- This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking COVID-19 treatments and vaccinations with Adam Feuerstein of Stat News.
- Much of the treatment talk has been about Gilead's remdesivir, and Feuerstein - who has been at the center of much of the reporting - takes us through those ups and downs.
- Gilead reports after the close on Thursday. It's possible that alongside, the company might publish and discuss results from one of its remdesivir trials. Results from the most important study - the one being done by the U.S. government - are expected in mid-May.
- Even if all goes great with remdesivir, it's only a treatment, and will only be effective on certain patients. The world ultimately needs a vaccine, and vaccines take time - 12-18 months in a best-case scenario.
Editors' note: This is a transcript version of the episode of Alpha Trader that we published earlier this week. We hope you enjoy.
Aaron Task: Balance your trading strategy by adding features, capitalize on around the clock access to highly liquid global markets in a wide range of asset classes with CME Group. See what adding features can do for you at cmegroup.com/alpha.
Welcome to the show, Aaron Task and Stephen Alpher, our special guest today. We’re pleased to have Adam Feuerstein, Senior Writer at Stat News joining us today. Adam, welcome to the show.
Adam Feuerstein: Hey, it’s pleasure to be here, guys. Thank you.
AT: Hi, Adam. Well, obviously, you’re reporting on the frontlines of the biggest story in the world right now, the COVID-19 virus running rampant and we do not want to make at all light of the human suffering that’s going on out there as of today, Friday, see, I mean, there’s 50,000 deaths; now in the United States, nearly 900,000 cases; around the globe, 2.8 million cases and around 194,000 deaths.
So as we talk about investing, we have to keep all the people in mind that are really suffering from this horrible pandemic. And I’m choking up as I say that, because it really is a terrible series of events that we’re dealing with all of us, as we’re talking here today, Friday afternoon.
But in terms of the markets, I could argue that Gilead Sciences has been the most important stock of the past week plus. Starting on April 16, when, Adam, you and your colleagues reported that some patients in Chicago testing Remdesivir...
AT: Gilead’s drug were recovering rapidly from the severe virus symptoms. A week later, the WHO accidentally put some documents on their website that suggested otherwise.
AT: So as we sit here today, Friday afternoon, the 24th, what is the status of this drug?
AF: Yes. It’s been – and I’ll second everything you just said, Aaron, about the scope of this pandemic and the tragedy. And I think it’s important. I’m glad you brought that up, because I think it does – it needs to be said, particularly as we sort of talk about investing in Wall Street, which we’re about to do.
And so when we reported potentially a week ago about the snapshot of this Remdesivir clinical trial that we had obtained from The University of Chicago Hospital, which showed some patients there. There were – this was like one site in a larger clinical trial that Gilead Sciences is running. We did the story, and it was an exclusive, did some pretty good reporting on it. And the market reaction to that story was – honestly, was the most bonkers thing I really have ever experienced in my almost 30 years of reporting and 20 years-plus of reporting on the markets.
AT: Right. And it wasn’t just the Gilead went up somewhat 10%, it was the next day that the whole market…
AF: [Multiple Speakers] market. I had over a long time sources of mine, investors and institutional investors who were texting me. And they were like, “Adam, you didn’t just move biotech stocks, you moved the entire market.”
AF: I think our story – I think we posted the story, it was Thursday afternoon. It was about 4:15, 4:16 P.M, so just a little bit after the market closed a week ago, Thursday. And yes, the entire market moved, which was not something that I expected when we wrote the story. We have been writing, obviously, in Stat, we cover for those who don’t know, Stat is a digital media website.
We’re about four years old. And we write about health medicine, life sciences, pharma, biotech. Obviously, I write kind of about the business of biotech, cover, right, mostly about publicly-traded biotech and pharma companies. So I’m certainly used to writing about market moving things. This was like beyond the magnitude…
AT: [Multiple Speakers] and you have, in your career, you’ve written a lot of stories that have moved individual stocks…
AT: …into the biotech sector or a couple of related stocks, but the entire market and, of course, we never know why the markets moving. But it sort of seemed that, that report triggered a huge rally, again [Multiple Speakers]
AF: Yes. I think it was really…
AF: …and people ask me like, yes, I was asked, because I did a couple of hits on CNBC. And people did ask me “Why do you think the market reacted the way it did?” Honestly, I don’t necessarily know and you can never really know. Aaron, you’ve obviously been covering the markets for super long time. And you know, it’s always hard to pin down why things happen.
