NIH Study Supports Wide Use Of Gilead's Remdesivir In COVID-19

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Summary

The latest news is positive, but...

For some reason, remdesivir seems to get more negative press than data supports.

Note: I use 'RDV' for remdesivir, which is what Gilead (GILD) does internally, and I say 'COVID' in place of COVID-19.

Now to the latest RDV news and some media reaction:

Results of an NIH-sponsored study were summarized in the NEJM Friday. A supplement to the article contains valuable information about the study design and clinical data.

The NIH put out a press release concomitant with the online publication of the NEJM article. It was titled Peer-reviewed data shows remdesivir for COVID-19 improves time to recovery. NIH said in part:

... the findings support remdesivir as the standard therapy for patients hospitalized with COVID-19 and requiring supplemental oxygen therapy...

I believe that the findings also support use of RDV in all hospitalized patients with pneumonia (or related pulmonary disease) due to COVID, though an argument can be made against starting it in patients who are already on artificial ventilation (Category 7 in the study's terminology). In that sense, NIH's wording was a bit cautious in not mentioning RDV for Category 4 patients with COVID (i.e. not on supplemental oxygen).

Some media presented a more negative view of RDV. CNN reported (emphasis added):

Researchers have finally published the data that led the federal government to recommend the use of the antiviral drug remdesivir in very ill coronavirus patients, and they say the drug alone will not be enough to help patients.

CNN might have been referring to the point made in the Discussion section that a 7% mortality rate was too high, and remdesivir may well be improved upon by adding a second drug.

But look at the concise conclusion the investigators actually wrote in the article:

Conclusions Remdesivir was superior to placebo in shortening the time to recovery in adults hospitalized with Covid-19 and evidence of lower respiratory tract infection.

That conclusion appears inconsistent with CNN's statement that "the drug alone will not be enough to help patients." The investigators believe that the drug - alone - does help patients recover faster.

That is different from a cure, and as with some other viral diseases, combination therapy may improve on RDV alone.

Another example of media negativity was seen in a Seeking Alpha post on Friday evening, Study shows Gilead drug helped only patients on oxygen.

I disagree with that assertion. The trends for Category 4 patients do suggest that RDV helps them. This key point is discussed in more detail below.

A prominent, market-moving example of RDV-bashing came a few weeks ago from, initially, the Financial Times. I discussed this in a May 4 article:

Who remembers this news item? "April 23 (Reuters) - Gilead Sciences Inc's experimental coronavirus drug failed its first randomised clinical trial, the Financial Times reported: Gilead antiviral drug remdesivir flops in first trial on Thursday, citing draft documents published accidentally by the World Health Organization. The Chinese trial showed the antiviral remdesivir did not improve patients' condition or reduce the pathogen's presence in the bloodstream, the report said." GILD protested at the time that this interpretation was misleading, but few heeded its warning. Yet when the article was published this past week in The Lancet, the data show that the Financial Times article was indeed misleading.

Recurrent negative news articles on RDV cannot be good for GILD shares in the short term... but to the extent that they foster selling, they can be good for patient longs over time.

It is puzzling that a drug for our modern plague of COVID that is getting a seal of approval from the NIH generates negative headlines.

Before going on, some caveats are needed.

Caution!

This article expresses my views based on what I see in the NEJM article and supplementary appendix, and on other information and analysis. I have tried to get the data right, but inadvertent errors could be present in this article. Please take my presentation as a source for your own research. Other points of view and data exist and should be considered when thinking of RDV, COVID treatments, and GILD shares.

Please consider reading the supplement carefully regarding the terms of the study, which "summarizes the preliminary results from this ongoing trial."

We have not seen the very final analysis from this study.

Science may move fast here, either with what ultimately are superior drug therapies to RDV and/or widespread effective use of a vaccine which may substantially limit the need for therapeutics. Both these and other risks to the commercial success of RDV may exist. And as always, no matter how successful RDV may end up being as a profit center, owning GILD shares carries plenty of risk. Please see GILD's 10-K and 10-Q for delineation of many of those risks.

Next up...

A look at some of the key data

The NIAID/NIH study randomized 1063 patients hospitalized with COVID and defined them as fitting into 4 categories of ascending severity of disease. In summary, by category (definitions are not precisely the ones used in the study and are simplified for convenience):

Categories 1-3 were post-enrollment levels of apparent cure from COVID.

