Gilead’s moral (and financial) COVID-19 conundrum

Good afternoon, readers.

When remdesivir, biotech giant Gilead’s experimental antiviral drug, was given Food and Drug Administration (FDA) emergency authorization to treat certain COVID-19 patients, you might have thought that investors would rush into the breach.

But life—and the life sciences market—has a way of throwing curveballs at you. Since President Donald Trump announced remdesivir had received FDA authorization last Friday, Gilead’s stock has actually fallen more than 6.8%. The slide began promptly after the announcement.

As experienced biopharma investor Brad Loncar told me last week, there are plenty of factors fueling that slide. “Biotech investors know there’s no money in this,” he said, in part referring to “biotech ‘generalists’ who are throwing money at everything they see in the headlines.”

Those generalists are just looking to make a quick buck off of anything related to COVID, but they’re anxious that public scrutiny will rob treatments like remdesivir of profitability. (Loncar argues that it’s more important to look to the long-term science demonstrated in remdesivir’s development, and the implications it has for a company like Gilead in the future.)

But it can be difficult for companies to strike a proper balance in the midst of a pandemic, especially in the short term. Gilead CEO Daniel O’Day is well-attuned to that reality. He’s stated on multiple occasions that the biotech will be under immense pressure to price remdesivir fairly. The firm has also committed to giving away its existing batches for free and investing $1 billion in scaling up availability—a gigantic sum with no assurance of anything approaching a big return.

And therein lies the rub. Just how might Gilead price this treatment over the long term?

The Institute for Clinical and Economic Review (ICER), a pharmaceutical pricing watchdog that has long been a thorn in the industry’s side, has a few ideas.

ICER believes the treatment would be cost-effective at a price tag of $4,460 per patient—with some caveats. The current version of remdesivir is administered via IV in a hospital setting for seriously sick COVID-19 patients, and while it’s nothing approaching a cure, it has shown results in cutting down on hospital stays and clearing up expensive medical equipment such as ventilators for wider use.

ICER lays out a number of different scenarios for remdisivir pricing ranging from a non-profit approach that might be justified at $10 per treatment to the $4,460 number that would require more evidence showing remdesivir decreases mortality risk.

So what will Gilead do? The company won’t be announcing a price point until more data may change the calculus. It will be a tightrope act between corporate citizenship during a disaster and financial imperatives.

Read on for the day’s news, and see you again next week.

Sy Mukherjee
sayak.mukherjee@fortune.com
@the_sy_guy

DIGITAL HEALTH

Using space strategies to care for the isolated during COVID-19. My colleague Jeremy Kahn has a fascinating piece on how IBM—a tech giant long associated with the American space program—believes that strategies for maintaining mental health aboard space stations may help care for the at-risk elderly here on Earth during the COVID-19 pandemic. A digital assistant being tested on the International Space Station (ISS) could, somewhere down the line (it's still in very early development stages), allow families to monitor their elderly loved ones who may not be able to leave the house or head to a hospital. (Fortune)

Livongo stock skyrockets on explosive earnings report and telehealth bullishness. Shares of digital health firm Livongo shot up more than 12% in Thursday afternoon trading after the company announced earnings that sped by Wall Street expectations, including quarterly revenue growth of more than 100%, according to a company spokesperson. Livongo's suite of offerings is meant to tackle chronic conditions such as diabetes by linking patients with health experts and coaches via a virtual platform. And multiple analysts, including from Morgan Stanley, have said that the coronavirus pandemic's downstream effects are positive signs for Livongo as more and more people turn to telemedicine services.

INDICATIONS

In pharma earnings season, Merck's Keytruda is still supreme. Merck's blockbuster cancer immunotherapy Keytruda continues to dominate its space, fueling $3.2 billion in first quarter 2020 adjusted earnings for the pharma giant compared with $2.9 billion during the same period last year. But the company has also warned that 2020 will be a tough year, with overall revenues falling due to COVID-19. Merck shares were down about 1.1% on Thursday. (TheStreet)

Moderna plots a summer late-stage trial launch for coronavirus vaccine. Biotech Moderna will attempt to start late-stage coronavirus vaccine trials in the early summer, the company said on Thursday, sending the company's stock up nearly 10%. If that timeline holds out, Moderna's so-called mRNA vaccine candidate, mRNA-1273, could—could—theoretically be approved early next year. And it would be the firm's first approved therapy to boot. But there's still plenty of questions about mRNA technology at large and how effective it might be. In other corners of the biopharma world, companies such as Pfizer and Johnson & Johnson are also actively engaged in COVID vaccine R&D. (FierceBiotech)

THE BIG PICTURE

Major insurers to offer discounts amid coronavirus. Three of the nation's largest health insurers say they will offer upfront savings to customers as a deep drop in demand for basic medical services has inflated their bottom lines. UnitedHealth, Cigna, and Humana (all Fortune 500 companies) announced they would take a variety of actions including rebates for certain customers, capping drug costs for people who have lost their jobs amid the crisis, and cost-sharing for elderly patients for primary care visits. While hospitals have suffered from a loss of revenue from elective surgeries postponed due to the outbreak, insurers have had to pay out significantly less money. (Fortune)