Speaker 1: I'm Carol Masser and I'm Jason Kelly. It's time for
Speaker 1: this week's cover story. In January, just as the world
Speaker 1: noticed the coronavirus, Carol scientists at Gilead Sciences, they began
Speaker 1: ordering enormous quantities of seventy or so raw ingredients needed
Speaker 1: to mass produce a drug that had languished in their
Speaker 1: lab for years. It's called rim desiviere. It is indeed
Speaker 1: Jason and they had initially developed from deseivere back in
Speaker 1: two thousand nine for hepatitis SEE, but ended up opting
Speaker 1: for more promising drugs instead. So rim de severe was
Speaker 1: then used to treat ebolip, but then the outbreak faded.
Speaker 1: The drug had also shown unusual promise against a wide
Speaker 1: variety of coronaviruses. In a May one, rim desivie was
Speaker 1: authorized for emergency use by the FDA. Making the drug
Speaker 1: is a months long process, requiring about twenty five chemical
Speaker 1: steps in the production process. Had those scientists not ordered
Speaker 1: those raw materials back in January, we wouldn't have the
Speaker 1: treatment ready for use right now. Talk about planning a haad.
Speaker 1: Gilead plans to donate the first one and a half
Speaker 1: million vial enough for roughly two hundred thousand patients. It's
Speaker 1: also important to note that not everyone agrees with that price.
Speaker 1: This is the story of rim Desevere, perhaps the first
Speaker 1: hopeful news of the pandemic. It's also an example of foresight, preparedness,
Speaker 1: and competence in a time when the world could use
Speaker 1: a little more of each. All eyes on gilead emergency
Speaker 1: approval of the anti viral drug rim desevere is the
Speaker 1: first good news of this pandemic. Gilead Sciences took extraordinary
Speaker 1: steps to get ready for the moment. By Robert Langreth.
Speaker 1: Last New Year's Eve, Thomas Chillar, vice President for Discovery
Speaker 1: Virology at Gilead Sciences, received a disturbing email from a
Speaker 1: top infectious diseases expert at the University of Virginia. The
Speaker 1: researcher had been working with Chilar on a plan to
Speaker 1: test the Gilead drug rim desevere as a treatment for
Speaker 1: Middle East respiratory syndrome, a deadly disease caused by a coronavirus.
Speaker 1: Mirrors had been flaring up from time to time in
Speaker 1: Saudi Arabia and elsewhere since. But this email was about
Speaker 1: something more ominous. There were cases of pneumonia suddenly emerging
Speaker 1: in Wuhan, China watched this one. The virologist warned it
Speaker 1: might be a new coronavirus. Rim desevere was one of
Speaker 1: the few experimental medicines that had shown promise in lab
Speaker 1: studies against a wide variety of coronaviruses. Like the rest
Speaker 1: of the world, Guilliad knew next to nothing about this
Speaker 1: new one. The World Health Organization hadn't yet confirmed there
Speaker 1: was a sustained human to human spread, and the extent
Speaker 1: of the outbreak in Wuhan wouldn't become clear for weeks.
Speaker 1: Nobody knew at that point whether it would become a pandemic,
Speaker 1: but Gilead started planning on the assumption it could within weeks.
Speaker 1: Chief executive Officer Daniel O'Day formed a task force to
Speaker 1: study how to test room desevere and if it worked,
Speaker 1: mass produce it. Even by the exacting standards of pharmaceuticals,
Speaker 1: rim desevere is tricky to produce. The months long process
Speaker 1: in involves seventy raw materials, reagents, and catalysts. The resulting
Speaker 1: active pharmaceutical agent, or a p I, is a white
Speaker 1: powder one point one grams of which constitutes a single
Speaker 1: ten day course of treatment. Rim desevie is administered intravenously,
Speaker 1: which introduces additional complexity into the manufacturing. The powder must
Speaker 1: be dissolved into a solution and then placed into glass
Speaker 1: vials under sterile conditions. Thanks to its work on Ebola,
Speaker 1: Gilead already had a small supply of rom desevie on hand.
