Opportunities in the COVID Treatment (not vaccine) Landscape
As I write this post from a state of semi-lockdown, I think it’s fair to say that the Omicron variant of the COVID virus remains a defining aspect of our daily lives. We are approaching the two-year mark of the first international lockdown in March 2020 and the crash in markets it provoked, yet with higher rates of infection than ever before. The Omicron wave in particular took a dent out of the blind trust myself and many others had placed in the vaccines that, until now, kept the cautious/lucky largely protected from infection. That has now changed as young and old, vaccinated and unvaccinated, fall ill.
Let me be clear–vaccination is still our best route to broad societal protection against this virus, and the overwhelming majority of serious illness and death in this latest wave are in the unvaccinated population. But as the world begins to grapple with the prospect that COVID will continue to circulate like the seasonal flu for years to come, it’s time to begin directing more serious attention to crafting a strategy of coping and mitigation.
Part and parcel of developing a modus vivendi with COVID–in addition to rather than exclusion of vaccinating and practicing social distancing–is reducing rates of hospitalization that are straining healthcare systems already on the brink of collapse. In some countries today elective and non-necessary surgical procedures have been halted due to staffing and bed shortages. One way of unburdening hospitals and medical personnel can be via wider use COVID treatments, which aim to prevent or reduce rates of serious illness. Herein, I run through some of the biotech/pharmaceutical companies that are leading the charge in terms of COVID treatments, the investment prospects they hold, and why I think the COVID treatment landscape as a whole continues to retain disruptive potential.
First up is Gilead Sciences (NASDAQ: GILD)(which I discussed in my previous entry on liposomes). In November 2020, the FDA authorized emergency use of Gilead’s remdesivir (trade name is Veklury), an antiviral treatment for those suffering mild-to-moderate cases of the virus. According to:
“a recent study published in the New England Journal of Medicine, researchers at the Baylor University Medical Center in Dallas, TX and affiliated institutions found that a three-day course of remdesivir lowered the risk of hospitalization by 87.5% in symptomatic, non-hospitalized COVID-19 patients.”
Pretty promising numbers I’d say. However, there are a few catches. The first deals with eligibility for the treatment option; while use has not yet been approved for certain vulnerable groups, remdesivir’s effectiveness against variants of the initial strain like Delta and Omicron remains opaque. The high price of the treatment option also prevents broader use, thereby creating an unequal access-to-treatment dynamic that has rubbed numerous public health pundits and patients alike the wrong way.
In terms of the associated investment play, the FDA emergency authorization for remdesivir played a major role in helping to reverse a steep bear trend Gilead tracked from April-September 2020; the approval shortly thereafter has helped GILD share price rally from a 5-year low of $58 to its current $70 valuation. While GILD is looking bearish in the short-term outlook, there's an analyst consensus that this is a bagger in the intermediate-to-long term time frames. So if you’re a patient biotech investor, now may be an opportune time to expand or establish a position in this company.
Next up, and located on the other side of the pond, is Bonus BioGroup. Bonus hails from the field of cell therapy and regenerative medicine, and their flagship clinical pipeline focuses on restorative bone therapy. However, like many others Bonus expanded into the COVID therapeutics market come the pandemic and has enjoyed some commendable progress on that front since its entry in early ‘21. More specifically, they have developed a COVID therapy called MesenCure that is designed to treat the most severe cases of the virus. Recently they submitted Phase-II clinical trial data to the Israeli Ministry of Health for emergency use authorization on the basis of these metrics:
“A 68% decrease in the mortality rate and a 57% drop in the number of patients requiring invasive ventilation measured for the severe COVID-19 patients treated with MesenCure compared to control patients.
A significant reduction in the duration of hospitalization; more than 50% of the patients treated with MesenCure were released from the hospital within two days following treatment. In addition, nearly a quarter (24%) of the patients treated with MesenCure were released from the hospital on the day their treatment ended, and 40% were released up to one day after.
MesenCure is a safe course of treatment for severe COVID-19; no adverse safety events were observed in the test patients assessed to be related to MesenCure.”
