>>> What to look at today - 30th of June 2020

Asian stocks advanced Tuesday, set to round out their best quarter since 2009 in a rebound from a devastating start to the year, as optimism about a recovery overshadows concerns over an increase in U.S. coronavirus cases.
Benchmarks rose more than 1% in Japan, Australia and South Korea. Hong Kong gains were more modest after the Trump administration suspended some trade benefits for the city over China’s new national security law for the financial hub. S&P 500 futures edged higher after the index erased its June decline in wake of positive U.S. home sales data. The dollar and Treasuries were little changed. Oil retreated.
US After Hours Bank stocks modestly higher on stress test results; XLNX +7.2% up on guidance; MU +5.6% up on strong earnings; LULU gets into home fitness market with Mirror purchase

Nikkei +1.81% Hang Seng +0.79 CSI +1.47% Shanghai +0.91% Shenzen +1.87%

Eur$ 1.1228 CNH 7.0691 CNY 7.0690 JPY 107.76 GBP 1.2287 CHF 0.9521 RUB 70.0988 WTI$ 39.45 -0.63

S&P -0.11% Nasdaq +0.11% EuroStoxx -0.03% FTSE -0.01% Dax +0.07% SMI -0.02%

Macro :
- *CHINA JUNE MANUFACTURING PMI AT 50.9; EST. 50.5
- German Tax Unit Got Wind of Cum-Ex Activities as Early as 2009

Keep an eye on :
- ABN NA : ABN Amro, Aegon Plan to Launch Joint ESG Equity Fund This Year
- AIR FP : Airbus Meets Unions on Job Cuts for Prolonged Virus Downturn
- ARYN SW : Aryzta Sees Steady Revenue Trend Improvement Through June
- ATT SS : Attendo Uses Face Masks That Aren’t Certified, Staff Says
- AUTN SW : Autoneum Amends Long-Term Credit Agreement Worth CHF350 million
- BALN SW : Baloise Places Two Senior Bond Issues for CHF300m
- BAMNB NA : BAM to Take EU40m Charge In Cologne Metro Claims Settlement
- BFIT NA : Basic-Fit Gets Clean Sweep of Buys After Morgan Stanley Upgrades
- BMPS IM : Monte Dei Paschi Board Approves Transfer of Bad Loans to Amco
- BOL FP : Bollore Seeking to Exit from Car Sharing in France, Abroad: AFP
- CAV1V FH : Caverion Says German Prosecutors End Probe Into Bribery; No Fine
- CINE LN : Cineplex Gets New Money From Lenders After Failed Takeover
- COFB BB : Cofinimmo to Buy German Care Home for About EU16m
- CBK GY : Commerzbank Supervisory Board Cancels Strategy Meeting: DPA
- DAI GY : Mercedes to Halt Subscription Pilot: Automotive News
- DANSKE DC : Danish Agency Failed in Money Laundering Oversight, Borsen Says
- DIA IM : DiaSorin: New SARS-Cov-2 IgM Test Now Available in Europe, U.S.
- ENDUR NO : Endur Offering Prices 66.7m Shares at NOK1.50/Share
- G IM : Mediobanca Pressured by Activist Investor to Exit Generali Stake
- GMAB DC : Genmab Rises Amid ‘Very Favorable’ Results From Phase 2 Trial
- GIMB BB : Gimv Sees About EU30m Gain on Contraload; Buys Televic Stake
- BOSS GY : Frasers Group Increases Its Investment in Hugo Boss
- IFX GY : Micron, Xilinx Give Bullish Revenue Forecasts; Shares Surge
- IHG LN : InterContinental to Give U.S. Employees Paid Day Off to Vote
- INGA NA : ING Belgium CEO Van Den Eynden to Step Down: Tijd
- DEC FP : JCDecaux Renews, Extends Contract W/ Beijing Metro for 20 Years
- JUVE IM : Juventus Signs Arthur Melo From FC Barcelona for EU72m
- KYG ID : Kerry Group Holder to Sell Shares Worth EU80m: Terms
- KIN BB : Kinepolis’s MJR Cinemas in U.S. to Open With a Capacity of 25%
- LEON SW : Leonteq Partners with BlackRock in Derivative Products (Earlier)
- LULU US : Lululemon to Buy Fitness Company Mirror for $500 Million
- MB IM : Mediobanca Pressured by Activist Investor to Exit Generali Stake
- N4G GY : Naga Group to Offer Up to 2m Shares at EU2.5 Apiece
- KN FP : U.K. FCA Probes H2O Over Sale of Bonds, Stocks to Windhorst: FT
- KN FP : Natixis, La Banque Postale to Merge Asset Management Operations
- KN FP : Natixis IM’s Raby Says Economy Could Be Stronger After Crisis
- NAS NO : Norwegian Air to End Boeing Purchase Agreements
- PRS NO : Prosafe Gets Extension to Forbearance Arrangement to End July
- PRX NA : Prosus Looks to Buck Dealmaking Slump With $7 Billion on Hand
- PRX NA : Prosus Full Year Revenue $21.5 Bln
- SOBI SS : Sobi Granted FDA Orphan Drug Status for Anakinra
- STM FP : Micron, Xilinx Give Bullish Revenue Forecasts; Shares Surge
- TSLA US : Tesla Shares Climb Back Above $1,000 on Musk’s Break-Even Email
- TRI FP : Trigano Says 3Q Operating Profit Positive Despite Sales Drop (1)
- UBER US : Uber in Talks to Buy Postmates for Around $2.6B, DJ Reports
- WDI GY : Wirecard Assessing Ability to Provide Singapore Services: MAS
- WDI GY : Wirecard North America Seeks Acquisition
- WDI GY : U.K. FCA Says to Allow Wirecard to Resume Operational Activity
- WDI GY : Germany’s Kukies Sees Rapid Oversight Overhaul Post-Wirecard
- WDI GY : Wirecard Assessing Ability to Keep Providing Singapore Services

