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  1. forum rang 6 Endless 6 april 2020 12:10
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    Production is difficult and it takes a long time

    The part in this letter that really disappointed me is that ramping up production is extremely difficult. It turns out that the length of time it takes to produce remdesivir is many months at the least. Per Gilead:

    It is a linear process that requires specialized chemistry and multiple chemical reactions, some of which can take several weeks to complete. It also calls for scarce raw materials as well as sterile manufacturing capabilities with limited global capacity, which are needed to make finished vials ready for administration to patients.
    Gilead did manage to find ways to cut production times by as much as 50% but end-to-end manufacturing still takes about six months.

    It has been previously known that Gilead repurposed one of its own facilities to manufacture remdesivir. From this letter I learned, they are repurposing multiple of their own facilities. Gilead is also working with external manufacturers to ramp up production around the globe.

    Glimmers of hope

    With this letter, Gilead announced it is giving away 1.5 million individual doses of Remdesivir. Currently, they are trialing 5-day and 10-day treatment courses. So this could translate into a minimum of 140,000 patients getting treated and at best 280,000 patients. My expectation, which is highly speculative, primarily based on reading one study that only had a few people on Remdesivr, I'd expect most COVID-19 patients can be treated with a 5-day course. But a segment of 10%-40% likely requires a 10-day course. Again, I could be totally wrong and we may see 10-day courses as a standard treatment.

    Economics

    If Gilead is giving away 1.5 million doses, it implies it is going to charge after that. In my opinion, the company is being enormously generous but they are going to be vilified no matter what. It is viewed as unseemly to make money off a pandemic by a certain amount of the population.

    I think we should be happy to be enormously thankful if there's a treatment and we can shell out some dollars for a cure. I don't mean to minimize the challenges this will pose to any one's individual budget. I can easily imagine it is in the best interest of nations if the government covers any and all COVID-19 bills. It is going to be a lot cheaper than doing series after series of $2 trillion stimulus plans.

    At 300k therapies per month and a therapy being anywhere between $500 and $5000 (at 80% gross margins), this could still be a significant therapy to Gilead's bottom line.

    This translates into between $150 million and $1.5 billion worth of revenue per month. That's between $1.8 billion and $18 billion of revenue. If it is the former Gilead has run a bit too far (although it does not look to me like a way overvalued stock even in that scenario given it started from quite an attractive level).

    If the price of therapy leans more towards the $5k range, I believe Gilead has a lot of room to run. A lot depends on the competition and the trajectory of COVID-19. There's no reason for the ceiling to be $5k but that's the highest number I've seen mentioned.

    Between $1.8 billion and $18 billion of annual revenue could obviously be significant to Gilead:

    ChartData by YCharts
    Gross profit margins in pharma tend to be really good. The highest costs are usually associated with research and development and especially the research and development that ultimately leads nowhere.
  2. forum rang 6 Endless 6 april 2020 12:11
    nowhere.

    ChartData by YCharts
    At high margins, you can imagine any revenue streams would translate into significant EBITDA. Again, unfortunately, the total addressable market is large enough that the impact on Gilead's bottom line could be large.

    If Remdesivir is approved, I can easily see this therapy contribute between $1 billion up to $26 billion to Gilead's bottom line.

    ChartData by YCharts
    EBITDA would fall off through time after that but not necessarily completely disappear. Increasingly, I'm of the inclination SARS-CoV-2 will end up endemic on a global scale.

    For example, Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, recommends drug manufacturers should take the risk to ramp up production ahead of trials to prepare for COVID-19 becoming a seasonal occurrence.

    According to Richard Preston, author of The Hot Zone. There is a pattern of viruses jumping from animal to the human species. It is the third coronavirus in a relatively short time to have done so. Urbanization and globalization turn novel viruses into potential global threats like COVID-19 turned out to be. The virus that causes COVID-19 will potentially be endemic to our species. Odds are there will be future coronavirus threats. remdesivir is specifically interesting to me because so far it has shown to be extremely effective against any coronavirus it has been tested on in vitro and in vivo.

