada.

Nobel debate

As for who deserves a Nobel, the names that come up most often in conversation are Karikó and Weissman. The two have already won several prizes, including one of the Breakthrough Prizes (at $3 million, the most lucrative award in science) and Spain’s prestigious Princess of Asturias Award for Technical and Scientific Research. Also recognized in the Asturias prize were Felgner, Şahin, Türeci and Rossi, along with Sarah Gilbert, the vaccinologist behind the COVID-19 vaccine developed by the University of Oxford, UK, and the drug firm AstraZeneca, which uses a viral vector instead of mRNA. (Cullis’s only recent accolade was a $5,000 founder’s award from the Controlled Release Society, a professional organization of scientists who study time-release drugs.)

Some also argue that Karikó should be acknowledged as much for her contributions to the mRNA research community at large as for her discoveries in the lab. “She’s not only an incredible scientist, she’s just a force in the field,” says Anna Blakney, an RNA bioengineer at the University of British Columbia. Blakney gives Karikó credit for offering her a speaking slot at a major conference two years ago, when she was still in a junior postdoc position (and before Blakney co-founded VaxEquity, a vaccine company in Cambridge, UK, focusing on self-amplifying-RNA technology). Karikó “is actively trying to lift other people up in a time when she’s been so under-recognized her whole career”.

Although some involved in mRNA’s development, including Malone, think they deserve more recognition, others are more willing to share the limelight. “You really can’t claim credit,” says Cullis. When it comes to his lipid delivery system, for instance, “we’re talking hundreds, probably thousands of people who have been working together to make these LNP systems so that they’re actually ready for prime time.”

“Everyone just incrementally added something — including me,” says Karikó.

Looking back, many say they’re just delighted that mRNA vaccines are making a difference to humanity, and that they might have made a valuable contribution along the road. “It’s thrilling for me to see this,” says Felgner. “All of the things that we were thinking would happen back then — it’s happening now.”


Source : Nature

It’s Getting Harder for People to Believe that Facebook Is a Net Good for Society

Shirin Ghaffary wrote . . . . . . . . .

At this point, it isn’t exactly surprising that social media platforms like Facebook can have negative effects on society. For years, journalists, politicians, social scientists — and even biologists and ecologists — have been raising concerns about the influence Facebook has on our collective well-being. And Facebook has always defended itself by insisting that it is a net good to society because of how it brings people together.

But a new series of reports from the Wall Street Journal, “The Facebook files,” provides damning evidence that Facebook has studied and long known that its products cause measurable, real-world harm — including on teenagers’ mental health — and then stifled that research while denying and downplaying that harm to the public. The revelations, which only strengthen the case that a growing chorus of lawmakers and regulators have been making for breaking up Facebook or otherwise severely limiting its power as a social media giant, could represent a turning point for the company.

Already, the Journal’s reporting has prompted consequences for Facebook: A bipartisan Senate committee is investigating Instagram’s impact on teenagers, and a group of legislators led by Sen. Ed Markey (D-MA) is calling for Facebook to halt all development of its Instagram for Kids product for children under 13, which BuzzFeed News first revealed the company was developing in March.

“We are in touch with a Facebook whistleblower and will use every resource at our disposal to investigate what Facebook knew and when they knew it — including seeking further documents and pursuing witness testimony,” read a joint statement from Sens. Richard Blumenthal (D-CT) and Marsha Blackburn (R-TN) on Tuesday. “The Wall Street Journal’s blockbuster reporting may only be the tip of the iceberg.”

It’s unclear how much these efforts will impact Facebook’s policy decisions and bottom line. The investigations are in their early stages, and it’s too soon to say if it will directly lead to any new laws or other regulation.

Instagram’s head of public policy wrote in a company blog post on Tuesday that the Journal’s reporting “focuses on a limited set of findings and casts them in a negative light,” and that the fact that Instagram did internal research on the matter demonstrates its “commitment to understanding complex and difficult issues young people may struggle with.”

“The fact that Facebook has known the research, done the research, and then hid it … it’s quite mind-boggling”
In the long term, the consequences for Facebook are less instantly measurable, but perhaps more pernicious. These findings about the company have further damaged what little trust it had left with politicians — who have long been asking Facebook for specific information about the platform’s effect on mental health. The company declined to provide it, even though in many cases it had all the answers.

Jeff Bezos speaking onstage in front of a screen showing a picture of the Earth as seen from space.
Take, for example, this back-and-forth between Mark Zuckerberg and Rep. Cathy McMorris Rodgers (R-WA) at a congressional hearing on social media in March 2021.

