The U.S. stock market ended Thursday flat after suffering a wild wobble midway through the session. The culprit? Every retail investor’s favorite coronavirus stock – Gilead Sciences.
The Financial Times reported that the most promising coronavirus treatment – remdesivir – failed in a clinical trial. Patient conditions did not improve, and neither did their blood viral load. The report came from leaked World Health Organization documents accidentally published on the WHO’s website.
Equities bounced back briefly after Gilead said the leaked WHO report mischaracterized the test results, but investors quickly soured on what executives had to say. Here’s why:
The Chinese trial showed remdesivir — developed by California-based Gilead Sciences — did not improve patients’ condition or reduce the pathogen’s presence in the bloodstream.
Further, the WHO had specifics about the trial’s size and results:
Researchers studied 237 patients, giving the drug to 158 and comparing their progress with the remaining 79. The drug also showed significant side effects in some, which meant 18 patients were taken off it.
In response, a spokesperson for Gilead told CNBC :
We believe the post included inappropriate characterizations of the study. Importantly, because this study was terminated early due to low enrollment, it was underpowered to enable statistically meaningful conclusions.
But investors already knew the size of the trial was 237 patients when the Dow took a dive. And they also already knew Gilead had to take 11% of patients off the trial because of side effects.
Gilead’s response didn’t provide new information, just the drug company’s spin on the leaked trial results. That spin might be misleading based on the size of other clinical trials.
Even fewer than 237 patients has long been considered statistically meaningful for calculating sample size in clinical trials . According to a clinical research workshop summary of a presentation led by Ronald Krall, former chief medical officer of GlaxoSmithKline:
Recruiting a large number of subjects per trial is a trademark of cardiovascular disease studies: on average, 275 patients are sought per cardiovascular trial, as compared with 20 patients per cancer trial, 70 patients per depression trial, and 100 per diabetes trial.
Thursday’s Dow turbulence is what happens when investors speculate on things like “coronavirus stocks.”
A week ago, the Dow got a boost and Gilead stock surged on promising results from a University of Chicago Medicine trial of remdesivir .
On April 16, Stat News reported:
A Chicago hospital treating severe Covid-19 patients with Gilead Sciences’ antiviral medicine remdesivir in a closely watched clinical trial is seeing rapid recoveries in fever and respiratory symptoms, with nearly all patients discharged in less than a week…
But the stock market’s upbeat reaction then was based on a trial with 125 patients. While Gilead quickly downplayed the 237-patient Chinese trial as underpowered, there were no such objections last week.
After the media and stock market excitement over remdesivir’s Chicago trial, Gilead said in a statement:
What we can say at this stage is that we look forward to data from ongoing studies becoming available.
But Kathleen Mullane, the University of Chicago specialist overseeing the remdesivir study, did say the trial was incomplete because there was no placebo group.
Thursday’s whipsaw is what happens when markets speculate. In the case of remdesivir last week, equities essentially priced in a bet on the unknown outcome of a drug trial investors knew little about. They lack the specialized medical knowledge to call what markets did “investing.”
They certainly did not know how the remdesivir trials would turn out. Even Gilead and specialists treating coronavirus didn’t know. That’s why they’re running trials.