ViewPoints: COVID-19 plays with global markets

Market uncertainty over the impact of coronavirus infection has reached new peaks, upping the ante on biopharma to deliver a solution- while also setting up a potential binary outcome for ongoing antiviral trials that could extend far beyond biotech.

What happened

This week's market turmoil has added additional panic over both the public health and economic impacts of the spreading coronavirus outbreak, as observers see a narrowing or even closed window for disease containment.

Virology-focused companies that had previously been immune from panic selling, like Vir Biotechnology or Gilead Sciences, also lost significant value on March 9 in the face of record-setting drops across public markets- partially driven by a fall in demand for oil. This time, diagnostics companies like Lab Corp and Quest were better protected from the sell-off, reflecting concerns in the US that diagnostic tests for coronavirus have been in short supply and are sorely needed to check further spread of infection.

A hugely negative market on March 9 partially recovered on March 10, with the Dow Jones Industrial Average clawing back a little more than half of its initial 2,000-point loss.

What it means

With diverse sectors now accepting that business will not be continuing as usual, pressure has mounted on biotech in particular to come up with a solution for the global problem- while it is also partially hobbled by the crisis. Major conferences like American Association for Cancer Research (AACR) have been delayed, while supply chains become strained and research personnel stay away from offices; on March 10, the governor of Massachusetts declared a state of emergency over the state's rapid increase in coronavirus patients, with most cases tied to a Biogen strategy meeting.

While there's been substantial effort across the biotech sector to produce a coronavirus solution, a disproportionate share is currently being supported by Gilead, with five clinical trials ongoing to evaluate the efficacy of remdesivir. (See ViewPoints: Remdesivir the redeemer)

However, the ramifications of those trial outcomes could have an impact well beyond Gilead, as a remdesivir failure could have global markets panicking again over the uncertainty of having missed their best shot at an effective treatment mid-pandemic.

Next steps

Gilead CEO Dan O'Day has already broadcast that he expects data from Chinese trials of remdesivir in April, following an interim safety analysis in March. (See ViewPoints: Biopharma goes to Washington)

That said, Evercore ISI's Umer Raffat speculates that trial data could be available earlier, citing signals from Chinese media. But setting reasonable expectations for those data will be critical as infection rates continue to climb- and with it the stakes of the outcome.

Raffat notes that treatment timing is likely to be an important feature of the remdesivir trials, citing animal studies that suggest treatment earlier in the course of infection is more effective; mice treated with remdesivir two days after infection had about half the viral titre of animals treated at four days, and a fifth of those treated after six days. He notes that that observation could make for an unimpressive overall result from the trials, as patient data is muddled by those that received remdesivir too late to show efficacy. He's therefore speculating stronger results from the subset of patients who happened to receive treatment early in their disease course.

Should that prediction prove true, it may not be quite the saviour the markets are hoping for; such an outcome would mean that effective disease management could be dependent on early diagnosis in a setting where testing is currently limited, and suggests that a 'rationing' approach for more severe patients would be ineffective- meaning a higher demand on initial production as Gilead ramps up its manufacturing capacity.

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