Speaker 1: Sitting in cold storage in Switzerland and California were enough
Speaker 1: thirty million liter vials of the drug to treat five
Speaker 1: thousand people, which made it possible to begin human trials
Speaker 1: in the US, China and elsewhere. In a factory in Edmonton, Alberta,
Speaker 1: Gilead also had one of the bulk powder, perhaps enough
Speaker 1: to treat ninety thousand patients. To fill enough rom desevere
Speaker 1: of vials to treat millions in a pandemic, however, would
Speaker 1: require a metric ton or more of the bulk drug.
Speaker 1: Giliad didn't have close to that and still doesn't, so
Speaker 1: back in January, it ordered more than a dozen of
Speaker 1: the most crucial starting materials and reagents from suppliers in China,
Speaker 1: Europe and elsewhere. Giliad also helped its contractors locate sufficient
Speaker 1: supplies of compounds needed to make those starting materials. There
Speaker 1: haven't been a lot of stories of foresight and preparedness
Speaker 1: in this pandemic. This is one after a big trial
Speaker 1: sponsored by the National Institute of Allergy and Infectious Diseases,
Speaker 1: Rimdesevie was authorized on May first for emergency use on
Speaker 1: COVID nineteen, the disease caused by the new coronavirus. Anthony Fauci,
Speaker 1: the director of the n I a i D, has
Speaker 1: likened the trial of rimdessevie to the first big trial
Speaker 1: of a z T. The first drug for HIV as
Speaker 1: a z T was. Rimdesevie is being authorized for wide
Speaker 1: use before it's fully clear how effective it will be.
Speaker 1: Preliminary data from the one thousand sixty person trial show
Speaker 1: the medicine sped recovery in the most serious cases of
Speaker 1: COVID nineteen by about four days. Full details haven't been published,
Speaker 1: and a smaller trial in China didn't find a benefit.
Speaker 1: The Food and Drug Administration, in granting the emergency authorization
Speaker 1: didn't allow Gilead to claim the drug is safe and
Speaker 1: effective for COVID nineteen. The agency said only that it's
Speaker 1: reasonable to believe the medicine may help. It is not
Speaker 1: a cure, O'Day says, it is a first step, but
Speaker 1: it is an important first step. Many additional drugs and
Speaker 1: vaccines will probably be needed to stop the pandemic, he says.
Speaker 1: Gilead itself is working on an easier to administer inhaled
Speaker 1: form of rim desevere that might be useful for less
Speaker 1: severe cases. But with few other medicines available and the
Speaker 1: number of COVID nineteen cases continuing to grow steadily about
Speaker 1: four point three million cases and two d ninety thousand
Speaker 1: deaths at press time, the drug is likely to be
Speaker 1: in high demand until a better treatment or a vaccine
Speaker 1: is available. Guilliad plans to donate the first one and
Speaker 1: a half million vials, enough for roughly two hundred thousand patients.
Speaker 1: The number depends on the dosage. The Emergency Use authorization
Speaker 1: allows both the ten day course of treatment for patients
Speaker 1: on ventilators and a five day course for those not
Speaker 1: on ventilators. Those will be delivered this spring. By the fall,
Speaker 1: a much larger supply should start to become available, and
Speaker 1: Gilead is also working with other unnamed companies to bring
Speaker 1: new factories online overseas. The question is can Gilead make
Speaker 1: enough of it for the whole world. Gilead, based in
Speaker 1: Foster City, California, is the most successful maker of anti
Speaker 1: viral drugs in history. The company was founded in seven
Speaker 1: and early on its chemists invented the influenza drug tamiflu.
Speaker 1: In the two thousands, it started packaging multiple powerful anti
Speaker 1: HIV medicines into simple, once a day pills, replacing complicated
Speaker 1: multi pill regimens. It came mount with Sivaldi, a breakthrough
Speaker 1: drug for hepatitis C. The news was overshadowed initially by
Speaker 1: a fereer over the price one thousand dollars a pill.
Speaker 1: As cheaper competing drugs hit the market, gileads hepse revenue declined.