    How will things look in the fall?

    Part of the Gilead letter that depressed me is that a company with such great expertise in virology as Gilead, is ramping up production to a level of 300K/month by October. That means they believe there's a good chance we aren't done with this problem by then and still need treatment at scale.

    Cases are increasing by 80k a day currently (obviously this is gated by test capabilities around the globe, actual is in all likelihood much higher).



    Again, enormous uncertainty around the trajectory and which geographies it will strike. Maybe the number of cases is going to decline as spring heats up or the summer rolls around. Let's just say I wouldn't buy any airline stocks, or companies that are dependent on events and or restaurants any time soon.

    A vaccine is likely still a long time away. Think at least a year from now. Then there is the question around ramping up production of that vaccine. If remdesivir is a solid therapy, a vaccination may not actually become all that standard. With vaccines there's a slice of the population that's opposed to that to begin with.

    I'm of the opinion that the mortality rate of COVID-19 is unacceptably high given the ease with which it spreads under normal living conditions. I've seen people point to the mortality rate and say that's not worth the economic sacrifice. That's a grave mistake for several reasons, most importantly:

    1) There are a lot of uncertainties around much of the data, meaning you should err on the side of caution.

    2) The mortality rate is "low" because of extraordinary efforts by healthcare workers, off-label therapies being applied and because we have an idea which groups are most at risk (there are senior homes where the staff voluntarily locked down along with the inhabitants).

    3) For up to 15% of patients it is a very nasty disease even though they may not ultimately lose their lives.

    4) Most countries (outside Asia) are managing the spread of the disease (more or less successful) based on intensive care capacity. A rather large number of patients require intensive care and if the standard of care deteriorates because of the volume of patients coming in you will see the mortality rate increase enormously.

    On the other hand, the mortality rate is higher than it is ultimately likely to end up at because of 1) lack of testing means we are missing a lot of cases (this effect is huge).

    On balance, for what it's worth, I unequivocally support government measures to delay the speed at which it spreads even though there is a severe economic cost.

    If healthcare systems are not swamped Remdesivir works well. Perhaps other therapies work well (Maybe chloroquine and filavapir). A large slice of the population developed antibodies organically we may not even see a huge uptake of vaccination programs. Perhaps primarily focused on at-risk groups.

    The point of all this is that there is a lot of uncertainty around the economics around Remdesivir. Many sell-side analysts are treating this as a one-off small revenue opportunity. Unfortunately, I think there's a good chance this will be a one-off massive revenue opportunity and it could continue to be a significant revenue stream for years to come.

    Key takeaways for investors

    This letter will allow analysts to start pricing in remdesivir sales quite accurately as soon as it's confirmed good-to-go (which I expect this month). Subsequently, expect updated notes coming out of the likes of Bank of America (BAC), Goldman Sachs (GS) et all.

    The other key takeaway is that it seems extremely likely that remdesivir is actually effective. Gilead has treated over 1700 patients. Apparently, the medical community keeps requesting this therapy all the time.

    In my earlier articles on this subject, I've given myriad anecdotal examples of patients that were treated successfully. There are also other soft-factors that point to potential effectiveness:

    What The First 12 U.S. COVID-19 Patients Tell Us About Remdesivir
    What The First 12 U.S. COVID-19 Patients Tell Us About Remdesivir

    25-3-2020
    12 Reasons Remdesivir is my best COVID-19 bet
    12 Reasons Gilead With Remdesivir Is My Best COVID-19 Bet

    16-3-2020
    Economics of Remdesivir Gilead: Remdesivir's Potential Most Dependent On COVID-19 Spread 1-3-2020
    17 reasons I'm confident Remdesivir is effective 17 Reasons Why I'm Confident Gilead's Remdesivir Will Work Against COVID-19 27-2-2020
    Market is underestimating COVID-19 and Gilead is an opportunity Gilead: Potential Hedge If Covid-19 Is Taken More Seriously 17-2-2020
    5 reasons why Remdesivir is likely to be effective Gilead Sciences: 5 Reasons Remdesivir Is Likely To Be Effective Against The Wuhan Coronavirus 10-2-2017
    These all were published exclusively for subscribers at an earlier date.

