10 ★ FT Weekend 4 April/5 April 2020
J O E M I L L E R— FRANKFURTGerman biotech groups leading the
race to develop a coronavirus vaccine
have warned that governments will
have to ease clinical trial regulations if
hundreds of millions of doses are to be
availablebytheendoftheyear.BioNTech and CureVac, based just
200km apart in south-west Germany,
are carrying out trials of a potential vac-
cine on mice and are set to start trials on
humans within weeks.
But progress will depend on regula-
tors such as the European Medicines
Agency and US Food and Drug Adminis-
tration agreeing to certify a vaccine that
had been fast-tracked through the three
phases of a clinical trial.
Ugur Sahin, founder of BioNTech in
Mainz, said: “Governmental organisa-
tions, experts and regulators need to
work together to identify potential ways
of accelerating the approval and availa-
bility of the vaccine.”
BioNTech intends to begin testing its
prototype on 150 healthy volunteers
this month. The questions are whether
regulators will insist on gathering dataon side-effects via on-site visits or be
satisfied with phone interviews with
patients, and how comprehensive clini-
cal reports will have to be.
For a vaccine to be ready by the end of
the year, regulators would also have to
agree to forgo or curtail the usual final,
large-scale human study, which nor-
mally takes many months to complete.
CureVac, which intends to start trials
on humans in June, said that, if the com-
pany was forced to go through all three
clinical stages, “it would take too much
time to get a vaccine to market to fight
against the current pandemic”.
“To speed this process up, authorities
would have to allow us to abbreviate the
approval process.”
The need for funding to enable large-
scale production is another potential
obstacle. Both companies are likely to
have to raise more cash soon from gov-
ernments or investors that are showing
huge interest in them.
CureVac was forced to deny reports of
a takeover approach by Donald Trump,
while BioNTech’s share price tripled
after it announced it was working on a
Covid-19 vaccine.Pharmaceuticals
Vaccine groups urge regulators
to ease rules on clinical trials
Douyin hopes to earn more despite
coronavirus, unlike US peersP E G GY H O L L I N G E R
INTERNATIONAL BUSINESS EDITOR
Airbus has sharply reduced production
of its most popular single-aisle passen-
ger jet, and will not return to previous
levels this year.
Customers are seeking to defer deliv-
eries in one of the worst aviation down-
turns in recent memory.
As well as cutting output of the A
single-aisle family to well below the 60 a
month achieved before the crisis, the
group was expected to reduce the rate of
its twin-aisle aircraft, the A350 and
A330 wide-bodies, according to people
with knowledge of the situation.
Just over a week ago, Airbus withdrew
2020 guidance and suspended its
dividend.
Analysts said they did not expect Air-
bus to return to a rate of 60 for several
years. “Manufacturers are always very
careful about changes in production
rates in either direction,” said Sash Tusa
of Agency Partners. “They will not
change unless they can sustain the rate
for two to three years.”
The move comes as rival Boeing this
week announced plans for job cuts and
signalled that it expected a shift in air-
craft demand, with any recovery likely
to take years.
The decision by the two biggest air-
craft makers to retreat after a decade of
ever-increasing output is expected to
spark a chain reaction of production
cuts and job losses in the supply chain.
The industry has been hard hit by the
grounding of aircraft. Roughly half the
fleet of 26,000 aircraft has been put into
storage, according to aerospace consul-
tancy Cirium.
Airbus had not yet taken a final deci-
sion on the scale of longer-term produc-
tion, but was in daily discussions with
customers about the shape of future
demand, a person close to the subject
said. Production was being strained by
issues in the supply chain, where virus
measures had hit output.
The company could update the mar-
ket at its virtual annual meeting on
April 16. If the situation continues to be
volatile, it may hold off until the first-
quarter results on April 29.
In February Airbus had laid out its
plans to increase single-aisle production
from the current 60 to 63 by the end of
next year and 67 a month by 2023. It set
wide-body production rates at nine to
10 a month for the A350 aircraft, and a
total of 40 A330s were expected to be
delivered this year. Those targets have
been scrapped.Philippe Petitcolin, outgoing chief
executive of Safran, has said that in cer-
tain areas the group has just two weeks’
stock, and engine production could be
brought to a halt if key suppliers were
unable to deliver.
Rolls-Royce, meanwhile, has been hit
by the shutdown of a supplier in Italy
that makes castings for specialised tur-
bine blades.
It has closed its UK civil aerospace
facilities for at least a week to
implement virus safety measures. The
factories are due to come back on
stream on Monday.
Productivity was expected to be sig-
nificantly lower than before the closure,
said two people with knowledge of the
subject. “It is not going to go back to the
way it was,” one employee said.
Once Airbus announces its new rates,
Rolls-Royce is expected to update the
market on its expectations for this year,
and on the £1bn free cash flow target it
set in 2017.