Speaker 1: Wall Street hasn't cared for that and has pressured Gilead
Speaker 1: to expand beyond antivirals into faster growing arenas such as
Speaker 1: cancer treatments. Until January, there wasn't much reason for a
Speaker 1: drug company to work on coronaviruses. For years, they were
Speaker 1: considered mere nuisances, responsible mostly for many common colds. The
Speaker 1: first deadly human disease caused by a coronavirus, severe acute
Speaker 1: respiratory syndrome or STARS, was stopped in two thousand three
Speaker 1: before it gained a significant foothold in the human population.
Speaker 1: The next deadly coronavirus MERS didn't spread efficiently in humans.
Speaker 1: The virus that causes COVID nineteen is more closely related
Speaker 1: to STARS, so much so that its official designation is STARS.
Speaker 1: C o v two, a precursor to rim desevie, was
Speaker 1: developed in two thousand nine by Gilead chemists hunting for
Speaker 1: hepatitis C drugs. It was difficult to administer, however, and
Speaker 1: Gilead had more promising drugs for HEPSEY in pill form,
Speaker 1: so it mostly sat on the shelf for several years.
Speaker 1: But in studying the compound, Gilead scientists showed in the
Speaker 1: test tube that it could slow the replication of a
Speaker 1: broad number of viruses. During the Ebola outbreak in West
Speaker 1: Africa in twenty fourteen, Gilead put together a team of
Speaker 1: scientists to look at whether any of its existing drugs
Speaker 1: could help treat it or other emerging viruses. Rimdsevie quickly
Speaker 1: moved to the top of the list by mid twenty fifteen.
Speaker 1: Working with government scientists, Gilead had shown the drug worked
Speaker 1: against ebola in laboratory animals and begun human safety trials,
Speaker 1: but by the time rim desevie was ready for human
Speaker 1: efficacy trials, the Ebola outbreak was fading. During the same period,
Speaker 1: Gilead was invited to participate in a government sponsored consort
Speaker 1: sham of academic researchers working on possible drugs for emerging viruses.
Speaker 1: Two virologists in this group, Mark Dennison of Vanderbilt University
Speaker 1: Medical Center and Ralph Barrack of the University of North
Speaker 1: Carolina at Chapel Hill, had worked together on coronaviruses for years.
Speaker 1: Barrick first warned about the potential for them to cause
Speaker 1: significant human disease back in the late nineteen nineties. Dennison
Speaker 1: was skeptical the Gilead compounds would do much, but when
Speaker 1: he tested an analog of room desevere against a mouse
Speaker 1: coronavirus in his lab, it worked. Over the next few years,
Speaker 1: Barrick and his UNC colleague Timothy Shean tested the drug
Speaker 1: against stars virus, mers virus, and numerous other bat coronaviruses.
Speaker 1: Room desevie worked better than almost any other drug they tried.
Speaker 1: Every virus we tested it on. It had a very
Speaker 1: high potency and efficacy, Dennison recalls. In eighteen, another Ebola
Speaker 1: outbreak flared up in the Congo, giving Gilead an opportunity
Speaker 1: to finally test rimmed severe in people with a bola.
Speaker 1: It didn't work, but the trials proved one thing, the
Speaker 1: drug was safe. Gilead was figuring out what to do
Speaker 1: with the compound next, says Chilar, when COVID nineteen came along.
Speaker 1: Ken Kent, Gilead's vice president in charge of chemical development
Speaker 1: and manufacturing, compares drug manufacturing to baking giant quantities of
Speaker 1: a very complicated bread. You have to perform all the
Speaker 1: right steps in precisely the right sequence. And just as
Speaker 1: a baker needs a particular flower to make a signature bread,
Speaker 1: a pharmaceutical chemist must have sufficient quantities of all the
Speaker 1: right ingredients on hand. If you have to wait for
Speaker 1: the wheat to grow, Kent says, it's going to take
Speaker 1: a while. Kent joined Gilead in the late nineteen eighties.
Speaker 1: He was employee number eight and has been involved in
Speaker 1: one way or another with many of its anti viral hits,
Speaker 1: including tamiflu, Sivaldi, and true Vada, a big selling provylactic
Speaker 1: HIV drug combination, and today he's in charge of producing
Speaker 1: the active ingredients for all of Gilead's small molecule drugs.