But I think it’s partly, because it’s a psychological reaction to me. I think it was – this idea that – I think, we are so – everyone is so desperate for a – an effective medicine to treat the coronavirus. We’ve all been – in some way, we’ve all been sort of traumatized by this. I mean – and obviously, some less than others.
But we’re all at home and we are all seeing what’s happening. We’re seeing the devastation, the deaths that are happening around, the economy being shuttered. And I think, we’re all – everyone just wants there to be a drug, anything, any drug that is proven to be effective against coronavirus.
And so I think there was just like this adrenaline rush into the market, like, wow, this might be a drug that could be effective, even though there’s all the caveats of – we still don’t know. We can kind of get into that a little bit if you like. But we still don’t know whether Remdesivir is going to be a drug proven to be effective and safe for the coronavirus. But our reporting, we did the story. We – there was a sort of glimmer of hope and it set the markets on fire.
AT: Right. So now fast forward to the 24th of April….
AT: …as I mentioned, there was a report out late last night that WHO accidentally putting something on their website suggesting that Remdesivir was not very effective in a trial in China.
AT: …so – and there are multiple other trials going on, am I correct on that?
AF: Yes, yes. So we should just step back for a second and just kind of explain to folks, there are five important clinical trials of Remdesivir that are either underway or basically completed. Two of those clinical trials are ongoing or essentially completed or have kind of stopped prematurely actually, in China – there’s two in China. There’s two clinical trials that Gilead Sciences is running on their own.
So like any drug company, biotech company, they run clinical trials. Gilead is running two clinical trials of Remdesivir. And then there’s a third study and probably the most important study. The fifth study is being run by the government, by basically – by the – by an arm of the NIH is running the fifth study of Remdesivir. So there’s a lot out there and it gets confusing, right?
AF: So a week ago, I was writing about a study, the study that I wrote a week ago, which had that little positive glimmer of hope, that was one of Gilead’s clinical trials. Now we’re going to actually have the results from that clinical trial the kind of the top line results, probably next week, like this is going to air on Tuesday, you said.
AF: You may have the results on Tuesday. It might be Gilead reports earnings on, I think, 30th of May – I’m sorry, April 30, I think, it’s a Thursday, I think…
AT: Yes, it’s Thursday. Yes.
AF: So it could be around their earnings, it – but it’s gong to be next week.
AF: So as you mentioned, again, just like it seem to happen on Thursdays. So yesterday, my colleagues and I reported on this WHO thing that happened. And we actually got beat to the story by five minutes. The Financial Times had the story out five minutes before we did.
We are obviously working on it at the same time, and they just clicked their publishing button five minutes before we did. But that study that we were talking about where there was this negative, there was “negative” study of Remdesivir. That was one of the China studies that reported, and we still need to see more details from that.
But – so yes, there’s a lot of studies. It’s kind of confusing. So you asked me, Aaron, sort of where we are like, what do we know about Remdesivir? We know a little bit about a couple of clinical trials. We know some good things. We know some bad things, negative things.
And I guess, the best thing that I could say about Remdesivir is that, within about a month to six weeks from now, so I would say, let’s say, let’s call it the end of May, we will have the data from all of those clinical trials that I talked about, including that government study – the government-run study, which is the most important study, because it’s a placebo or it’s got – it has a really good control arm.
So like, we’ll really be able to kind of see whether or not Remdesivir is better than kind of standard of care. And so hopefully, by the end of May, we will have a very good picture of this drug and whether or not it’s going to be effective against the coronavirus.
Stephen Alpher: Yes. Speaking of that U.S. trial, there was a story that hit shortly before we just started talking. We’re talking late on Friday afternoon at the U.S. government trial, the results are expected a little sooner-than-expected, maybe as early as mid-May?