The group, which sells engines at an
average loss of £1.2m each, generates
cash and profit on the number of hours
its engines fly on wing — a system
known as power by the hour. With so
many aircraft grounded, Rolls-Royce’s
cash target is in doubt.Airbus slashes production
of mainstay single-aisle jet
3 A320 output plan reversed 3 Wider curbs likely 3 Blow to suppliers
DAV E L E E— SAN FRANCISCOThe short-term rental site Airbnb,
which has had its business hammered
by the coronavirus fallout, has lowered
its internal valuation to $26bn — a 16
per cent drop compared to its most
recentfundinground.The new figure reflects the sharp drop-
off in bookings as travellers have been
forced to stay home, with estimates sug-
gesting Airbnb bookings were down as
much as 90 per cent in the most severely
hit markets, according to data from
AirDNA, an independent monitoring
company.
Staff were told of the new valuation by
chief executive Brian Chesky at a com-
pany-wide meeting on Thursday, a per-
son familiar with the presentation told
the Financial Times.
Airbnb was last valued privately at
$31bn after closing a reported $1bn
funding round in September 2017. Since
then, however, secondary sales of indi-
rect stakes in the company — where
buyers gain rights to proceeds from a
future initial public offering or sale —
have suggested the company may have
been worth more than $40bn at the end
of 2019, as reported by the FT.
As it looks for more ways to raise capi-
tal, Airbnb has held conversations with
new and existing investors to consider a
late-stage funding round, a source
familiar with those discussions said,though no firm decisions have been
made.
The company recently met its bank-
ers to request an extension to its $1bn
credit line. The company has pulled
back all its marketing campaigns in an
attempt to save $800m.
Speaking to staff on Thursday, Mr
Chesky noted other travel companies
had been hit heavily since the impact of
coronavirus. The market capitalisations
of Expedia, Hilton and Booking.com are
down 58 per cent, 44 per cent and 37 per
cent, respectively.A person familiar with Airbnb’s
finances said internal projections pre-
dict a return to 2019-levels of revenue
by next January. The company booked
$4.8bn in revenue in 2019, a 35 per cent
increase year-on-year, the person said.
In an effort to prevent hosts from
deserting the platform during the cur-
rent uncertainty, Airbnb on Monday
said it would spend $250m on reimburs-
ing some of the money lost by hosts after
they were forced to give full refunds to
guests with travel plans disrupted by
Covid-19.Airbnb drops valuation
target 16% to $26bn
Suppliers said they expected Airbus
to update them on new rates around
mid-April. “We are waiting for Airbus,”
said one. Another said substantial rate
cuts were “inevitable”.
Guillaume Faury, Airbus chief execu-
tive, had emphasised the need to work
“in sync” with suppliers to ensure oper-
ations could continue even at a lower
rate, in an effort to preserve capability
and skills for the eventual rebound,
according to people close to the subject.The company is in daily conversa-
tions with suppliers such as Rolls-
Royce, whose engines power Airbus’s
A350 midsized jet and the A330 wide-
body family, and Safran, the French
aero-engine maker whose LEAP-1 tur-
bine sits on the A321neo.
Both are preparing for stoppages in
their supply chains, which would
threaten their ability to continue pro-
ducing at the record rates reached
before the crisis.Airbnb may have
been worth more
than $40bn at the
end of 2019 and
the reduction casts
doubt on IPO plansBattlefrontWorkers fear they are being left
alone to face virus dangers— REPORT, PAGE 12
Emergency summitTrump talk of global
unity to boost oil prices faces test— MARKETS, PAGE 13
RYA N M C M O R R OW— BEIJING
H E N N Y S E N D E R— HONG KONG
The Chinese podcasting app Lizhi faced
the same puzzle four years ago that
many tech platforms face today as the
world spends more time online during
the coronavirus outbreak — how do you
translate a huge audience into profit?
Marco Lai, chief executive of the Nas-
daq-listed company, said he had
thought about an advertising-based
model and a subscription model to
make money from Lizhi’s 52m listeners.
In the end, he was inspired by the Japa-
nese girl group AKB48. “Their fans each
bought up hundreds of their CDs for the
chance to get into their shows,” he said.
Lizhi embraced the idea: its listeners
were encouraged to buy virtual gifts for
their favourite podcast hosts. Today,
the commission on those gifts accounts
for 99 per cent of the company’s revenue
and Lizhi enjoyed a strong start to
the year as its listeners were trapped
indoors by the Covid-19 outbreak.
By contrast, US platforms such as
Twitter and Facebook have both
warned that coronavirus would hit,
rather than boost, their revenues as
advertising drops off. Analysts expect
Google to suffer too.
“American companies are highly
dependent on advertising-based busi-
ness models, look at Twitter, look at
Facebook, look at YouTube or Google,
ads are their only revenue stream, but in
China look at Douyin [the Chinese ver-
sion of TikTok],” said Mr Lai. “They’re
diversified.”