Speaker 1: That's industry jargon for pills and other medicines made through
Speaker 1: traditional chemistry as opposed to d NA or protein based concoctions,
Speaker 1: which are produced using genetic engineering and browed inside living cells.
Speaker 1: While ramdesvie isn't a pill, it is a smaller molecule.
Speaker 1: In mid January, Kent got a call from Reza ole I,
Speaker 1: senior vice president for Gilead's pharmaceutical operations, telling him the
Speaker 1: company would need to make large quantities of room desevere
Speaker 1: to fight the novel coronavirus. Kent immediately started calculating how
Speaker 1: long that would take. We had to move quick, because
Speaker 1: the one thing you can't buy is time, he says.
Speaker 1: When you have long linear chemical synthesis that has to
Speaker 1: be done sequentially A to B to see, that's time
Speaker 1: you just can't get back. Depending on how you count,
Speaker 1: there are about twenty five chemical steps in the production process.
Speaker 1: Most drugs require a out half that number. Some of
Speaker 1: the steps are more delicate than others. An early one
Speaker 1: uses a reagent so flammable it will spontaneously combust if
Speaker 1: exposed to air. Another involves a poison called trimethyl sillill cyanide.
Speaker 1: If you get it on your body, you better get
Speaker 1: yourself to the hospital really quick, says Howard University chemist
Speaker 1: Joseph Fortunac, who has analyzed the rim deseivie manufacturing process,
Speaker 1: and you still might not survive. Kent estimated that without
Speaker 1: improvements in the process, it would take nine to twelve
Speaker 1: months to make a batch of rim desevere from scratch.
Speaker 1: That included a few months for suppliers scattered around the
Speaker 1: world to make the wrong ingredients, six months for Gilead
Speaker 1: to assemble those ingredients into the precious powder, and a
Speaker 1: final month to finish and package the drug at the
Speaker 1: filling plant in Laverne, California. This calculation led Kent and
Speaker 1: Olei to brief O'Day on the need to order more
Speaker 1: raw ingredients and other supplies right away to prevent bottlenecks.
Speaker 1: O'Day signed off immediately, Kent says. At the same time,
Speaker 1: Can't assembled a team of twenty chemists who started working
Speaker 1: on ways to speed up the manufacturing process on both
Speaker 1: the rimdessevere powder made in Edmonton, and the starter chemicals
Speaker 1: made by Gilad's contractors. Eventually, they instituted tweaks that reduced
Speaker 1: the time to manufacture the drug to six months. On
Speaker 1: February second, Giliad flew the powder left over from its
Speaker 1: Zibola effort, one hundred kilograms packed in high density polyurethane
Speaker 1: drums with tamper evident seals, from Edmonton to Laverne. At
Speaker 1: the filling plant, the powder was mixed with sterile water
Speaker 1: and excipiens, substances that enhance the powder's solubility in reaction vessels,
Speaker 1: then passed through another filtration step to insure sterility. An
Speaker 1: automated filling machine put it in vials. After two weeks
Speaker 1: of sterility testing, labels were prepared and checked. The Edmonton
Speaker 1: plant also had enough raw materials to start on another
Speaker 1: batch of powder in its glass lined steel reactors. This batch,
Speaker 1: enough for at least thirty thous and patients, was completed
Speaker 1: by early April, Soon after, the massive order of supplies
Speaker 1: Gilead had placed in January started to arrive by plane,
Speaker 1: allowing workers to start producing far larger batches of the drug.
Speaker 1: Those will begin shipping to the California filling plant in June.
Speaker 1: Gilliad says a contract manufacturer in Iowa will also start
Speaker 1: releasing batches of rim de severe in August, and the
Speaker 1: company has begun to assemble a consortium of chemical and
Speaker 1: pharmaceutical manufacturers in India, Pakistan and elsewhere to help supply
Speaker 1: the rest of the world. The U s Department of
Speaker 1: Health and Human Services recently announced that six hundred and
Speaker 1: seven thousand of the initial one and a half million
Speaker 1: vials of rim desevere will be distributed domestically, enough for
Speaker 1: about seventy eight thousand patients. That leaves enough of the
Speaker 1: drug for about one fifteen thousand non US patients. If
Speaker 1: the pandemic is still raging when the supply of donated
Speaker 1: drugs runs out, and if vaccines or better treatments still
Speaker 1: aren't available, there will be a fury debate about the price.