Rep. Rodgers: Do you agree too much time in front of screens, passively consuming content, is harmful to children’s mental health?

Mark Zuckerberg: Congresswoman, the research that I have seen on this suggests that if people are using computers and social —

Rep. Rodgers: Could you answer yes or no? I am sorry. Could you use yes or no?

Mark Zuckerberg. I don’t think that the research is conclusive on that. But I can summarize what I have learned, if that is helpful.

Zuckerberg went on to say, “overall, the research that we have seen is that using social apps to connect with other people can have positive mental health benefits and well-being benefits by helping people feel more connected and less lonely.”

He did not mention any of the negative effects his own team had found about Instagram over the past three years, including that in its own study of teenage users, 32 percent of teen girls said that when they felt bad about their bodies, Instagram made them feel worse.

When Rep. Rodgers and other Republicans followed up with Facebook and asked about the company’s internal research on the effects of its products on mental health, the company did not share the Instagram research results, according to Bloomberg, nor did it share them with Sen. Ed Markey when his office also asked Facebook to provide any internal research on the matter in April, according to letters provided by Markey’s office to Recode.

“This is such a profound issue for kids and teens,” said Jim Steyer, CEO and founder of the nonprofit organization Common Sense Media, which promotes safe technology and media for children and families. “The fact that Facebook has known the research, done the research, and then hid it … it’s quite mind-boggling,” he told Recode.

Other damning findings from the Journal’s reporting include a discovery that the company has a VIP program that allows celebrities and politicians to break its rules, and that in 2018, Facebook tweaked its algorithm in a way that encouraged people to share angrier content. In each case, Facebook’s own employees found systematic proof of serious issues, but when they warned executives — including Mark Zuckerberg — about it, they were largely ignored.

For years, Facebook’s main line of defense to criticism about any negative impacts its products might cause is that social media, like other technological innovations, can cause some harm — but that the good outweighs the bad.

In a recent interview with my colleague Peter Kafka on the Recode Media podcast, Instagram head Adam Mosseri pointed to the way that social media has helped social justice movements like Black Lives Matter and Me Too. And he compared Facebook to the invention of the automobile.

“Cars have positive or negative outcomes. We understand that. We know that more people die than would otherwise because of car accidents,” said Mosseri. “But by and large, cars create way more value in the world than they destroyed. And I think social media is similar.”

It’s undeniable that social media can facilitate social change. It can also be a useful way for people to keep in touch with their friends and family — and indeed, as Zuckerberg told Congress, it can help people feel less lonely.

But, at some point, the question is whether the public will accept that rationale as an excuse for the company to have free rein to experiment on our collective well-being, measure that harm, and keep the public in the dark about what they learn as they continue to rake in record revenue of nearly $30 billion a quarter.


Source : VOX

‘Quantitative Easing’ Isn’t Stimulus, and Never Has Been

Ken Fisher wrote . . . . . . . . .

Upside down and backwards! Nearly 13 years since the Fed launched “quantitative easing” (aka “QE”), it is still misunderstood, both upside down and backwards. One major camp believes it is inflation rocket fuel. The other deems it essential for economic growth—how could the Fed even consider tapering its asset purchases amid Delta variant surges and slowing employment growth, they shriek! But both groups’ fears hinge on a fatal fallacy: presuming QE is stimulus. It isn’t, never has been and, in reality, is anti-stimulus. Don’t fear tapering—welcome it.

Banking’s core business is sooooooo simple: taking in short-term deposits to finance long-term loans. The spread between short- and long-term interest rates approximates new loans’ gross profit margins (effectively cost versus revenue). Bigger spreads mean bigger loan profits—so banks more eagerly lend more.

Overwhelmingly, people think central banks “print money” under QE. Wrong. Very wrong. Super wrong! Under QE, central banks create non-circulating “reserves” they use to buy bonds banks own. This extra demand boosts bond prices relative to what they would be otherwise. Prices and yields move inversely, so long-term interest rates fall.

Fed Chair Jerome Powell and the two preceding him wrongheadedly label QE stimulus, thinking lower rates spur borrowing—pure demand-side thinking. Few pundits question it, amazingly. But economics hinges on demand … and supply. Central bankers almost completely forget the latter—which is much more powerful in monetary matters. These “bankers” ignore banking’s core business! When short-term rates are pinned near zero, lowering long rates shrinks spreads (“flattening” the infamous yield curve). Lending grows less profitable. So guess what banks do? They lend less! Increase demand all you want—if banks lack incentive to actually dish out new loans, it means zilch. Stimulus? In any developed world, central bank-based system, so-called “money creation” stems from the total banking system increasing net outstanding loans. QE motivates exactly the opposite.