AF: Yes. And that’s – I think, I did see that headline. I think that was a Reuters headline that…
AF: …popped up, right, as I was kind of actually setting up to talk to you guys. Yes, so mid-May, end of May, it’s kind of like that’s sort of always been the timeline for that study. So maybe – it just may be like a week or so earlier. But like I said, essentially, like, call it, middle of May or the end of May, which I think is really important, right? Because we all need to have, like hopefully, I think, I can speak, I probably could speak for all of us that I hope Remdesivir works.
I mean, I – we obviously need stepping away from sort of the investment side of this and we can talk about that, too. I think as a human being who is living through this pandemic, I certainly want there to be an effective medicine to help people who have COVID-19. This will be a drug that will be effective for some people and we’ll need more drugs and we’ll need probably need better drugs.
But that first drug where you have the disease that if you can – if we get a drug that can help people, look, that’s going to help alleviate some of the issues and the problems that are happening in hospitals, that will help us start to get the economy moving again. So all these things, like it’s all incremental, but like, we need something. So like I’m rooting for Remdesivir. I think we all are.
SA: And I would say, yes, that Reuters story also had more kind of anecdotal data about a hospital in Houston, as they treated 41 severely old COVID-19 patients, none have died and half have returned home?
AF: Yes. So Remdesivir is an antiviral and it’s been around for a little while. Generally, what people feel like that drug, if it does work, it will probably benefit people who are on the little earlier stage of COVID-19. Like if, essentially, the earlier you can take an antiviral, the more effective it will be.
So it’s given intravenously, so it has to be given in the hospital. It is not a pill that you can, like a doctor could prescribe to you and you take it home. You – this is – this will be a drug for people who are in the hospital. So it will not be a drug for all people with COVID-19, but still it’s a step.
AT: Okay. We’re going to take a quick break to hear from our sponsor, CME Group. We’ll be right back with more from Adam Feuerstein. This is Alpha Trader.
Commercial: Take a deep dive into features to arm yourself with knowledge to expand your strategy with confidence. See what adding features can do for you at cmegroup.com/alpha.
AT: Again, this is Aaron Task and Stephen Alpher. Our guest today is Adam Feuerstein. He is a Senior Writer at Stat News. So, Adam, I would like to turn to the investing side of this if we could, again.
AF: Oh, sure, Aaron. Let’s get to that.
AT: It’s a caveat. Yes, it’s hard to talk about it. And, frankly, we haven’t talked much about biotech or pharma stocks on this podcast, I think, in part, because it’s such a sensitive thing to say, “Hey, [Multiple Speakers]
AF: And I said to Stephen earlier, I said to him, I said, it’s a little bit – I find it a little bit ghoulish.
AF: …to talk about investing around this. Like we talked – like we mentioned, we can – we mentioned Gilead, and the stock has – I looked it up, it added basically from the beginning of the year, so maybe before sort of the COVID stuff hit, right? And so it’s added about $18 billion in market cap…
AF: …through all of this. So there’s a lot.
AT: And they’re not the only ones, I mean, that was my other question like, obviously, Gilead has gotten so much attention and understandably so in the last week or 10 days. There are certainly other firms out there pursuing different treatments and vaccines.
But what as – and you’re a journalist, you’re not a fund manager, but what is your message or advice for investors as they’re trying many of our listeners and certainly our readers at Seeking Alpha and other people around the world, or are they trying to invest around this disease and the treatments?
AF: I guess, I have – I don’t want to insult your listeners. I don’t want to do that. That’s very bad.
AT: That’s all right.
AF: You guys can insult your listeners. I don’t want. I guess, again.
AT: I can represent [ph] to this podcast.
AF: I do feel – it just seems a little bit. Again, I don’t know if the word is ghoulish or gross [ph] or just like, I don’t want to say inappropriate. I don’t know, like, I get it. People want to trade about all – trade around all different kinds of things and money is money and that’s what people do. But it just seems a little bit weird to me to be trading amongst – basically, trading these stocks based on headlines or their hopes that they may have a COVID-19.
