ViewPoints: Optimism accumulates well ahead of COVID-19 progress

A series of news events late last week had people in high places seeing a light at the end of the tunnel for the COVID-19 pandemic, now striking grand plans to end economy-hobbling social distancing restrictions- and setting up a more difficult fight for those endorsing a more tempered approach.

What happened

Media reports late last week disseminated anecdotes about the efficacy of remdesivir from a single study site, striking a chord of optimism that produced impressive share performances for Gilead Sciences and broader markets alike.

While markets were singing the praises of the remdesivir data, tone from the top in the US was adding to the pressure to 'reopen' the American economy, with the White House releasing its own plan for "Opening Up American Again."

The guidelines, described by President Donald Trump as a means to "provide governors with the fact-driven and science-based metrics they will need to make the decisions that are right for their own particular state," call for a 14-day downward trajectory of new cases, as well as a "robust testing programme in place for at-risk healthcare workers, including emerging antibody testing."

"The United States has the most robust, advanced, and accurate testing system anywhere in the world," President Trump said. The guidelines also directed states to step up their own testing and contact tracing measures. The testing would effectively work ahead of viral spread to quarantine those with suspected exposure, rather than the current, reactive approach of following behind in the virus' footsteps. 

In a similar vein, Johnson & Johnson's earnings last week saw the company lay out its expectations for the trajectory of the pandemic, disclosing that it was modelling a near-term peak for the new infections, with economic recovery starting in the third quarter. (See ViewPoints: Johnson & Johnson survives the earnings gauntlet)

Why it matters

Emerging from the social distancing cocoon to fire up the economy and stem unemployment is a hot topic in the US, where the economic versus public health impacts of the pandemic have devolved into partisan issues. The sneak peek at remdesivir, paired with the administration's active guidance towards a reopening strategy, were all taken as signs that a return to normalcy was well on the way and could be safely implemented.

But it's not clear that those market gains will be sustainable for either Gilead or the broader marketplace; while optimists count the days until a return to business as usual, others are outlining the human health impact of a premature reopening.

For starters, there are plenty of caveats to the anecdotal data from the remdesivir programme that could cut into its ability to reduce the burden on healthcare systems. The report of high discharge rates from a Chicago study site excluded patients receiving mechanical ventilation- meaning that the data nugget doesn't provide much insight on the more severe patients who represent a greater burden on healthcare systems.

Evercore ISI's Umer Raffat further noted that the company's China-based studies, which do include a control group, failed to achieve sufficiently strong efficacy to halt the trial early during its mid-March interim analysis. Both studies have since been discontinued on account of slow enrolment.

Further, Gilead recently scaled-up the size of its US studies, which could be a sign of the company's commitment to broad access to the antiviral- but some interpreted as a sign that overwhelming efficacy was not emerging.

The bigger picture

Outside of the continued uncertainty over remdesivir's efficacy, a COVID-19 therapeutic won't be the magic bullet that enables a return to global normalcy. That gap can only be filled by either an effective vaccine or the accumulation of herd immunity. Bernstein's Ronny Gal notes that the latter option would require infections in about 50% to 70% of the population and up to two million deaths in the US- "not an acceptable death rate in a democracy."

A protective vaccine remains at least a year away- well behind when the US administration is hoping to loosen restrictions on business closures and social distancing measures. However, it’s not clear that there's a path forward to the implementation of the administration's reopening plan and its aspirations for broader testing and contact tracing.

According to Bernstein's Gal, "we don't have enough public health workers to trace patient contacts through conventional contact tracing, and we also don't have technologies in place to use digital strategies for tracing contacts and enforcing quarantines. Further, we are just starting the public debate about the material privacy issues that would arise from implementation of these technologies."

Reopening markets in the absence of this testing capacity, Gal says, "would do more damage to the economy than continuing the lockdown."

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