FT : EY/Wirecard: accounting for fraud

EY/Wirecard: accounting for fraud
Deregulation and new business models are fertile grounds for scams, but regulation lags progress

It seems rich to dismiss detection of a €1.9bn cash hole as something that “even the most robust audit procedures may not uncover”. Rich, but predictable, as accountancy firm EY finds itself in the line of fire over its audit of now insolvent payments processor Wirecard.

Unfortunately for investors, rhetoric is not the only defence at the auditor’s disposal. A string of wearily familiar financial scandals this century illustrates three built-in protections afforded to EY and its ilk.

The first is time. History shows financial frauds take years to come to light and even longer to come to justice. Investigation into KPMG’s role auditing Carillion stretches back to the UK outsourcing group’s accounts from 2014. Deloitte agreed to settle allegations that it helped to prolong fraud at Parmalat in early 2007, four years after the Italian dairy group collapsed with debts of €14bn.

Next comes organisational structure. Unlike multinationals, with their global HQs and regional hubs, audit firms operate as a network of geographic entities. Firms like to stress their international reach — until it all goes wrong. Hence Grant Thornton sought to distance itself from the Parmalat scandal by pointing the finger at Grant Thornton Italy. 

Similarly, Arthur Andersen in the US was only partially taken down by Enron, a scandal so large and colourful it spawned a West End musical. Andersen’s UK business, including partners named in one of the many lawsuits, moved to Deloitte UK. For its part, EY boasts “several hundred” member firms, all of which are separate legal entities.

Country rules offer additional wriggle room. Take China, where EY’s local arm is under scrutiny for its role auditing coffee shop Luckin. The Public Company Accounting Oversight Board, which oversees the audits of US public companies, is barred from China. That, as Luckin and its overseas-listed Chinese peers repeatedly note, “makes it more difficult to evaluate the effectiveness of our auditors’ audit procedures or quality control”.

Finally, auditing firms are obliged to have indemnity insurance rather than capital buffers. That means they lack the financial heft required to bear the sort of fines meted out to perpetrators of fraud and their advisers.

