Good Reason To Be Hopeful For Gilead's Remdesivir
Mar. 31, 2020 2:33 PM ET|12 comments | About: Gilead Sciences, Inc. (GILD)
Richelle Cutler-Strom
Richelle Cutler-Strom
Long/short equity, Growth, growth at reasonable price, short-term horizon
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Summary
Gilead is testing efficacy of remdesivir against the novel coronavirus (COVID-19) in multiple international trials.
Remdesivir prevented severe lung damage from MERS coronovirus infection in a mouse and monkey model.
Preclinical data and an explanation for the Ebola trial failure indicate that remdesivir will be a successful treatment for COVID-19.
Inevitable remdesivir licensing deals, with exclusivity until 2034, and its forthcoming marketing of a blockbuster arthritis drug, filgotinib, will increase Gilead's revenue significantly.
Gilead Sciences Inc. (NASDAQ:GILD) is currently testing remdesivir in multiple human trials for efficacy against the novel coronavirus (COVID-19). Remdesivir is an adenosine nucleotide prodrug that inhibits replication in a broad range of viruses (Arenaviridae, Coronaviridae, Filoviridae, Flaviviridae, and Paramyxovirida) in vitro. Remdesivir reduced lung damage inflicted from the MERS coronavirus in mice and monkeys. The animal studies showed that optimal therapeutic efficacy requires early dosing. However, MERS patients were found to have prolonged viral replication, so remdesivir may still benefit the most severe coronavirus cases.
Remdesivir failed in Ebola virus trials even though remdesivir inhibited Ebola virus replication in vitro and in a monkey study. These preclinical studies indicated that remdesivir would be effective against the Ebola virus in humans. So, what went wrong? Could disappointment be around the corner for remdesivir in the COVID-19 trials?
The Ebola monkey study showed that a high remdesivir concentration (10 mg/kg) was critical for maximum suppression. The trial also indicated that too high a concentration, over consecutive days, could cause liver injury. Gilead played it safe by using a low dosage in the Ebola trial (~3 mg/kg loading dose, 1.5 mg/kg maintenance dose, assuming a 66 kg patient). Thus, the dosage may not have reached an effective concentration in all cell types. Furthermore, Ebola causes systemic intravascular coagulation, which could have restricted remdesivir circulation through organs. The stronger efficacy of the Ebola targeting antibodies could be attributed to their ability to enter the lymphatic system, circumventing the coagulated capillaries - the antibodies could reach infected cells, whereas remdesivir could not.
Gilead is using the same remdesivir dosage in the COVID-19 trials as used in the Ebola trial. Fortunately, COVID-19 infected patients do not have circulatory problems. Also, COVID-19 targets the lungs, and remdesivir robustly inhibits COVID-19 replication in human airway epithelial cells in vitro. The selected trial dosage is based on the effective in vitro inhibitory concentration along with in vivo pharmacokinetics and toxicity data. Accordingly, lung epithelial cells of COVID-19 infected patients receive an effective concentration of remdesivir. Remdesivir may also be more readily incorporated into coronavirus RNA than Ebola RNA since remdesivir appears to have a higher affinity for the coronavirus polymerase than the Ebola polymerase.
A blogger recently opined remdesivir's unpredictable success based on the poor performance of a similar type of drug, favipiravir. However, favipiravir has never been reported to inhibit coronavirus replication (figure 2). Moreover, many nucleoside analogues fail to inhibit virus replication because the virus’s proofreading nuclease detects and removes them. Remdesivir mostly evades proofreading by the coronavirus exoribonuclease, thus allowing incorporation and viral inhibition.
Nucleoside and nucleotide analogues are tried and true antiviral drugs, making up almost half of all antivirals. Chloroquine is another antiviral that has shown promise in treating COVID-19. Unfortunately, chloroquine can have serious side effects such as vomiting, diarrhea, nausea, and headache. These side effects may be particularly hazardous in ill COVID-19 patients and is out of the question for intubated patients.
RNA viruses have high mutation rates and mutations in COVID-19 surface glycoproteins could eventually make the current vaccines under development less effective. An annual vaccine version, like the flu vaccine, may be necessary. Moreover, vaccines produce less protection in the elderly. Thus, a vaccine will not make remdesivir obsolete. Remdesivir's efficacy relies on polymerase nucleotides conserved across diverse coronavirus strains. This indicates that remdesivir will be front-line therapy for today's COVID-19 and tomorrow's new coronavirus strain. Gilead's first remdesivir patent filing was in 2014, which gives Gilead exclusivity rights until 2034.
The first remdesivir trial result from China has an estimated primary completion date of April 3rd. With a life-saving treatment in high demand, the analysis could be expedited. Good news could be just around the corner.
Financials
Gilead's revenue growth has been low, with the 12 months trailing growth at a paltry 1.2%. However, Gilead still has a reasonable P/E of 17.3 and earnings will grow markedly if Gilead receives licensing revenue from remdesivir. In addition, Gilead and Galapagos (NASDAQ:GLPG) will soon bring Filgotinib to market for treating rheumatoid arthritis. Filgotinib will compete with AbbVie's (NYSE:ABBV) Rinvoq, but Gilead is hoping its strong safety record prevents a black box warning, making filgotinib the preferred treatment. Filgotinib's approval for treating other inflammatory diseases, such as Ulcerative colitis, Crohn's disease, Psoriatic arthritis, and Ankylosing spondylitis, will soon follow. The potential worldwide sales of these indications are in the billions.