An important differentiator between MesenCure and other COVID treatments of antivirals is its target audience. Whereas Gilead’s Veklury is designed for mild/moderate cases, MesenCure works to attenuate the systemic hyper-inflammation that characterizes the most severe COVID cases (think patients on invasive ventilation/ECMO/grappling with multiple comorbidities). These are precisely the cases that are most resource-intensive from the perspective of healthcare systems, and therefore the most urgent to address from both medical and practical perspectives.
While there’s no word yet from the Israeli MoH on Bonus’ request, the company was granted permission to expand its Phase-II trials to hospitals across Israel during the Delta wave, thus indicating early optimism from relevant public entities. Even so, Bonus’ value proposition lies in addressing the market gap left by other approved antiviral treatments designed for more mild cases. I like to view the situation as a positive sum game in which Bonus has ample room to contribute. The company is currently listed on the Tel Aviv Stock Exchange which isn’t accessible from all American brokerage platforms, but Bonus has previously expressed its intent for a future NASDAQ listing so I’d recommend adding them to your watchlist.
The last two names I’ll touch on today are practically household terms at this point: Pfizer’s ritonavir and Merck’s molnupiravir. I may be glossing over some of the fine details, but in terms of investment plays I’m of the opinion that PFE and MRK are overvalued and overdue for a correction. Both of their antiviral treatments work to decrease rates of hospitalization for mild/moderate cases though with potential for serious illness. In this regard their therapeutic profile is more similar to Gilead’s remdisivir than Bonus’ MesenCure. What’s unique about ritonavir and molnupiravir is that they can be ingested orally, significantly simplifying the logistics of administration. The oral drug delivery market is a hot one at the moment (e.g. see Oramed (NASDAQ: ORMP), which is developing an oral insulin intake method). That said, here are some stats for Pfizer’s ritonavir:
“The scheduled interim analysis showed an 89% reduction in risk of COVID-19-related hospitalization or death from any cause compared to placebo in patients treated within three days of symptom onset (primary endpoint)…”
And as for Merck’s molnupiravir:
“At the interim analysis, molnupiravir reduced the risk of hospitalization or death by approximately 50%”
To sum it up, the race for a COVID vaccine has shifted to a race in developing effective treatment methods for both mild and severe patients in order to cope with rather than unilaterally defeat the virus as it continues to rage. The COVID-economy field has been understandably overhyped over the past two years, but the treatment methods detailed herein have potential applications beyond COVID to a variety of diseases.
For instance, Bonus’ MesenCure targets the body’s cytokine storm rather than the virus directly, lending itself for use in other cases of ARDS (acute respiratory distress syndrome). Oddly enough, the research pipeline for molnuvirapir originated with the US Defense Threat Reduction Agency’s push to develop treatment options for Venezuelan equine encephalitis virus and other grizzly tropical diseases like Ebola. The opportunities are diverse.
I for one am equally intrigued by the macro-economic dynamics of the COVID economy as I am in specific investment plays. Moving forward, it will be interesting to assess the state of things once we’re past the peak of the Omicron wave. Researchers in South Africa — where Omicron is thought to have originated — are conjecturing that the country has acheived a level of herd immunity that signals the passage of the epidemic-phase of the virus. The jury’s still out on that one, but here’s my two cents, and as always, thanks for lending an ear.
Disclaimer: the contents of this blog post should in no way be construed as investment or financial advice, and rather represent the personal opinions of the author.
Sources:
https://www.forbes.com/sites/williamhaseltine/2022/01/10/the-challenges-of-treating-covid-19-lessons-from-gileads-remdesivir/?sh=1f316be470df
https://finance.yahoo.com/news/bonus-biogroup-submits-outstanding-phase-140000138.html
https://www.pfizer.com/news/press-release/press-release-detail/pfizers-novel-covid-19-oral-antiviral-treatment-candidate
https://www.merck.com/news/merck-and-ridgebacks-investigational-oral-antiviral-molnupiravir-reduced-the-risk-of-hospitalization-or-death-by-approximately-50-percent-compared-to-placebo-for-patients-with-mild-or-moderat/
https://cen.acs.org/pharmaceuticals/drug-development/emerging-antiviral-takes-aim-COVID-19/98/web/2020/05
https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-authorizes-additional-oral-antiviral-treatment-covid-19-certain