All of this is a worry as more bankruptcies loom. Deregulation and new business models are fertile grounds for scams — see Enron, WorldCom and Wirecard. So too is the pandemic, which has shunted sheaves of documentation online, making fraud easier. Regulation typically lags progress, but seldom so glaringly as in the world of audit.

>>> US After Hours Summary: Bank stocks modestly higher on stress

After Hours Summary: Bank stocks modestly higher on stress test results; XLNX +7.2% up on guidance; MU +5.6% up on strong earnings; LULU gets into home fitness market with Mirror purchase

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: XLNX +7.2% (guides JunQ and SepQ above consensus), MU +5.6%, JEF +2.4%, XP +0.1% (guides for Q2 revs)

Companies trading higher in after hours in reaction to news: BLNK +41.4% (extends momentum), SPG +6.2% (provides reopening update; declares Q2 dividend of $1.30), LULU +3.4% (to acquire in-home fitness company MIRROR for $500 mln), WDC +3% (in sympathy with strong MU earnings), ARYA +2.9% (shareholders approve combo with Immatics Biotech), SGEN +1.9% (announces "favorable" results from Phase 2 trial of tisotumab vedotin), NLS +1.7% (in sympathy with LULU acquiring home fitness co Mirror), XP +0.1% (announces offering by selling stockholders, provides Q2 rev guidance)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: LNDC -6.1% (guidance), MLHR -5%

Companies trading lower in after hours in reaction to news: OCX -48% (DetermaDx study endpoints were not achieved), VRCA -28.9% (provides regulatory update pertaining to VP-102), LQDA -18% (to acquire RareGen through all-stock merger, also announces stock offering), ERII -13% (will exit its licensing deal with Schlumberger), CRSP -7% (commences $325 mln common stock offering), IIPR -2.6% (anounces 1.8 mln share offering), PTON -1.8% (falls a bit as LULU will acquire home fitness co Mirror), XLRN -1.7% (announces $400 mln offering), BA -1% (Norwegian Air cancels orders for 97 of Boeing's planes), GMAB -0.4% (announces "favorable" results from Phase 2 trial of tisotumab vedotin)

Bank Movers on Stress Test Results: C +1.0%, MS +0.9% (to maintain dividend), JPM +0.8% (intends to maintain dividend), GS +0.7%, DFS +0.7%, ALLY +0.6%, CFG +0.5%, BAC +0.2% (to maintain dividend), STT +0.1% (suspends share repurchases for Q3), BK +0.1%; COF -1.3%, WFC -0.8% (expects dividend in Q3 will be reduced from current level; expects Q2 results will include an increase in the allowance for credit losses substantially higher than the increase in Q1). 

>>> US Close Dow +2,32% S&P +1,47% Nasdaq +1,20% Russell +3,08%

Closing Stock Market Summary

The S&P 500 increased 1.5% on Monday in a broad-based advance to recoup some of last week's decline. The Dow Jones Industrial Average (+2.3%) and Russell 2000 (+3.1%) outperformed the benchmark index, while the Nasdaq Composite (+1.2%) underperformed. 

All 11 S&P 500 sectors finished in positive territory, led by the industrials sector (+3.2%) amid leadership from Boeing (BA 194.49, +24.48, +14.4%), which resumed 737 MAX flights for certification. The health care sector (+0.9%) was the lone sector that rose less than 1.0%. 

Value-oriented stocks edged out growth stocks today after data showed pending home sales rebound 44.3% m/m in May (consensus +18.0%), which extended a trend of data depicting a rebound in the economy. The market pushed toward session highs after its 10:00 a.m. ET release and proceeded to drift higher the rest of the session. 

In other corporate news, more companies halted ad spending from Facebook (FB 220.64, +4.56, +2.1%) due to concerns about insufficient efforts to police misinformation and hateful content. FB shares still finished higher after being down as much as 4.2% early in the session. 