    Gilead is also giving away 140k treatments. They are specifically earmarking these for severe cases:

    The 1.5 million individual doses are available for compassionate use, expanded access and clinical trials and will be donated for broader distribution following any potential future regulatory authorizations. These doses are for treating patients with severe symptoms, through daily intravenous infusions in a hospital setting. Having a potential treatment in our hands comes with significant responsibility. Providing our existing supplies at no charge is the right thing to do, to facilitate access to patients as quickly as possible and in recognition of the public emergency posed by this pandemic.
    This just screams to me they are aware it is (at least somewhat) effective in severe cases. For people who have access to the trial data, it should be more or less blindingly obvious whether Remdesivir is effective. Based on patient anecdotes and the study into the first batch of U.S. patients I'm under the impression this is not a therapy where 51% of patients benefit.
  3. forum rang 6 Endless 6 april 2020 12:11
    Gilead is making it reserving the doses it gives away specifically for people that are the hardest hit. That's the toughest group to cure with an antiviral that counters replication. I don't think they would do this if they were uncertain about its effectiveness. They would probably do it but not specifically highlight it in a letter signed by the CEO. In retrospect, it would look ridiculous.

    Why I'm holding Gilead

    What I'm planning to do is to add some Gilead exposure as the share price goes towards $70 and I sell some as it is around $80. When initially recommending this around February 5 I acquired a larger position. As the stock price has moved up it has also become much more clear that COVID-19 is a serious problem.

    But given where things stand now I'm fine with an average-sized position near $80. At $66 I thought there was very little downside risk compared to the upside (I traded around earnings to avoid its impact). But with actual results coming up (which I'm very confident about), the difficulty of manufacturing, the apparent competition from chloroquine and filavapir as well as the stock having run-up while its peer group has collapsed the risk/reward is slightly less attractive to me.

    Gilead remains attractive to me at $78.21 but is not a screaming buy.

    Check out the Special Situation Investing report if you are interested in uncorrelated returns. I look at mergers & acquisitions, spin-offs, companies with buyback programs, rights offerings as well as unique opportunities like Gilead today, which is so well positioned with its Remdesivir cure.
  4. forum rang 6 Endless 6 april 2020 13:43
    Gilead teams up with Second Genome to ID biomarkers and IBD candidates

    Apr. 6, 2020 6:45 AM ET|About: Gilead Sciences, Inc. (GILD)|By: Douglas W. House, SA News Editor
    Gilead Sciences (NASDAQ:GILD) enters into a four-year collaboration with Second Genome aimed at identifying biomarkers associated with clinical response to up to five of Gilead's pipeline candidates in inflammation, fibrosis and other diseases and to identify potential new targets and candidates for inflammatory bowel disease (IBD).

    Second Genome will leverage its proprietary Microbiome Analytics Platform to identify biomarkers and will combine additional discovery and development tools to to identify targets and candidates for IBD.

    Under the terms of the agreement, Second Genome will receive $38M upfront, up to $300M in milestones for each of the five programs and success-based milestones for each validated biomarker. Gilead will have the option to in-license global rights for up to five programs for all diseases and all biomarkers.

    Shares up 2% premarket on light volume.
  5. forum rang 6 Endless 6 april 2020 21:28
    quote:

    Ralph01A schreef op 6 april 2020 21:12:


    Wat een verschil inderdaad tussen voorbeurs (+2%) en tijdens de beurs (-2%). Volgens mij vooral doordat de hele markt weer risk on ging. Doet mijns inziens niets af aan gunstige vooruitzichten gilead.