I mean, if you think about the economics of it, and Gilead is a good example, let’s just maybe stick to that one, because it’s a big – obviously, it’s a huge macro cap biotech stock. They’re going to basically give away Remdesivir. The company has not said specifically what they will charge or what the sort of business model or the economics of this.
But they have essentially pledged that – they have basically pledged that this is a noncommercial venture. So – and you can understand why? This is a public health crisis that – the global public health crisis. So they are working as fast as they can to determine whether this drug works. And then if it does, obviously – or in parallel with that, they have to figure out how to make enough of it to treat millions and millions of people.
AF: …that is a monumental task. So they are in the process of doing that. This was a – if this was like any other – if this was like a regular, I don’t want to say regular, but it’s sort of encodes a regular disease. We would all expect Gilead, because hey, hey, American Capitalism, we would expect them to charge a premium for a drug and make a nice profit like all pharmaceutical companies do here in the United States. This is a different situation.
So they – we don’t know what they’re going to charge. But I would assume that it’s going to be somewhere like that, I think, basically, Gilead is going to want to recoup its costs certainly on the manufacturing side. But after that, probably not going to make – I mean, they’re not going to profit from Remdesivir. When we think about the public relations headaches and disaster, it will be – if you have a company trying to profit from global human misery. So with all that said…
AT: Yes. So specially investors then bidding up the stock on the [Multiple Speakers]
AT:…hope there, are they expecting that Gilead, they’ll have some sort of halo effect and they’ll get other government grants for things or that otherwise, it will benefit the bottom on if you’re seeing this…?
AF: Yes. I mean, I think that – I bet a halo effect is probably a really good way of describing it, Aaron, there, because I don’t think that Gilead’s profitability is going to change very much because of Remdesivir. You could maybe make the argument that the company is sort of so fixated on this that they – that other things may – timelines and other areas of their business that are probably more fundamental to their bottom line might slip.
I’m not saying that’s going to happen, but you could, like – I mean, it’s probably all hands on deck over at Gilead right now, trying to figure out and get Remdesivir going. So like I think that there is like, it’s like a psychological thing. It’s a halo effect. Like it’s a multiple – maybe there’s – people just are going to sort of see them in a better light in the stock.
So I’m not surprised that Gilead has appreciated – the stock has appreciated like it has. It’s just like if you look at it at the end of the day, if you’re – it’s depending on how you value stocks and what you made probably it’s not just like fundamentally, it’s probably not justified that you’ve added $18 billion to the market cap of the company.
AT: Right. Let me ask you this if you’re an investor in Gilead or perspective on…
AT: …and you listen to their conference call or read the transcript this week, what’s the most important thing to keep an ear out for, that’s ex Remdesivir, because as you suggested…
AF: Well, yes.
AT: …thinking your pipeline are going to be taking a hit from this?
AF: Well, it’s interesting. I don’t know if other things are going to take a hit. I mean, I’m just sort of kind of throwing that out there as a puzzle.
AT: You saw that with J & J, although…
AF: …but like, I mean, what’s funny is like, what do we call before the coronavirus era like…
AT: 2019, I don’t know.
AF:…BCV, it’s like – it’s BCV and ACV, right? So like, in the BCV era, B as in boy, in the before coronavirus, Gilead was not a favorite of investors. It was like probably there were a lot of criticism to the company. Growth had been really slowing. They were high. They were a very fast grower for a few years and then they’ve sort of come down. There has been a lot of questions about their pipeline and sort of what’s going to be the next blockbuster drug for them.
They got a relatively new CEO in the top of the company. And so he has been sort of – he is trying to implement his strategy there, a lot more questions about Gilead than answers. So when you – when I – for instance, when I saw them at the JPMorgan Conference and kind of thinking, it seems like 10 years ago at the JPMorgan Conference…
AT: Right. That was just January, right?
AF: …it wasn’t in January, but it seems – it literally seems like a decade ago. There were – they came out of that conference and people were kind of mad at them. Like they hadn’t – people wanted them to do a big acquisition and they hadn’t done one. And there were a lot of questions about where the growth was going to come from.
So, again, we’re a couple of months later and now obviously, there – it’s an entirely different view. So when you ask me what people will listen for on the conference call, I think what people will be listening for is anything about Remdesivir.