Microsoft (MSFT 198.44, +2.11, +1.0%) and PepsiCo (PEP 131.08, +2.15, +1.7%) reportedly targeted only Facebook's platforms, while Starbucks (SBUX 73.48, +1.91, +2.7%) and Coca-Cola (KO 44.36, +0.79, +1.8%) paused all social media spending. 

Given the positive bias in stocks, the coronavirus resurgence was less in focus today even as New Jersey and parts of California scaled back reopening efforts. The Treasury market appeared more in tune with the threat of reduced economic activity, as bonds held firm throughout the session. 

The 2-yr yield was unchanged at 0.16%, and the 10-yr yield was unchanged at 0.64%. The U.S. Dollar Index increased 0.1% to 97.51. WTI crude rose 3.1%, or $1.18, to $39.67/bbl. 

Looking ahead to Tuesday's economic calendar, investors will receive the Conference Board's Consumer Confidence Index for June, the Chicago PMI for June, and the S&P Case-Shiller Home Price Index for April.

  • Nasdaq Composite +10.1% YTD
  • S&P 500 -5.5% YTD
  • Dow Jones Industrial Average -10.3% YTD
  • Russell 2000 -14.8% YTD

FT : Petra Diamonds hoists for sale sign as debt payment looms

Petra Diamonds hoists for sale sign as debt payment looms
Analysts say there is no obvious buyer for a group whose gems are in the British crown jewels

Petra Diamonds, owner of the South African mine famous for producing two of the diamonds in the British crown jewels, has put itself up for sale as it battles to service its debts. 

The London-listed miner, which has been in talks with creditors after the coronavirus pandemic hammered the diamond market, said it was seeking offers for all or part of the company that owns the Cullinan mine.

Petra failed to make an interest payment on a $650m bond last month, but won some breathing space from creditors who said they would not declare a default until August.

In return the company has told bondholders to come up with a restructuring plan by the end of June that would set out a revised capital structure. The $650m bond has to be refinanced by May 2022.

“This is a very challenging market to seek offers for the mines, when the diamond miners are struggling even to sell the diamonds themselves due to both travel restrictions in getting to sites, lockdown of cutting and polishing centres in India and collapse in jewellery sales,” said Ben Davis, an analyst at Liberum.

Shares in Petra, which were trading at 57p two years ago, dropped 21 per cent to 1.67p, leaving the lossmaking company valued at just £14m. 

The $80bn diamond industry has been devastated by the pandemic, as a global supply chain spanning mines in South Africa, polishers in India, and retailers in London’s Hatton Garden, has ground to a near halt because of lockdowns imposed to contain the virus.

Even before the pandemic, Petra was struggling. Weak diamond prices and difficulties in Tanzania, where it operates the Williamson mine, weighed on profits and share price. 

At the same time, its debts have increased following investment in a new processing plant at Cullinan and the expansion of underground operations at other mines. These include Finsch, South African’s second-largest diamond mine by production.

“Cullinan and Finsch mines are good assets and will eventually be picked up, but the other mines, particularly Williamson in Tanzania, have little to no value for outside investors, unless they have very favourable views of the diamond industry or the political situation in Tanzania,” said Mr Davis.

Cullinan has a reputation for spewing out top-notch gems. In 1905 it produced the largest rough diamond in the world, at 3,106 carats, which became part of the British crown jewels. In 1966, it delivered the Taylor-Burton diamond.

Richard Hatch, analyst at Berenberg, said it was not unusual for advisers to explore all options during a debt restructuring process but he could not think of any obvious buyers for Petra.

Having sold its mines to Petra in the first place, he said De Beers was unlikely to repurchase them unless it could do so at a significant discount, while Russian group Alrosa was focused on other African countries including Angola.

“We continue to believe that a debt-for-equity swap is the more likely end-result for Petra, and struggle to see any obvious parties that could make a bid for the group, as the $650m debt presents a major stumbling block, we think,” said Mr Hatch.