ByteDance, the company behind
Douyin, started by selling ads and has
now embraced virtual gifts for lives-
treamers as well as ecommerce. The
Beijing-based company has also pushed
into gaming.
Meanwhile, Bilibili, a YouTube-like
online entertainment hub that is listed
on Nasdaq with a $7bn market capitali-
sation, said it expected to record its
strongest first quarter ever this year.
“There is this, what we call, a time
sandbox where there is a period of time
where users are actually stuck at home,
nowhere to go, and they have hours on
the internet to spend,” said Jixun Foo ofGGV Capital, who estimated about 20
per cent of their roughly $1bn China
portfolio had experienced a positive
impact from coronavirus.
“These are online education, online
content, online subscription services,
including online fitness,” he told entre-
preneurs last week in a webcast.
At Douyin, which made 80 per cent of
its estimated Rmb75bn ($11bn) reve-
nues last year from advertising, there is
a push under way to wring more money
out of its 400m daily users, according to
Founder Securities, a research firm.
Su Yuanxin makes short videos on
Douyin under the handle Big White
Goose. On a recent stream, Ms Su tagged
a Rmb49.9 lipstick pack from a shop on
Douyin’s ecommerce platform and a
pair of sunglasses on Alibaba’s Taobao.
Viewers were able to click on a shopping
bag for the goods and ByteDance shared
a small cut of the sales with Ms Su.
Ms Su also received a 50 per cent cut
of the virtual gifts her fans sent her, in
line with the 45 to 55 per cent app-wide
commission on gifts, according to
Founder Securities (a virtual bucket of
fried chicken costs the equivalent of less
than Rmb1; a virtual candy truck costs
about Rmb900).“Everyone’s fighting for traffic right
now. Everyone’s thinking during this
epidemic I want to make money by
livestreaming,” said Ms Su.
As a new host, she is also spending
with Douyin to try to build a fan base:
over the past two months she paid
Rmb700 to buy 35,000 views for her
videos. Recruiting for livestreaming-
related positions is up 84 per cent since
the lockdown began, according to data
from job site Zhaopin.com.
ByteDance, whose valuation hassurged to between $90bn and $100bn in
recent transactions on secondary mar-
kets, is also diversifying into gaming,
online education and work productivity
with a host of new apps.
The company’s gaming team now has
more than 1,000 staff and last year
ByteDance acquired two game develop-
ment studios. During the new year holi-
days two of its games were among the
top five most downloaded mobile
games, according to Founder Securities.
Gaming contributes a large portion of
rival Tencent’s business, and has helped
the larger social media and gaming
group to weather the coronavirus hit to
other parts of its business.
Bilibili, too, turned to gaming to mon-
etise its users. Carly Lee, the chief oper-
ating officer, said the company early on
turned to games instead of adverts to
minimise the impact on the user com-
munity it was nurturing.
“Our ecosystem provided traffic to
the games which were relatively inde-
pendent of the content community,” she
said. “Traffic on the site would be
diverted to games and from there it was
monetised.”
Competition in livestreaming and
ecommerce is heating up. Ad-depend-ent Weibo, China’s version of Twitter,
rolled out an ecommerce function this
week after it warned of a 15 to 20 per
cent revenue fall in the quarter.
Taobao Live, of traditional ecom-
merce giant Alibaba, saw new merchant
livestreamers soar 719 per cent in Feb-
ruary from January. Tencent-backed
Kuaishou has been so successful capital-
ising on livestreaming, as well as rural
farmers hawking their meats and vege-
tables direct to city dwellers, that it is
increasingly a major competitor to Ten-
cent’s own WeChat app.
At one point during Big White Goose’s
Sunday-night livestream, Ms Su veered
from karaoke renditions of the popular
song Hai Cao Shake to offering advice
for Chinese President Xi Jinping on han-
dling coronavirus, mentioning a hospi-
tal near her home housing patients.
“I’ve just gotten a notification on my
screen,” Ms Su told her fans. “I’m violat-
ing the content guidelines,” she said.
“Will they cut off my stream?” she
started again and stopped, apparently
unclear on what exactly had triggered
the warning. Then she took a sip of tea
and queued up the next karaoke song.
Additional reporting from Nian Liu in
BeijingTechnology.Online audiences
Chinese apps outfox Facebook and Google with lockdown gains
Podcast platform Lizhi is
among those with innovative
ideas for tapping a rise in users
Customers are seeking
to put off deliveries
in one of the worstaviation downturns
An employee enters the fuselage
section of an A320 jet in an
Airbus hangar in Hamburg
Krisztian Bocsi/BloombergAPRIL 4 2020 Section:Companies Time: 3/4/2020 - 18: 26 User: cathy.pryor Page Name: CONEWS1, Part,Page,Edition: USA, 10, 1