The Cure is There if you Look for It

(Photo from crosswalk)

Today's Old Testament lesson includes the verse: "Is there no balm in Gilead? Is there no physician there?"--Jeremiah 8:22

Gilead was a mountainous region that was known for its agricultural products, particularly for its healing medicines.

The land of Gilead was known for its balm, a liquid rosin that flowed or dripped from certain trees such as pine, cedar, cypress, or terebinth. Gilead was most noted for the Balsamodendron Gileadense, a rosin-producing tree native to that area. Because of easy access to medicinal ingredients, many physicians made their homes in Gilead.

The Book of Jeremiah laments both the spiritual waywardness of the Israelites and the impending threat of Babylon, which later did destroy the Temple in Jerusalem. (King Nebuchadnezzar expelled the Israelites from the region during the Babylonian Exile that occurred in the 6th century BCE.)

There would be no material balm that would cure Israel's idolatry (the worship of something other than God). Many Christians believe that Christ is the balm that Jeremiah is seeking.

Note: Foster City's Gilead Sciences is its largest public company, currently valued by the stock market at $142 billion. Founder Michael Riordan originally named the business Oligogen in 1987 but changed it to Gilead Sciences when he heard the biblical passage. He could have done worse.

Foster City Company Saves the World

Gilead Sciences ($100 billion market cap) pulled up the entire market ($30 trillion) on Wednesday.

OK, "saving the world" is overblown, but it's not a complete exaggeration.

Government scientists reported that remdesivir, which is owned by Foster City-based Gilead Sciences, improved coronavirus patient outcomes:

The U.S. study compared recovery times for 1,063 hospitalized patients taking either remdesivir or placebo...

Patients taking remdesivir recovered in 11 days, compared with 15 days for patients taking placebo, a 31% improvement that was statistically significant, NIAID said in a news release.

In the remdesivir group, 8% of patients died, compared with 11.6% of patients in the placebo arm. The survival difference wasn’t statistically significant, however.

The key takeaway is

Gilead is in active discussions with the Food and Drug Administration about securing emergency authorization for remdesivir,

When it receives FDA clearance, remdesivir will be the first COVID-19 medication approved for use in hospitals.

The remdesivir results were good but did not guarantee that a patient would recover. So why the enthusiasm?

Market participants may think that other favorable developments were coming soon. Also, remdesivir tells the public that an effective treatment is available and reduces the risk of venturing out of homes. Restoring confidence about health and safety is perhaps the most significant obstacle to recovery.

A Foster City company didn't save the world, but it did signal that we've turned the corner.

Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning. ---Winston Churchill

Hang On, Help is Coming

The WSJ updates the status of clinical trials: [bold added]

Some patients have recovered after receiving Gilead Sciences ’ experimental antiviral treatment remdesivir, though there isn’t yet enough clinical data to understand if the drug is truly safe and effective and, if so, for what specific disease stages or populations. That could soon change: A series of clinical trials that began in early February will start to generate results in March and April...

Elsewhere, drugmakers Regeneron Pharmaceuticals Inc. and Sanofi SA are studying whether their jointly-owned drug Kevzara helps prevent overactive lung inflammation in severe Covid-19 patients receiving the drug last week in New York....

Hospitals also have begun to include the old malaria drugs chloroquine and hydroxychloroquine in treatment protocols [blogger's note: favorable results have been reported when these drugs are used with azithromycin]. Those drugs, which aren’t approved by regulators to treat the virus but have generated promising but inconclusive results in small, open label studies, can be administered by doctors on an off-label basis. Several large drug manufacturers have vowed to donate large quantities of the drug or crank up production.

The odds are high that at least one of these treatments will prove effective in reducing deaths from COVID-19.

Meanwhile, testing is ramping up, and the stumbling block of requiring a doctor's order for a test may well disappear in the next few weeks. It already has in Hayward, just 10 miles east of us over the bridge.