FT : Digital payments rules must be updated now

Digital payments rules must be updated now
Wirecard scandal plus increased use of cards caused by Covid-19 leave no time to spare

The scandal at Wirecard has not only exposed a multibillion-dollar fraud in the accounts and profound failures of oversight. It has also raised fresh questions of whether payments regulation in Europe has kept pace with the huge changes in the industry.

Once a sleepy arm of heavily regulated banks, the payments sector is being transformed by technological innovations, new legislation, new players and shifts in customer habits. Little wonder technology and payment-processing companies and banks are all vying to grab a share of the large and fast-growing market for digital payments.

Modern payment chains consist of an increasing number of companies that are interdependent but do not always have shared interests. They may be under the supervision of various authorities or even under no supervision at all.

That’s why last year my review of financial services for the Bank of England argued for a cross-authority review of payments regulation to reflect the shifting risks and gaps. The Wirecard debacle makes urgent action essential. 

Technology and regulation have driven an unbundling of payments that historically were done under the roof of a regulated bank. The EU is especially vulnerable in this regard because it has been explicitly trying to break banks’ monopoly on payments. In addition, many European banks have raised capital by selling the parts of their businesses that work with retailers who want to accept cards.

This creates a challenge for policymakers who must decide which regulations should apply to those businesses while keeping a competitive system. Simon Gleeson of Clifford Chance argues in The Legal Concept of Money that a regulatory paradigm shift is needed; from an approach focused on entities to one based on activities.

A key lesson from the 2008 financial crisis was that some of the systemic importance of banks came from their function as payments providers to the real economy. If payments are systemic, then the largest payment companies must also be systemic once they exceed a certain size. Systemic companies must have appropriate oversight aimed at ensuring their resilience and operational continuity. It may not matter that a new payments company can get started with initial capital of just €50,000 and some insurance, but it does matter if additional oversight and systemic requirements do not kick in as the business becomes more important. 

 Some jurisdictions are leading the way. Singapore has recently introduced a three-tiered regulation for payment companies, which encourages innovation in smaller businesses, but imposes appropriate oversight on larger ones.

Since the crisis, regulators have started forcing banks and clearinghouses to write living wills to govern how they could be wound down in a crisis. That requirement should now be applied to payments companies that are deemed systemic, with clear segregation of funds to ensure smooth transitions and alternatives for businesses and consumers. 

In addition, the resilience of payments systems and their linkages should be tested with cyber penetration exercises. Such measures would make it easier for regulators to determine which companies are critical, and where there should be a pre-agreed plan in place of how they can step in for each other.

As payments data becomes increasingly valuable, we need to revise data-sharing rules. The EU’s second payments directive has created an unlevel playing field where banks are obliged to give customer data to unregulated businesses. Moreover, the liability when things go wrong can often rebound to the banks. Ana Botín, group chief executive of Santander, is right to argue that PSD2 should be amended to treat everyone involved in this activity the same way. 

Digital payments innovation brings huge benefits to customers and businesses. The pandemic is accelerating our use of electronic payments and digital wallets. As a result, an even larger proportion of payments is likely to take place outside the tightly regulated perimeter of financial services. Wirecard’s bankruptcy underscores the urgency of next-generation payments regulation.

>>> US Gapping down

Gapping down

Other news:

  • ICPT -38.1% (announces the FDA issued a Complete Response Letter regarding the New Drug Application for obeticholic acid for the treatment of fibrosis due to nonalcoholic steatohepatitis)
  • GNUS -6.5% (files for 59,523,812 share common stock offering by selling shareholders)
  • DRRX -5.7% (announces that Gilead is terminating its license agreement related to an HIV investigational product using DURECT's SABER technology)
  • FB -3.3% (social media names continue to show weakness after more corporations boycot ads)
  • CACC -2.7% (received another civil investigative demand on June 1)
  • SNAP -2.5% (social media names continue to show weakness after more corporations boycot ads)
  • TWTR -2.4% (social media names continue to show weakness after more corporations boycot ads)
  • TAK -1.2% (announces anticipated financial impact from Novartis' (NVS) withdrawal of the Marketing Authorisation Application for Xiidra)
  • VERU -0.9% (files for $150 mln mixed securities shelf offering)