Category 8 was death.

The primary endpoint was time to recovery.

The data favored RDV. The RDV group had a shorter time to recovery of 11 days, versus 15 days with placebo. Trends favored RDV for patients in categories 4, 5 and 6. Outcomes in the most severe category, #7, were similar between RDV and placebo.

The data trended better for RDV than placebo in category 4, with a very good ratio of 1.38 in favor or RDV, and were close to the 1.47 ratio seen in Category 5.

There were not a lot of patients who entered in category 4, and the 95% confidence interval ("CI") had a wide range: 0.94 to 2.03. Because the CI went below 1.00, the investigators were unable to conclude that Category 4 patients benefited, but the trend was that they did.

I believe it is probable that Category 4 patients were helped by RDV, and that we will learn more soon (see below).

Note, the investigators did not exclude Category 4 patients in their summary conclusion of the findings of the study.

Grade 3 or 4 serious adverse events were more common in the placebo group. This result supports the view that RDV was safe and effective.

A key secondary endpoint was improvement in the 8-category ordinal scale. This also favored RDV.

The mortality data deserves its own section.

Trends in mortality favor RDV over placebo

With the benefit of hindsight, it is possible to critique the rushed NIAID study as imperfectly planned, as it aggregated data amongst a low-risk group (Category 4) with two intermediate levels of greater severity (Categories 5-6) all the way to critically ill patients on artificial ventilation (Category 7). My opinion is that had GILD and other researchers had time to do a normal drug development program, it would have begun with Phase 2 studies on Category 5 and Category 6 patients. Favorable results with Category 5 patients would have then led to a study in the lower risk Category 4 group. Favorable results with the high-risk, very sick Category 6 patients could have similarly led to a study in the ultra-high-risk Category 7 patients.

Thus, it is important to understand the emergency nature of this study, which combines patients of extraordinarily different risk categories in the one aggregated data.

Note, importantly, the study was not powered to detect a difference in mortality.

Yet, the results are encouraging, especially in Category 5 - where the patients may be sick enough to have a meaningful risk of dying but the disease is not so far advanced as to be too late for an antiviral drug to make a difference.

Overall, the RDV group, using a certain type of statistical analysis (Kaplan-Meier estimate), had a 7.1% mortality rate after 2 weeks, versus 11.9% for the placebo group. That gives a hazard ratio of 0.70, with a 95% CI of 0.47-1.04.

That the CI just nudges only a bit past 1.0 means that statistical significance was not quite present, but the trend is clear.

Regarding Category 5, as Table 2 shows (bottom array in the table), there were only 4 deaths (2%) in the RDV group versus 20 deaths (12%) in the placebo group.

Whereas, in the milder Category 4 group, there was only 1 death in each of the RDV and placebo groups (2%), and no one in the RDV group progressed to need mechanical ventilation versus 4% in the placebo group.

Much higher mortality rates were seen in the very sick Categories 6 and 7 patients, with little difference between RDV and placebo.

Doing this sort of post hoc analysis is risky, but here we are in a pandemic with limited data. I will just proffer the opinion that I think that RDV does reduce mortality in Category 5 patients, and possibly in Category 4 and some 6 patients.

Clearly, the mortality question would benefit from additional, focused, larger-scale research. It matters a lot to GILD's price flexibility with RDV when it begins charging for the drug, and I offer no predictions about how this drug will actually be priced and reimbursed.

Imbalances between groups

The placebo group had a modestly higher (worse) ordinal score on entry. The authors adjusted for this and found slightly less benefit for RDV after this adjustment, but not enough to affect their pro-RDV conclusion.

However, there was evidence that the RDV group was sicker in some ways than the placebo group.

The RDV groups had (mildly) higher percentages of:

The placebo group had greater percentages of patients with chronic lung disease not on oxygen therapy and immune deficiency.

A higher percentage of patients had no comorbidities in the placebo group than in the RDV group.

See Table S1, p. 21 in the supplementary appendix for these details.

I would like to see the primary data adjusted for these pre-existing comorbidities, especially for patients in Categories 4, 5 and 6.

This might reveal stronger data in favor of RDV.

Correlation with the China study

As mentioned above, the trends in the partly-completed study in Wuhan/Hubei province were positive in a similar direction to that in the NIH study.

Two studies done in different groups of patients, with different adjunctive treatment practices, do not allow for formal meta-analysis.