On the inventory side Factory America is producing more ventilators and masks, with higher production rates to follow. Supply of essential matériel has been woefully lacking for two months, but that will change soon as long as most of us remain uninfected or at least asymptomatic. Dawn hasn't broken, but there's a faint glow on the horizon.

(Yosemite image from KVDDesign)

Market Bottom Not Here Yet

Including today's drop (so far), the markets are down 10% from a week ago, 20% from the highs.

As of 11 a.m. Eastern Daylight Time the stock market indices are down 6-7% (it's pointless to give an exact number; it changes materially every second). I've nibbled a little but the markets keep going lower, a reminder of the old Wall Street saying: "never try to catch a falling knife."

Thoughts:

The markets began falling last month when the coronavirus and a Bernie Sanders presidency, though unlikely, factored into investors' analyses.

With Bernie's chances receding, a Saudi oil-price war has replaced the socialist bogeyman. But aren't low oil prices great for consumers? Not in this case, because the Saudis are behaving like classic monopolists: bankrupt the weaker players as well as alternative energy companies, then raise prices.

The market's best case is an announcement that a coronavirus vaccine has been developed.

The second-best case is that treatments like Gilead's remdesivir stop the sick from getting worse.

The third-best case is that the contagion (inevitably) spreads in the U.S. and U.S. fatality rates show that the coronavirus is 2x or 3x worse than the flu. The worst case is that the disease is 10x as bad or more.

If we can take the worst case off the table, everyone--businesses, governments, consumers--can adjust accordingly. That will signal the market bottom.

I wish I had more cash to invest....

Balm in Gilead

Gilead HQ in Foster City on a Saturday morning in 2015.

Pharmaceutical company Gilead Sciences hasn't excited stock analysts for years. Due to the paucity of new medications in the pipeline, GILD traded 30% lower than in 2015.

Last week Gilead was back in the headlines because the World Health Organization spoke highly of its proprietary drug:

Shares of American biotech firm Gilead Sciences rose nearly 5% Monday after an official from the World Health Organization said that Gilead's drug remdesivir is showing signs that it may be able to help treat the deadly coronavirus.

"There is only one drug right now that we think may have real efficacy and that's remdesivir," Bruce Aylward, an assistant director-general of the World Health Organization (WHO), said at a press conference in Beijing.

Testing on remdesivir and potential vaccines will take months, a seemingly interminable wait in a world in which we expect miracles to occur at light-speed.

For perspective Gilead Sciences took its name from an ancient reference to a healing substance that originated from a region in Jordan. Jeremiah 8:22:

Is there no balm in Gilead? Is there no physician there? Why then is there no healing for the wound of my people?

The passage inspired the spiritual:

There is a balm in Gilead
To make the wounded whole;
There is a balm in Gilead
To heal the sin-sick soul.
Some times I feel discouraged,
And think my work’s in vain,
But then the Holy Spirit
Revives my soul again.

Two Miles Away

At the very top of the 2015 Barron's 500 is Foster City's Gilead Sciences.

Already a leader in HIV drugs, the company launched Sovaldi, a lifesaving treatment for hepatitis C, in late 2013. It quickly became one of the best-selling drugs in the world, producing $10.3 billion in 2014 revenue. Harvoni, a successor treatment approved in October, contributed another $2 billion in just a few months, helping to cement Gilead’s reputation for birthing biotech blockbusters.

$1,000 invested in Gilead in its 1992 IPO would have grown to over $600,000 today.

Your humble observer, unfortunately, was so enamored with the growth stories occurring elsewhere that he was blind to one that was occurring two miles away.

Before we can seize the opportunity we must first recognize it.

(The Barron's 500 is

is an exclusive ranking of the 500 largest [U.S. and Canada] public companies, measured by sales in the latest fiscal year...it compares companies on the basis of three equally weighted measures:

median three-year cash-flow-based return on investment;

the one-year change in that measure, relative to the three-year median;

and sales growth in the latest fiscal year.)

Gilead's sprawling campus has much larger buildings than its legal address,  333 Lakeside Drive.
On Saturday morning the HQ parking lot is empty while construction crews work nearby.