AF: I mean, I think it’s almost like all the other stuff, like their actual business, their HIV drugs, their Hep C drugs, their oncology business, like nobody will care. Like, I just look at what the things are like just talk about Remdesivir, what are you doing? Like I think there’s a good chance that the data from – like I said, the data from one of their studies will be out either in the day before earnings call or on the earnings call. So that’s a fair point.
AT: That would be a dramatic reveal if they reveal it on the call, right?
AF: Yes. I mean – again, I mean, they, obviously, have a conference call schedule. So that’s why I’m thinking well, it sort of make sense, I mean, you can just want to do it all that, because it’s the only thing that anyone is going to ask you anyway.
AF: So why not just do it? So yes, that – I mean, maybe in a year from now or six months from now, people will start to care about other things that are going on with Gilead, but not right now.
SA: Adam, I wanted to ask you a question about these. I don’t know if I’m pronouncing it right, serasurveys.
SA: A couple ones [ph] that made headlines from one from Stanford, one from USC, and then one…
SA: …of course, Cuomo talking about the one in New York yesterday, which shows far higher rate of COVID-19 infection than I had been thought, which raises the denominator of the equation means a far lower death rate. You’re a little more familiar with kind of looking at data with an arched eyebrow than I am. I just wanted to get your take on that?
AF: So I’m not an epidemiologist, and I do find it funny like you on Twitter now and like all of a sudden everyone acts like they’re an expert epidemiologist, and they’re not. And so those Sierra Surveys that you referred to, those are essentially blood tests that patients – that people take. And what they’re doing is, they’re detecting or they’re looking for antibodies to the virus.
So if you have – if you had been infected with the coronavirus and you have recovered, you have an antibody – your – because your body’s immune system will have detected the virus in your – in the body, fought it, killed it off, and then what’s left is an antibody that can be detected in blood. And so the antibodies are supposed to infer immunity to future infection. I mean, that hopefully what this means, right?
So most of the times when you get – if you get a virus, you get an antibody – your body fights it off. You get an antibody, the antibody is in your body. And so they’ve – you’ve got it again. Those antibodies are there that alert the immune system to attack and kill off the virus. So what people hope for is that – and that’s why we talked about people who have mild symptoms, mild COVID-19 or recovered from it are “immune” to reinfection.
We all know that for sure and we don’t know how long immunity lasts. So like how long those antibodies that we don’t know how much anybody you need to infer immunity. But the surveys that you’ve talked about is basically essentially a survey that goes out and looks to see how widespread the infection actually is beyond kind of testing for the actual virus, right?
This is a way to kind of go out to a broader group of people just sort of randomly and say, “Well, how widespread is the infection.” And that’s – and those are those numbers. You have to be really careful about interpreting those numbers, because it depends on the population you’re treating, it depends on the amount of people you’re treating.
So there’s a lot of variables that go. And I – and this is where I get – I’ll be honest with you, this is where I get a little bit fuzzy, and I – so I don’t want to overspeak or overstate my knowledge here. But you’re going to see a lot more of those kind of Sierra Surveys, as we roll out these antibody testing, because it’s important to understand sort of how widespread the infection is, because that will also kind of give you a sense of how many people might be immune to it and how quickly maybe we can get back to well, I guess, if life is normal, is maybe the way to – best way to describe it.
AT: Yes, of course, that’s a [indiscernible] as soon as seemingly possible and [indiscernible] you – back to your abnormal life living under quarantine now. We talked obviously a lot about Gilead and Remdesivir. Are there other drugs or drug makers out there where you’ve seen evidence that they might be onto something?
AF: Well, yes, I mean, we can talk about – we’ve obviously talked about – with Remdesivir, we’re talking about a medicine, a drug to treat the infection until you’ve been infected, you have COVID-19, a drug like Remdesivir. If it works, it would be treated – it would be used to treat you.
The only way that we are going to get back to like a fully normal, like our true BCV lives is with vaccines, right? I mean, we need vaccines that absolutely, someone has to come up with a vaccine that will protect you from infection. So that if you get exposed to the virus, you don’t get it.
