All Eyes on Gilead

for more promising drugs instead. So rim de severe was then used to treat ebolip, but then the outbreak faded. The drug had also shown unusual promise against a wide variety of coronaviruses. In a May one, rim desivie was authorized for emergency use by the FDA. Making the drug is a months long process, requiring about twenty five chemical steps in the production process. Had those scientists not ordered those raw materials back in January, we wouldn't have the

treatment ready for use right now. Talk about planning a haad. Gilead plans to donate the first one and a half million vial enough for roughly two hundred thousand patients. It's also important to note that not everyone agrees with that price. This is the story of rim Desevere, perhaps the first hopeful news of the pandemic. It's also an example of foresight, preparedness, and competence in a time when the world could use

a little more of each. All eyes on gilead emergency approval of the anti viral drug rim desevere is the first good news of this pandemic. Gilead Sciences took extraordinary steps to get ready for the moment. By Robert Langreth. Last New Year's Eve, Thomas Chillar, vice President for Discovery Virology at Gilead Sciences, received a disturbing email from a

top infectious diseases expert at the University of Virginia. The researcher had been working with Chilar on a plan to test the Gilead drug rim desevere as a treatment for Middle East respiratory syndrome, a deadly disease caused by a coronavirus. Mirrors had been flaring up from time to time in Saudi Arabia and elsewhere since. But this email was about something more ominous. There were cases of pneumonia suddenly emerging in Wuhan, China watched this one. The virologist warned it

might be a new coronavirus. Rim desevere was one of the few experimental medicines that had shown promise in lab studies against a wide variety of coronaviruses. Like the rest of the world, Guilliad knew next to nothing about this new one. The World Health Organization hadn't yet confirmed there was a sustained human to human spread, and the extent of the outbreak in Wuhan wouldn't become clear for weeks.

Nobody knew at that point whether it would become a pandemic, but Gilead started planning on the assumption it could within weeks. Chief executive Officer Daniel O'Day formed a task force to study how to test room desevere and if it worked, mass produce it. Even by the exacting standards of pharmaceuticals, rim desevere is tricky to produce. The months long process

in involves seventy raw materials, reagents, and catalysts. The resulting active pharmaceutical agent, or a p I, is a white powder one point one grams of which constitutes a single ten day course of treatment. Rim desevie is administered intravenously, which introduces additional complexity into the manufacturing. The powder must be dissolved into a solution and then placed into glass

vials under sterile conditions. Thanks to its work on Ebola, Gilead already had a small supply of rom desevie on hand. Sitting in cold storage in Switzerland and California were enough thirty million liter vials of the drug to treat five thousand people, which made it possible to begin human trials in the US, China and elsewhere. In a factory in Edmonton, Alberta, Gilead also had one of the bulk powder, perhaps enough

to treat ninety thousand patients. To fill enough rom desevere of vials to treat millions in a pandemic, however, would require a metric ton or more of the bulk drug. Giliad didn't have close to that and still doesn't, so back in January, it ordered more than a dozen of the most crucial starting materials and reagents from suppliers in China, Europe and elsewhere. Giliad also helped its contractors locate sufficient

supplies of compounds needed to make those starting materials. There haven't been a lot of stories of foresight and preparedness in this pandemic. This is one after a big trial sponsored by the National Institute of Allergy and Infectious Diseases, Rimdesevie was authorized on May first for emergency use on

COVID nineteen, the disease caused by the new coronavirus. Anthony Fauci, the director of the n I a i D, has likened the trial of rimdessevie to the first big trial of a z T. The first drug for HIV as a z T was. Rimdesevie is being authorized for wide use before it's fully clear how effective it will be. Preliminary data from the one thousand sixty person trial show the medicine sped recovery in the most serious cases of

COVID nineteen by about four days. Full details haven't been published, and a smaller trial in China didn't find a benefit. The Food and Drug Administration, in granting the emergency authorization didn't allow Gilead to claim the drug is safe and effective for COVID nineteen. The agency said only that it's reasonable to believe the medicine may help. It is not a cure, O'Day says, it is a first step, but

it is an important first step. Many additional drugs and vaccines will probably be needed to stop the pandemic, he says. Gilead itself is working on an easier to administer inhaled form of rim desevere that might be useful for less

severe cases. But with few other medicines available and the number of COVID nineteen cases continuing to grow steadily about four point three million cases and two d ninety thousand deaths at press time, the drug is likely to be in high demand until a better treatment or a vaccine is available. Guilliad plans to donate the first one and a half million vials, enough for roughly two hundred thousand patients.