Yet there are now two blinded, placebo-controlled studies of RDV during this crisis period, and the results are consistent on trend that using the drug speeds recovery from COVID.

To date, in what may be record time, two studies have been completed, published in major medical journals, and are consistent in favoring the premise that RDV is safe and effective in treating hospitalized COVID patients.

What is RDV worth, and will GILD make any money?

As mentioned above, I do not want to guess what GILD will ultimately realize per course of treatment for RDV. I expect it to be well above $1000 per treatment.

The next major step will be regulatory approval in the US, UK and EU.

Some have suggested that GILD is doing its RDV development without thinking of profit. However, Stat News reports that GILD recently engaged in a fireside chat with veteran analyst Geoffrey Porges of SVB Leerink, and is looking forward to RDV becoming at least a 1-2 year opportunity, and very possibly a multi-year profit center. The latter possibility has been something I have already been using to give RDV a high risk-adjusted present value.

For expert back-and-forth commentary on the issue of mortality benefit and other matters, please see a different recent Stat News article.

Why has GILD been giving RDV away?

A full answer has to come from the company, of course.

My guess is that there are three major reasons. One would be that GILD did not know yet how efficacious the drug is, so it did not know how to price it. The second reason would be that with RDV now in widespread use, doctors, hospitals and insurers can judge for themselves how it appears to be working. The final reason would be that all RDV has for now is an emergency authorization for use by the FDA, rather than full, regular marketing approval.

Moving to the topic of out-licensing, GILD is doing with RDV what it does with its HIV and HCV drugs: it licenses the technology and patents to generic companies for manufacture and sale to poor countries. I believe GILD breaks even on these charitable pursuits, and deserves credit for doing so. I am unaware of other companies doing this as a routine matter.

Conclusions - RDV's commercial potential gradually gets better defined

I believe that COVID-19 has a new standard of care, RDV, and that the FDA will move to approve it, either as a standard or accelerated approval. I would think that this, and a similar action out of the EU and UK, will be important for GILD to commercialize RDV.

Regeneron (REGN) indicated in its last conference call that if this came to pass, it would test its antibody cocktail in addition to RDV in hospitalized patients.

This posture is a positive for RDV's commercial potential.

GILD indicated in its last conference call that it is working on a subcu version of RDV as well as the more difficult inhaled version.

More information is coming soon: GILD is planning to release results from its study of RDV in what amounts to Category 4 patients in about a week. This is a placebo-controlled study. It is open label due to a shortage of placebo IV infusion sets. These and other matters are going to help us learn more about the true value, or lack of such, of RDV.

From a stock market standpoint, RDV has become the tail that wags the large GILD dog.

This is a situation that should pass. RDV was "sitting on a shelf" and is non-core to GILD's future.

That future is most closely tied into its HIV franchise and the challenge thereto from ViiV. It is also likely less but still importantly tied into its various oncology efforts, the Galapagos (GLPG) collaboration, and other matters.

Personally, I own GILD with a multi-year perspective, using as an example the many years it took Roche (OTCQX:RHHBY), where GILD's CEO ran the dominant biotech division, to excite investors. For now, the dividend suffices.

In summary, the New England Journal of Medicine published an article Friday after the market closed that concluded that remdesivir, or RDV, was superior to placebo in shortening the time to recovery (a standard measure of antiviral efficacy) in adults hospitalized with COVID-19 and pulmonary involvement.

This conclusion was not modified to only Category 5, or to patients receiving supplemental oxygen (Category 4, where RDV showed nicely favorable trends).

Further studies, using larger patient subgroups, would be very helpful in delineating how effective RDV is in different severity levels of COVID and when considering comorbidities, duration of disease before beginning therapy, etc.

Other approaches, such as the antibody treatments that REGN and others are rapidly developing, may be additive to RDV in hospitalized COVID patients, and may be efficacious as one-dose treatments for outpatients.

All involved in organizing, executing and analyzing these rapid-fire clinical trials, performed under unusually difficult and exigent conditions, deserve our respect and gratitude.

Thanks for reading and sharing any comments you wish to contribute.

Submitted Saturday afternoon.

GILD closed Friday at $73.34.

Disclosure: I am/we are long GILD,RHHBY,REGN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Not investment advice. I am not an investment adviser. REGN and RHHBY are held in IRAs and may be sold at any time without notice. I have no current plans to cease owning GILD.