    I agree Sterker net als galapagos goed bezig heb ook vertrouwen in O day zelfde kaliber als Onno
  6. forum rang 6 Endless 7 april 2020 22:38
    Summary
    Gilead’s remdesivir has a significant time advantage over competitor therapeutics.

    Achieving standard of care status first is highly advantageous in this healthcare crisis.

    Other COVID-19 therapeutics may struggle to compete with remdesivir, should it be approved first.

    Weaknesses in the chloroquine/hydroxychloroquine story are emerging.

    Gilead is a high-quality company with a solid balance sheet.
  7. forum rang 6 Endless 8 april 2020 00:01
    Innovation

    Gilead & Forty Seven: Committed to Creating Possible for People Living with Cancer
    Stories@Gilead - April 07, 2020
    Gilead today completed its acquisition of Forty Seven, a clinical-stage immuno-oncology company. The acquisition will help Gilead strengthen its oncology research and development portfolio and adds Forty Seven’s investigational lead product candidate, magrolimab, which is being tested in a number of hematological cancers.

    Forty Seven was founded by scientists at Stanford University who uncovered the fundamental role of the CD47 receptor in cancer. CD47 is a protein that can be found on many cells and is overexpressed by various types of cancerous tumors. The protein is thought to send a signal that allows cancer to escape elimination by the body’s immune system. Blocking CD47 has the potential to block that signal, activating the immune system to identify and then eliminate cancer cells.

    Investigational magrolimab is being studied in myelodysplastic syndrome, non-Hodgkin lymphoma and acute myeloid leukemia. The investigational candidate has the potential to be a foundational molecule in Gilead’s immuno-oncology portfolio, as the company seeks to deliver 10 transformative medicines across its therapeutic areas in the next 10 years.

    “We view oncology as a critical area for our growth and this is an important step toward our goal of improving outcomes for patients living with cancer,” says Gilead Chief Medical Officer Merdad Parsey. “Magrolimab is a great example of an investigational therapeutic with the potential to transform the treatment of myelodysplastic syndrome and other hematological diseases. We will continue to build a portfolio that has assets with similar potential to transform care for people with certain types of cancer who need additional therapeutic options.”

    Gilead and Forty Seven announced the deal in early March and will now begin working together to integrate the companies. The teams will collaborate on the development of magrolimab and explore how Forty Seven’s expertise in immuno-oncology can accelerate Gilead’s work to advance new therapies to help people living with cancer.

    “There are many similarities between Gilead and Forty Seven – a patient-centered approach, fast-paced and energetic environment and tendency to be inquisitive when it comes to science,” says Forty Seven President & CEO Mark McCamish. “By coming together, our teams can unify our shared pursuit of meaningful innovation in immuno-oncology to help patients defeat their cancer.”

    Magrolimab is an investigational agent and has not been approved for use by any regulatory agency globally. Its safety and efficacy have not been establishe
  8. forum rang 5 Galapapositief 9 april 2020 12:36
    Dit van Stocktwits afgeplukt..

    KamiCook
    08:26 AM
    $GILD
    saw on LinkedIn the other day one insider daying his friend was working on production of Rem and thet he works 24/7 and that he produced two batches already. The message was ina comment to an article about ranping up pruduction. He said he was proud and so on...

    I was trying to find it again to post here, but you know what... that message has now dissapeared! There is a strict control on the info seems like
    2
    KamiCook
    Bullish
    08:08 AM
    $GILD
    Gilead always makes Rem-related announcements on Saturdays. If the trial result was out last Friday, I am guessing the first to know would be FDA. It would put FDA in an uncomfortable situation if GILD released the succesful data. The pressure will be on them. Obviously they didn't have time to make any announcement last Saturday. Instead they just send a confident message they are ramping up production. My opinion the news will come out on Saturday per current tradution, with a follow up FDA approval on Sunday or Monday. There might be some conditions to the approval, until the other studies are completed.

    Thoughts?
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