The number depends on the dosage. The Emergency Use authorization allows both the ten day course of treatment for patients on ventilators and a five day course for those not on ventilators. Those will be delivered this spring. By the fall, a much larger supply should start to become available, and Gilead is also working with other unnamed companies to bring new factories online overseas. The question is can Gilead make

enough of it for the whole world. Gilead, based in Foster City, California, is the most successful maker of anti viral drugs in history. The company was founded in seven and early on its chemists invented the influenza drug tamiflu. In the two thousands, it started packaging multiple powerful anti HIV medicines into simple, once a day pills, replacing complicated

multi pill regimens. It came mount with Sivaldi, a breakthrough drug for hepatitis C. The news was overshadowed initially by a fereer over the price one thousand dollars a pill. As cheaper competing drugs hit the market, gileads hepse revenue declined. Wall Street hasn't cared for that and has pressured Gilead to expand beyond antivirals into faster growing arenas such as cancer treatments. Until January, there wasn't much reason for a drug company to work on coronaviruses. For years, they were

considered mere nuisances, responsible mostly for many common colds. The first deadly human disease caused by a coronavirus, severe acute respiratory syndrome or STARS, was stopped in two thousand three before it gained a significant foothold in the human population. The next deadly coronavirus MERS didn't spread efficiently in humans. The virus that causes COVID nineteen is more closely related to STARS, so much so that its official designation is STARS.

C o v two, a precursor to rim desevie, was developed in two thousand nine by Gilead chemists hunting for hepatitis C drugs. It was difficult to administer, however, and Gilead had more promising drugs for HEPSEY in pill form, so it mostly sat on the shelf for several years. But in studying the compound, Gilead scientists showed in the test tube that it could slow the replication of a

broad number of viruses. During the Ebola outbreak in West Africa in twenty fourteen, Gilead put together a team of scientists to look at whether any of its existing drugs could help treat it or other emerging viruses. Rimdsevie quickly moved to the top of the list by mid twenty fifteen. Working with government scientists, Gilead had shown the drug worked against ebola in laboratory animals and begun human safety trials, but by the time rim desevie was ready for human

efficacy trials, the Ebola outbreak was fading. During the same period, Gilead was invited to participate in a government sponsored consort sham of academic researchers working on possible drugs for emerging viruses. Two virologists in this group, Mark Dennison of Vanderbilt University Medical Center and Ralph Barrack of the University of North Carolina at Chapel Hill, had worked together on coronaviruses for years. Barrick first warned about the potential for them to cause

significant human disease back in the late nineteen nineties. Dennison was skeptical the Gilead compounds would do much, but when he tested an analog of room desevere against a mouse coronavirus in his lab, it worked. Over the next few years, Barrick and his UNC colleague Timothy Shean tested the drug against stars virus, mers virus, and numerous other bat coronaviruses. Room desevie worked better than almost any other drug they tried. Every virus we tested it on. It had a very

high potency and efficacy, Dennison recalls. In eighteen, another Ebola outbreak flared up in the Congo, giving Gilead an opportunity to finally test rimmed severe in people with a bola. It didn't work, but the trials proved one thing, the drug was safe. Gilead was figuring out what to do with the compound next, says Chilar, when COVID nineteen came along.

Ken Kent, Gilead's vice president in charge of chemical development and manufacturing, compares drug manufacturing to baking giant quantities of a very complicated bread. You have to perform all the right steps in precisely the right sequence. And just as a baker needs a particular flower to make a signature bread, a pharmaceutical chemist must have sufficient quantities of all the right ingredients on hand. If you have to wait for the wheat to grow, Kent says, it's going to take

a while. Kent joined Gilead in the late nineteen eighties. He was employee number eight and has been involved in one way or another with many of its anti viral hits, including tamiflu, Sivaldi, and true Vada, a big selling provylactic HIV drug combination, and today he's in charge of producing the active ingredients for all of Gilead's small molecule drugs.

That's industry jargon for pills and other medicines made through traditional chemistry as opposed to d NA or protein based concoctions, which are produced using genetic engineering and browed inside living cells. While ramdesvie isn't a pill, it is a smaller molecule. In mid January, Kent got a call from Reza ole I, senior vice president for Gilead's pharmaceutical operations, telling him the company would need to make large quantities of room desevere

to fight the novel coronavirus. Kent immediately started calculating how long that would take. We had to move quick, because the one thing you can't buy is time, he says. When you have long linear chemical synthesis that has to be done sequentially A to B to see, that's time you just can't get back. Depending on how you count, there are about twenty five chemical steps in the production process. Most drugs require a out half that number. Some of

the steps are more delicate than others. An early one uses a reagent so flammable it will spontaneously combust if exposed to air. Another involves a poison called trimethyl sillill cyanide. If you get it on your body, you better get yourself to the hospital really quick, says Howard University chemist Joseph Fortunac, who has analyzed the rim deseivie manufacturing process,

