Demand for Covid-19 Antivirals Will Exceed Supply

Almost two years into the global pandemic and Covid-19 doesn’t seem like it’s “just going to go away.” European cases are on the rise again, with fresh daily highs being hit in countries like Austria and Slovakia. Not recent highs, mind you. All-time highs. Many countries are reporting more Covid-19 cases now than before we had vaccines.

So, what accounts for this? Some of it is due to increased testing and people not getting vaccinated. The numbers vary by country, but it seems to be roughly a 60/40 split. 60% of new Covid-19 cases in countries with high-vaccination rates are coming from the unvaccinated.

Variants, seasonality, the waning efficacy of vaccines, and lessened restrictions. Each one is contributing to the surge of European Covid-19 cases.

The good news is vaccinated individuals are being admitted to the hospital at a much lower rate.

This report, published in September 2021, shows that the unvaccinated are 7x more likely to get Covid. They’re 50x more likely to be hospitalized. And they’re 60x more likely to end up in the ICU.

When the vaccines started rolling out, we knew Israel was the place to watch. They paid the most for Pfizer doses, so they got their population vaccinated first. Cases immediately began to drop and for a few months there, things looked pretty good. The war against Covid-19 has always been ebb and flow. Things get better, things get worse.

Things improved in Israel for about six months. Then cases started to rise again. Efficacy rates of the vaccine to prevent infection dropped from 88% to 47%.

Now Israel has administered a booster shot (third dose) to their population and infection rates and hospitalizations have dropped again. Yesterday they reported zero deaths.

Some people think we might have to get a booster every six months, but this doctor thinks the fourth dose will be closer to the two-year mark.

Here’s the bad news

Last Friday, it was announced that Israel is doing war-game simulations/drills for a hypothetical strain of Covid-19 they call the Omega variant.

Omega doesn’t currently exist, but it could manifest one day.

The Omega variant would defeat vaccines and infect children at similar rates to adults. This would result mass hospitalizations and closures than any other wave.

Here’s what the war-game will cover:

(The Guardian)

Since the Omega variant is still hypothetical, this might not concern you. But given that Israel has been ahead of this thing since the beginning, the idea that they’re practicing for a worst-case scenario says the chance of it occurring isn’t zero. It might even be significant. Israel is home to some of the world’s best intelligence agents and analysts. Someone ran the numbers and said, “You know what? This might actually happen, and we need to prepare for it.”

A briefing on the possibility of an Omega variant would have been handed up the chain of command until it landed on the prime minster’s desk. He would have read this report and authorized the drills and war games.

Governments usually have access to information before the public does. It’s just sometimes they choose to ignore it. Now world governments are weeks if not months ahead of the news cycle for Covid-19. Remember when you first heard about the Merck oral antiviral? The US government had already secured a supply contract with them. Same with the Pfizer pill.

If Omega, or a variant that’s even close to Omega does emerge, then the demand for oral antivirals will outstrip supply by a significant margin. According to the data, the best oral antiviral pill is Pfizer at 89% reduction in hospitalization. (Although their study design raises some concerns.)

Merck’s pill prevents hospitalization at 50%, although the potentially mutagenic side-effects means it shouldn’t be given to everyone. Merck has not tested this pill on pregnant women or children.

The supply situation is pretty grim. Merck will only have 10M courses available by the end of 2021. Pfizer will only have 180,000, although they say this will jump to 50M by the end of 2022. (We’ll see.) During the initial vaccine rollout, both Pfizer and Moderna delivered less vaccines than promised to some nations.

The current supply of oral antivirals isn’t high enough to prevent disaster from an Omega variant. It isn’t even enough courses for the variants we have today. Currently in the US there are 45,810 patients hospitalized with Covid-19. During the peak of the Delta infection in India, there were more than 800,000 cases reported in a day. And this is ignoring the increase in deaths in the past two years which can likely be attributed to Covid-19. Check out this chart.

Healthcare systems worldwide are struggling to accurately report the scale of this disaster. And Omega could make it even worse.

Thankfully there are more antivirals currently in testing.

Intravenous remdesivir, when given early enough, prevents hospitalization at 87%. Unfortunately, the logistics of intravenous delivery make this impossible to administer to the masses.

Here’s the good news

Gilead and Matinas are working with the National Institute of Health to develop an oral version of remdesivir. This version is hypothetically superior to the current version of remdesivir for three reasons.

1. It’s oral, which mean it can be administered outside of the hospital setting.

2. It uses Matinas’ LNC technology which has been shown to reduce toxicity.

3. LNC oral remdesivir might also be more effective than classic remdesivir.

Reducing toxicity is important because remdesivir can cause kidney and liver issues. LNC tech was already shown to reduce toxicity in an amphotericin B trial, so hopefully this reduced toxicity carries over to LNC remdesivir as well.

In the same amphotericin B trial, the LNC version was also shown to be more effective.

Given that remdesivir attacks the virus in a different way than vaccines, and variants don’t seem to affect it, then an LNC oral remdesivir could be the silver bullet we’ve been waiting for.

LNC oral remdesivir is being tested right now at the University of North Carolina. The data will be out soon. But so might the Omega variant. Let’s pray the science outraces the monster. Given the rate of mutation, the rate of reinfection, and the waning efficacy of vaccines, it’s only a matter of time until a deadlier variant emerges. Gilead is notoriously slow at everything they do, but it would be nice to see some giddyup on this.

If you’re invested in a company that’s working on a Covid-19 antiviral, then you shouldn’t be worried about the recent success of Pfizer and Merck. If your drug is proven to reduce hospitalization, there will be huge demand for it if Omega becomes a reality. If Israel is planning for it, then your portfolio should be planning for it to.

During an Omega outbreak even if your drug only prevents hospitalization at 20% then someone will buy it. That’s how bad it could be.

Stay safe and good luck with you investing. Don’t forget to follow us on Twitter.

(This post does not constitute financial advice.)