Doubt it? Consider recent history. The Fed deployed three huge QE rounds after 2008’s financial crisis. Lending and official money supply growth shriveled. In the five pre-2008 US expansions, loan growth averaged 8.2% y/y. But from the Fed’s first long-term Treasury purchases in March 2009 to December 2013’s initial taper, loan growth averaged just 0.8% y/y. After tapering nixed the nonsense, it accelerated, averaging 5.8% until COVID lockdowns truncated the expansion. While broad money supply measures are flawed, it is telling that US official quantity of money grew at the slowest clip of any expansion in history during QE.

Now? After a brief pop tied to COVID aid, US lending has declined in 12 of the last 14 months. In July it was 4.7% above February 2020’s pre-pandemic level—far from gangbusters growth over a 17-month span.

Inflation? As I noted in June, it comes from too much money chasing too few goods and services worldwide. By discouraging lending, QE creates less money and decreases inflation pressure. You read that right: QE is disinflationary. Always has been. Wherever it has been tried and applied inflation has been fried. Like Japan for close to …ah…ah…ah….forever. Demand-side-obsessed “experts” can’t see that. But you can! Witness US prices’ measly 1.6% y/y average growth last expansion. Weak lending equals weak real money growth and low inflation—simple! The higher rates we have seen in recent months are all about distortions from lockdowns and reopenings—temporary.

The 2008 – 2009 recession was credit-related, so it was at least conceivable some kind of central bank action might—maybe kinda sorta—actually help. Maybe! But 2020? There was zero logic behind the Fed and other central banks using QE to combat COVID. How would lowering long rates stoke demand when lockdowns halted commerce?

It didn’t. So fearing QE’s wind-down makes absolutely no sense. Tapering, other things equal, would lift long-term rates relative to short rates—juicing loans’ profitability. Banks would lend more. Growth would accelerate. Stocks would zoom! Almost always when central banks try to get clever they wield a cleaver relative to what they desire. A lack of FED action is what would otherwis be called normalcy.

Fine, but might a QE cutback still trigger a psychological freak-out, roiling markets? Maybe—briefly. Short-term volatility is always possible, for any or no reason. But it wouldn’t last. Tapering is among the most watched financial stories—has been for months. Pundits over-worry about it for you. Their fretting largely pre-prices QE’s end, so you need not sweat it. This is why Powell’s late-August Jackson Hole commentary—as clear a statement that tapering is near as Fed heads can make—didn’t stoke market swings. The ECB’s September 9 “don’t call it a taper” taper similarly did little. Remember: Surprises move markets materially. Neither fundamentals nor sentiment suggest tapering is bear market fuel.

Not buying it? Look, again, at history. The entrenched mythological mindset paints 2013’s “Taper Tantrum” as a game-changer for markets. Untrue! After then-Fed Chairman Ben Bernanke first hinted at tapering back in May 2013, long-term Treasury bond prices did sink—10-year yields jumped from 1.94% to 3.04% by that yearend. But for US stocks, the “tantrum” amounted to a -5.6% decline from May 21 through late June—insignificant volatility. After that, stocks shined. By yearend, the S&P 500 was up 12.2% from pre-taper-talk levels. Stocks kept rising in 2014 after tapering began. 10-year yields slid back to 2.17%. My sense is even tapering’s teensy impact then is smaller this time because, whether people consciously acknowledge it or not, we all saw this movie before.

Taper terror may well worsen ahead of each coming Fed meeting until tapering actually arrives. Any disappointing economic data will spark cries of “too soon!” Tune them down. History and simple logic show QE fears lack the power to sway stocks for long.


Source : Real Clear Markets

China’s Financial Institutions Report Rising Assets

Assets of China’s financial institutions totaled 371.26 trillion yuan (about 57.56 trillion U.S. dollars) by the end of the second quarter of this year, official data showed.

The volume increased by 9.1 percent year on year, according to the preliminary statistics released by the People’s Bank of China (PBOC).

China’s banking sector held 336 trillion yuan at the end of the second quarter, up 8.6 percent year on year, the PBOC said.

The securities institutions reported 11.27 trillion yuan of total assets by the end of the second quarter while assets of China’s insurance institutions rose 9.2 percent from a year ago to 23.99 trillion yuan.

The total liabilities of China’s financial institutions came in at 337.63 trillion yuan at the end of the second quarter, up 8.9 percent year on year, PBOC data showed.


Source : Xinhuanet

U.S. Initial Jobless Claims Unexpectedly Rose for a 2nd Straight Week

Source : Trading Economics