and you still might not survive. Kent estimated that without improvements in the process, it would take nine to twelve months to make a batch of rim desevere from scratch. That included a few months for suppliers scattered around the world to make the wrong ingredients, six months for Gilead to assemble those ingredients into the precious powder, and a final month to finish and package the drug at the

filling plant in Laverne, California. This calculation led Kent and Olei to brief O'Day on the need to order more raw ingredients and other supplies right away to prevent bottlenecks. O'Day signed off immediately, Kent says. At the same time, Can't assembled a team of twenty chemists who started working on ways to speed up the manufacturing process on both the rimdessevere powder made in Edmonton, and the starter chemicals

made by Gilad's contractors. Eventually, they instituted tweaks that reduced the time to manufacture the drug to six months. On February second, Giliad flew the powder left over from its Zibola effort, one hundred kilograms packed in high density polyurethane drums with tamper evident seals, from Edmonton to Laverne. At the filling plant, the powder was mixed with sterile water and excipiens, substances that enhance the powder's solubility in reaction vessels,

then passed through another filtration step to insure sterility. An automated filling machine put it in vials. After two weeks of sterility testing, labels were prepared and checked. The Edmonton plant also had enough raw materials to start on another

batch of powder in its glass lined steel reactors. This batch, enough for at least thirty thous and patients, was completed by early April, Soon after, the massive order of supplies Gilead had placed in January started to arrive by plane, allowing workers to start producing far larger batches of the drug. Those will begin shipping to the California filling plant in June.

Gilliad says a contract manufacturer in Iowa will also start releasing batches of rim de severe in August, and the company has begun to assemble a consortium of chemical and pharmaceutical manufacturers in India, Pakistan and elsewhere to help supply the rest of the world. The U s Department of Health and Human Services recently announced that six hundred and seven thousand of the initial one and a half million vials of rim desevere will be distributed domestically, enough for

about seventy eight thousand patients. That leaves enough of the drug for about one fifteen thousand non US patients. If the pandemic is still raging when the supply of donated drugs runs out, and if vaccines or better treatments still aren't available, there will be a fury debate about the price. Gilliad says it's spent fifty million dollars on the drug in the first quarter of the year and could spend as much as one billion dollars by year end, mostly

on manufacturing, but also potentially on additional clinical trials. O'Day says that Gilead is committed to making sure the medicine is accessible and affordable to patients around the world, and that it's simply too soon to talk about the price. Wall Street doesn't think so. Analysts are already pressing him on how his company will make money from rim desevere. What is special about covid. Jeffrey Porges, an analyst at the investment bank SVB Leering, asked O'Day on an April

thirtie earnings call. Should we assume the returns are going to be similar to the returns you have generated in other parts of the business. Porges later explains that he views a pandemic as exactly the time a drug breakthrough should pay off big. The fiftie medicine for blood pressure we are allowing them to make a profit on, But protecting the world from a pandemic, you can't make a profit on that, He asks, It is crazy. It should

be the opposite. Other analysts have estimated the price could be three thousand dollars to five thousand dollars per treatment, in line with other new drugs to treat infections and hospitalized patients. At that price, rim desevere could generate one billion dollars or more in annual sales if it ends up being used by hundreds of thousands of people. While the drug is complicated to make, it won't necessarily be expensive to produce on a per person basis once production

is scaled up and manufacturing efficiencies are maximized. In April, scientists at the University of Liverpool and Howard University estimated that Generics manufacturers could produce rim desevere for just nine dollars per dose, according to a study published in the Journal of Virus Eradication. Gilead's shares are up twenty two percent this year, and investors expect the company will eventually earn a return on its most high profile drug, assuming

the drug is still needed. At the same time, activists pushing for a low cost are pointing out the government's key role in identifying rim Desevere's potential for treating coronaviruses. Public Citizens says the US government has spent at least seventy point five million dollars funding research on the possible uses of the drug. In the best case scenario that everyone is hoping for vaccines now in early trials will work well halt the viruses spread and render drugs like

rim desevere largely obsolete. Even if that happens, Gillyad's pricing decision on rim desevere may have a lasting impact. As the first drug in a new category, it may set a precedent for other COVID nineteen treatments. The coronavirus has already caused untold economic damage, leading to the highest US unemployment rate since the Great Depression, and the virus looks like it isn't going away. Vaccines and drugs for COVID

nineteen may be needed for years to come. We could spend years asking how much society is willing to pay for a cure. With Susan Burfield, be sure to check out the cover story and more in the Kerney Siol Bloomberg Business Week magazine. It's on newsstands, on the Bloomberg and online at Bloomberg dot com. I'm Carol Nasser and I'm Jason Kelly, and check us out every day on the radio two to six pm Wall Street Time wherever you listen to Bloomberg Radio. Also check out our podcast

you can get that wherever you get your podcasts. This is Bloomberg