Speaker 1: Gilliad says it's spent fifty million dollars on the drug
Speaker 1: in the first quarter of the year and could spend
Speaker 1: as much as one billion dollars by year end, mostly
Speaker 1: on manufacturing, but also potentially on additional clinical trials. O'Day
Speaker 1: says that Gilead is committed to making sure the medicine
Speaker 1: is accessible and affordable to patients around the world, and
Speaker 1: that it's simply too soon to talk about the price.
Speaker 1: Wall Street doesn't think so. Analysts are already pressing him
Speaker 1: on how his company will make money from rim desevere.
Speaker 1: What is special about covid. Jeffrey Porges, an analyst at
Speaker 1: the investment bank SVB Leering, asked O'Day on an April
Speaker 1: thirtie earnings call. Should we assume the returns are going
Speaker 1: to be similar to the returns you have generated in
Speaker 1: other parts of the business. Porges later explains that he
Speaker 1: views a pandemic as exactly the time a drug breakthrough
Speaker 1: should pay off big. The fiftie medicine for blood pressure
Speaker 1: we are allowing them to make a profit on, But
Speaker 1: protecting the world from a pandemic, you can't make a
Speaker 1: profit on that, He asks, It is crazy. It should
Speaker 1: be the opposite. Other analysts have estimated the price could
Speaker 1: be three thousand dollars to five thousand dollars per treatment,
Speaker 1: in line with other new drugs to treat infections and
Speaker 1: hospitalized patients. At that price, rim desevere could generate one
Speaker 1: billion dollars or more in annual sales if it ends
Speaker 1: up being used by hundreds of thousands of people. While
Speaker 1: the drug is complicated to make, it won't necessarily be
Speaker 1: expensive to produce on a per person basis once production
Speaker 1: is scaled up and manufacturing efficiencies are maximized. In April,
Speaker 1: scientists at the University of Liverpool and Howard University estimated
Speaker 1: that Generics manufacturers could produce rim desevere for just nine
Speaker 1: dollars per dose, according to a study published in the
Speaker 1: Journal of Virus Eradication. Gilead's shares are up twenty two
Speaker 1: percent this year, and investors expect the company will eventually
Speaker 1: earn a return on its most high profile drug, assuming
Speaker 1: the drug is still needed. At the same time, activists
Speaker 1: pushing for a low cost are pointing out the government's
Speaker 1: key role in identifying rim Desevere's potential for treating coronaviruses.
Speaker 1: Public Citizens says the US government has spent at least
Speaker 1: seventy point five million dollars funding research on the possible
Speaker 1: uses of the drug. In the best case scenario that
Speaker 1: everyone is hoping for vaccines now in early trials will
Speaker 1: work well halt the viruses spread and render drugs like
Speaker 1: rim desevere largely obsolete. Even if that happens, Gillyad's pricing
Speaker 1: decision on rim desevere may have a lasting impact. As
Speaker 1: the first drug in a new category, it may set
Speaker 1: a precedent for other COVID nineteen treatments. The coronavirus has
Speaker 1: already caused untold economic damage, leading to the highest US
Speaker 1: unemployment rate since the Great Depression, and the virus looks
Speaker 1: like it isn't going away. Vaccines and drugs for COVID
Speaker 1: nineteen may be needed for years to come. We could
Speaker 1: spend years asking how much society is willing to pay
Speaker 1: for a cure. With Susan Burfield, be sure to check
Speaker 1: out the cover story and more in the Kerney Siol
Speaker 1: Bloomberg Business Week magazine. It's on newsstands, on the Bloomberg
Speaker 1: and online at Bloomberg dot com. I'm Carol Nasser and
Speaker 1: I'm Jason Kelly, and check us out every day on
Speaker 1: the radio two to six pm Wall Street Time wherever
Speaker 1: you listen to Bloomberg Radio. Also check out our podcast
Speaker 1: you can get that wherever you get your podcasts. This
Speaker 1: is Bloomberg