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Mar 24, 2020

Gilead's experimental COVID-19 drug scores potential tax break

Shane Obata discusses Gilead

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Gilead Sciences Inc.’s stock is little changed after an experimental treatment for COVID-19 secured a coveted regulatory designation that usually comes with tax breaks and a seven-year market monopoly.

The Food and Drug Administration announced late Monday that remdesivir would get the agency’s orphan drug designation, a program usually reserved for rare illnesses affecting less than a quarter of a million people in the U.S. Globally, deaths from the disease stand at over 16,000 and close to 400,000 cases of the illness have been confirmed, including 46,000 in the U.S.

The consumer advocacy group Public Citizen railed against the designation. “The FDA has handed Gilead, one of the most profitable pharmaceutical corporations on earth, a long and entirely undeserved seven-year monopoly and with it, the ability to charge outrageous prices to consumers,” Peter Maybarduk, a director at the group said in a statement.

While COVID-19 is still relatively rare, scientists have noted that the spread is expected to pick up exponentially. Orphan drug status is part of a host of programs the agency has added in recent years to speed along new medicines. The FDA didn’t immediately respond to requests seeking comment.

What You Need to Know About the Coronavirus Pandemic: QuickTake

President Trump said a potential approval for remdesivir may be in the works at a press conference last week while also extolling the benefits of a decades-old malaria drug, chloroquine. Neither chloroquine nor remdesivir has yet been proved to work against COVID-19.

“If remdesivir is proven to be safe and effective to treat COVID-19, we are committed to making the medicine both accessible and affordable to governments and patients around the world,” a Gilead spokeswoman said in an email. The California-based biotech didn’t say exactly when it first sought orphan drug status with the agency but said, “only a small number of Americans were affected by COVID-19” at the time.

Gilead recently changed how it has been prOVIDing access to the medicine outside of clinical trials and has shifted to giving groups of patients access rather than individuals under compassionate use guidelines, where patients can get access to medicines if their life is at risk.

With the first late-stage study results not expected until mid-April, “remdesivir FDA approval isn’t imminent,” Mizuho analyst Salim Syed wrote in a note on Tuesday. The “bar for success is not incredibly high,” but the agency will still want to see proven results, he said.

Shares in the drugmaker were little changed after paring back from a gain of as much as 4.4 per cent. Gilead’s stock has climbed roughly 13 per cent so far this year while the S&P 500 Index has plunged more than 20 per cent.

Wall Street analysts have been trying to gauge Gilead’s chances of success with some such as RBC saying it has a 50/50 shot at best. Analysts at Piper Sandler, meanwhile, upgraded Gilead on Friday, highlighting the “tremendous pressure” to approve something for the disease.