Analyst comments:

  • AMC -4.5% (downgraded to Underperform from Neutral at Credit Suisse)
  • ALGT -2.5% (downgraded to Neutral from Buy at Goldman)
  • SPOT -2.1% (downgraded to Sell from Neutral at Guggenheim)
  • BYND -2% (downgraded to Underweight from Overweight at Barclays)
  • CNK -1.5% (downgraded to Neutral from Outperform at Credit Suisse)
  • UL -1.1% (downgraded to Sell from Neutral at UBS)
  • PPC -0.8% (downgraded to Market Perform from Outperform at BMO Capital Markets)

>>> US Gapping up

Gapping up

Other news:

  • ALT +20.8% (awarded $4.7 million from the U.S. Army Medical Research & Development Command (USAMRDC) to fund its Phase 1/2 clinical trial of T-COV)
  • INSU +19.5% (Insurance Acquisition Corp and Shift Technologies will combine)
  • CNTG +19.3% (raises $250 mln in private placement by Temasek and other accredited investors)
  • COTY +17.2% (confirms Kim Kardashian West strategic relationship to expand beauty brands globally BW)
  • TLSA +12.6% (announces agreement with STC Biologics for GMP manufacturing of an anti-interleukin-6-receptor monoclonal antibody for clinical studies in patients with COVID-19)
  • APTO +8.9% (FDA completed its review of the company's Investigational New Drug (IND) application and has granted IND allowance for the initiation of a Phase 1a/b clinical study of CG-806)
  • KOS +8.6% (enters into crude oil prepayment agreement with Trafigura Trading worth up to $200 mln)
  • NKLA +7.8% (confirms preorders will open June 29 at 11 a.m. ET; Nikola Badger EV pickup will debut at Nikola World 2020 in December)
  • NEPT +7.4% (has been authorized by Health Canada to sell cannabis products to provinces and territories)
  • MMP +4.5% (positive mention in Barron's )
  • GRAF +4.5% (reportedly in talks to merge with Velodyne Lidar which makes sensors for self-driving vehicles and is backed by Ford (F) and Baidu (BIDU), according to Detroit News)
  • FCEL +4.3% (notified POSCO Energy and Korea Fuel Cell that it has terminated License Agreements effective immediately)
  • BP +3.4% (receives first regulatory approval for Duvroq (daprodustat) in Japan)
  • BNTX +3.3% (raises $250 mln in private placement by Temasek and other accredited investors)
  • RTX +3% (receives a $2.3 bln US Missile Defense Agency contract for seven GaN-based AN/TPY-2 radars)
  • RCKT +3% (receives FDA clearance for its IND application for RP-L401)
  • GILD +3% (provides update on remdesivir pricing)
  • NEO +2.3% (launches comprehensive suite of solid tumor liquid biopsy tests for cancer patients)
  • BSX +2.1% (receives FDA 510(K) clearance for the LUX-Dx insertable cardiac monitor system)
  • INCY +1.5% (Japanese Ministry of Health, Labour and Welfare approved Tabrecta for MET exon 14 skipping (METex14) mutation-positive advanced and/or recurrent unresectable non-small cell lung cancer)
  • RGEN +1.3% (to acquire Albany, New York based Engineered Molding Technology)
  • GSK +1.2% (receives first regulatory approval for Duvroq (daprodustat) in Japan)
  • NVS +1.1% (receives simultaneous approval for five new products from Japanese Ministry of Health, Labour and Welfare)
  • CMCL +0.9% (raises quarterly dividend by 13% to $0.085 per share, up from prior dividend of $0.075 per share)

Analyst comments:

  • LUV +3.5% (upgraded to Buy from Sell at Goldman)
  • STM +2% (upgraded to Buy from Neutral at Bryan Garnier),
  • GTLS +1.4% (upgraded to Outperform from In-line at Evercore ISI)

Covid-19 Drug Remdesivir to Cost $3,120 for Typical Patient on Private Insurance

Covid-19 Drug Remdesivir to Cost $3,120 for Typical Patient on Private Insurance
Gilead Sciences, remdesivir’s maker, said its price will depend on who is paying and how long a patient takes the drug

Remdesivir’s pricing has been hotly debated. Here, a lab technician works on the drug at a facility in Cairo, Egypt, June 25.