And so, yes, that work – as you know, I’m sure there’s a lot of work going on. I think there are right now, I think, there are five vaccines in actual clinical development meeting like they’re actually been already being tested in people. There’s about 70-plus vaccine candidates that are kind of in preclinical, which means that they’re being tested in animals or laboratories and they were moving towards clinical setting. So there’s a lot of work going on in the vaccine world right now.
In terms of like publicly-traded companies since we’re talking Moderna (MRNA) which is a biotech company here, based up by me up here in Cambridge, Massachusetts. They have a vaccine that’s one of the more advanced vaccines right now in terms of – they’ve started clump. They’ve started testing it in healthy volunteers. And like Gilead motorist stock has skyrocketed because of the work that they’re doing to develop a coronavirus vaccine.
J&J is probably another – J&J is working on one, Pfizer is working on one, GlaxoSmithKline and Sanofi are working on one. So all the big pharma companies that companies that have done a lot of vaccine work in the past who have developed other vaccines have kind of engaged and are getting into the vaccine development business for coronavirus. The problem with vaccines is that, they take a long time to develop.
AF: So we’re talking at best, I mean, literally, it’s like everything goes right 12 to 18 months. And if like bad things, if there are setbacks, it could be longer. So you have to wait a while for vaccines.
AT: Even Pfizer, they’re doing a joint venture with BioNTech?
AF: Yes. Right. Yes, that’s right exactly.
AT: So what would you be expecting more of those kind of deals? I mean, again, to be crass, if I’m an investor, should I be looking for the other BioNTech’s out there that might get agreement with a big pharma company or have the…
AF: I mean, there are some smaller – like there has been some smaller biotechs that are also kind of doing vaccine stuff. They’re all without getting kind of into the deep into the weeds of like the different types of vaccines, the technologies.
The Pfizer BioNTech vaccine is basically the same kind of technology that Moderna is using. It’s an mRNA-based vaccine. They’re both – they both use similar technologies to develop. And the caveat there is that, there has never been a mRNA vaccine developed successfully before.
AF: There’s actually never been an mRNA-based medicine developed before. This is like groundbreaking new technology. So it’s moving ahead, but it’s brand-new. So you’re kind of going into a little bit of an uncharted territory there.
SA: Because there’s a nonzero chance that a vaccine is never developed either there are plenty of other…
AF: Oh, Stephen, please don’t be such a pessimist.
AT: That’s just his job.
AF: Come on, man. I mean, yes, there is a nonzero chance. That’s almost too depressing to think about.
AF: So let’s not go there.
AT: And before I let you go, you mentioned you’re in the suburbs of Boston. I’m just curious, like, what is life there? I mean, outside of New York City, Stephen is in Philadelphia.
AT:…you’re in East Coast, it’s different sort of than it is in other parts of the country. But is there any sense there of “reopening” of the economy?
AF: Not here yet. So I live in Cambridge, Massachusetts, just on the other side of the Charles from Boston. And Massachusetts, it’s sort of – it’s kind of – it’s, I would maybe call it like a mini hotspot.
We certainly haven’t been as affected as New York has been. But we do have our share [ph] of cases here. And which – I think it’s drifting by the numbers, like this week was actually kind of a – it seems like maybe starting to flatten the curve a little bit here and new cases that the pace of new cases is going down, death has gone down. So those are all hopeful signs.
But I know that the Mayor of Boston yesterday in a press conference, he was asked, like, “How long is this going to last?” And he was like, “We’re probably still four or five, six weeks away from any kind of significant decision on kind of being able to sort of reopen things.” So, probably, I mean, there’s probably just like – probably like you guys down in New York, New Jersey and Phila, I mean, I don’t think it’s probably not that much different. So that’s just the way things are these days.
AT: Yes. These are strange times indeed.
AF: They certainly are.
AT: Thanks so much for being with us. We’d love to have you back as obviously, this story unfortunately is not going away anytime soon.
AF: No. Yes. Well, hopefully, next time you have me out. We can talk about something that’s not coronavirus-related. That would be nice.
AT: I look forward to that. Thanks very much.
AF: Thanks, guys.
SA: Thanks, Adam.
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