From this weekend's Barron's: no mention of Amarin or Vascepa.
Pills to Battle Covid are coming: These Companies Stand to Gain
In the earliest days of the Covid-19 pandemic, when an effective vaccine seemed too much to hope for, investors and drug developers looked to antivirals to blunt the impact of the disease.
They didn’t have much luck. To date, the only antiviral authorized by the U.S. Food and Drug Administration to treat Covid-19 is Gilead Sciences ’ (ticker: GILD) Veklury, also known as remdesivir. It is expected to earn $3 billion in revenue for Gilead this year, despite its effectiveness being debatable, and it being administered as an inconvenient intravenous infusion.
Today, the next generation of Covid-19 antivirals is on the way, and a pill to treat—or even prevent—Covid-19 could be available by the end of the year. Merck (MRK), Pfizer (PFE), and the biotech Atea Pharmaceuticals (AVIR) each expect late-stage data on an oral Covid-19 antiviral in the coming months. If the data are positive, the drugs provide a major opportunity for the companies—one that investors should not ignore.
The antivirals may not be effective enough to stop a Covid-19 infection in its tracks.
Still, if they show even moderate efficacy, they will play a major role as the global fight against the virus shifts to a long-term grind against an endemic threat. A prescription Covid-19 antiviral that could be taken at home as a pill would be in great demand around the world.
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Analysts at Jefferies have said that an effective, convenient treatment for Covid-19 could be a $10 billion-a-year drug. That treatment will compete with monoclonal antibody therapies for Covid-19 from Regeneron Pharmaceuticals (REGN), GlaxoSmithKline (GSK), and others, which work well but, like Veklury, are generally administered as an intravenous infusion, making them challenging for widespread use.
The U.S. government has already signaled an interest in stockpiling oral antivirals, signing a $1.2 billion contract with Merck that will go into effect if its drug receives emergency-use authorization from the FDA.
Some analysts are more skeptical of the role the pills will play.
In a recent note, Jefferies analyst Michael Yee wrote that he expected antivirals to be only incrementally effective. Still, he says there will be a need for them “for the foreseeable future.”
Given the potential size of the market, positive data or an emergency-use authorization for any of the three oral antivirals could give the shares of its maker a tremendous boost.
The Coming of the Covid Pill
Four leaders in the race for a Covid-19 antiviral
Company / Ticker Recent Price YTD Change Market Value (bil) Covid-19 Antiviral
Pfizer / PFE $44.77 22% $251.0 PF-07321332
Merck / MRK 72.81 -7 184.3 Molnupiravir
Atea Pharmaceuticals / AVIR 25.98 -38 2.2 AT-527
Roche Holding / RHHBY 46.86 7 331.5 Partnered with Atea
Source: Bloomberg
For Atea, a biotechnology company developing a range of oral antivirals, the effect on the share price could be the most significant of them all. Its Covid-19 antiviral, AT-527, is being studied in a number of trials, including a Phase 3 trial in nonhospitalized patients expected to produce data later this year. The company has teamed up with Roche Holding (RHHBY), which will have the rights to sell the drug outside of the U.S. SVB Leerink analyst Roanna Ruiz recently set a $60 price target on Atea shares, more than double their recent price of around $26.
The drug, AT-527, targets an enzyme called RNA polymerase, part of the coronavirus’ replication mechanism. The drug uses a sort of two-pronged attack, which could make it effective across a range of Covid-19 variants.
“Our drug, to our knowledge, is the only drug that has a dual mechanism,” Atea’s CEO, Jean-Pierre Sommadossi, told Barron’s. The world will need a range of therapeutics to treat Covid-19, he adds. “It’s a major unmet need,” says Sommadossi. “And it’s going to be a significant and large market on a global scale.”
Merck, which is developing an antiviral called molnupiravir in collaboration with the private firm Ridgeback Biotherapeutics, could be the first with Phase 3 data on its Covid-19 antiviral.
This past week, Merck CEO Robert Davis said at Morgan Stanley’s industry conference that FDA authorization could come by the end of the year.
In a recent note, SVB Leerink’s Daina Graybosch wrote that molnupiravir could be worth $3 a share to Merck, which recently traded around $71. Like AT-527, molnupiravir interferes with the replication of the virus that causes Covid-19.
“It would be very challenging to mutate around,” says Merck’s vice president of infectious diseases discovery, Daria Hazuda, of molnupiravir. What’s more, she says the drug has been shown in preclinical tests to be active against other coronaviruses beyond Covid.
“It would have the potential not only to be an important contributor to this pandemic, but also future zoonotic transmissions [those transmitted from animals] of other coronaviruses,” Hazuda says.
As for Pfizer, its experimental Covid-19 antiviral, known as PF-07321332, is also in studies that could produce data later this year. Pfizer’s drug is what’s known as a protease inhibitor, similar to antivirals used against HIV, among other diseases.
Pfizer’s Chief Financial Officer Frank D’Amelio said at the Morgan Stanley conference that Pfizer could submit the drug for FDA authorization in the fourth quarter of this year. “We think this could be another really nice tool in the arsenal relative to our fight against this virus and this pandemic,” D’Amelio said.