Gilead Sciences Inc. GILD -1.22% detailed its pricing plans for Covid-19 drug remdesivir, saying it will charge U.S. hospitals $3,120 for a typical patient with commercial insurance.

The drugmaker on Monday disclosed its pricing plans as it prepares to begin charging for the drug in July. The U.S. has been distributing remdesivir donated by Gilead since the drug was authorized for emergency use in May.

Under the company’s plans, Gilead will charge a higher price for patients with private insurance in the U.S., and a lower price for U.S. government health programs like Medicare and all other developed countries that insure their patients directly.


The government price will be $390 per dose or $2,340 per patient for the shortest treatment course and $4,290 for a longer treatment course.

Gilead said in the U.S. it will charge nongovernment buyers such as hospitals about $520 per dose, or a third more than the government price, for patients who are commercially insured. That works out to $3,120 for a patient getting the shorter, more common course of treatment, and $5,720 for the longer treatment duration.


A man arrives at a hospital amid a coronavirus outbreak in Texas, June 28.
PHOTO: CALLAGHAN O'HARE/REUTERS
The U.S. is the only developed country where Gilead will charge two prices, Gilead Chief Executive Daniel O’Day said in an interview. In other nations, governments negotiate drug prices directly with drugmakers. “The logic is that we wanted a single government price around the developed world,” Mr. O’Day said.

The higher price for U.S. commercially insured patients is because government health programs such as Medicaid typically receive statutorily-defined discounts off the prices companies receive in the private market.


“This medicine is priced far below the value it brings to health-care systems and that’s true for private payers and government payers,” Mr. O’Day said.

On average, the drug should help reduce hospital costs by $12,000 per patient, he said. Gilead estimated the savings based on data showing that each day of hospitalization costs $3,000 and that patients taking remdesivir are discharged four days sooner than those receiving standard treatment, Mr. O’Day said.

Covid-19 patients get two doses of remdesivir by infusion on the first day, and one dose daily afterward. The shortest treatment course is five days, while a longer treatment course takes 10 days.

Currently, 90% to 95% of patients receive five-day treatment courses, Mr. O’Day said.

Remdesivir is the first antiviral drug shown to be effective at treating Covid-19 in a major clinical trial, reducing patients’ recovery times by four days compared with the placebo group in a large study funded by the National Institute of Allergy and Infectious Diseases.

Air travel is full of opportunities for coronavirus transmission. Touchless check-in, plexiglass shields, temperature checks, back-to-front boarding and planes with empty middle seats are all now part of the flying experience, and the future may bring even more changes. Illustration: Alex Kuzoian
So far, few other drugs have proven in human testing to help coronavirus patients. One drug that recently produced positive results in a clinical trial was the steroid dexamethasone.

The drug, which treats Covid-19 by a different mechanism than remdesivir, has been on the U.S. market for decades to treat other diseases. It hasn’t been authorized in the U.S. to treat Covid-19, but doctors are allowed to prescribe it “off-label” under U.S. regulations.


Given its unique status, remdesivir’s pricing has been widely anticipated—and hotly debated—among doctors, health insurers and investors. It could serve as the starting point for other drugs that eventually prove to safely treat coronavirus patients.

The Institute for Clinical and Economic Review, a nonprofit group that analyzes pharmaceutical prices, said last week that a cost-effective price for remdesivir would be $2,520 to $2,800 per patient if dexamethasone becomes a standard medication for Covid-19.

Without dexamethasone, a cheap generic medication, remdesivir would be cost-effective at a range of $4,580 to $5,080 a patient, ICER said.