Hedge fund manager behind long-term coronavirus pill

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An investigational drug developed by a small biotech company offers a glimpse of hope in times of crisis: a twice-daily pill that could be prescribed to someone as soon as they test positive for the disease-causing coronavirus before she got seriously ill.

Like all drugs at an early stage, this is a long-term plan. Less than 10% of the drugs that pass the first stage of the human test end up on the market.

However, if the drug, named EIDD-2801, eventually works, it would be a crowning achievement for Wayne and Wendy Holman, the husband and wife team behind Miami-based Ridgeback Biotherapeutics. It would also be a remarkable turn of events for Dr. Holman, who became famous in 2014 during the SAC Capital insider trading scandal.

“One thing I often say to those involved is, ‘If we fail, no one will remember what we are doing here,’ he said in an interview. “If we succeed, everyone will remember. ”

Dr. Holman, who worked for a division of SAC Capital, Steve Cohen’s now-missing hedge fund, between 2003 and 2006, has never been charged with wrongdoing. Rather, he was dragged into the scandal by Mathew Martoma, another former SAC employee, who is serving a nine-year sentence for securities fraud and conspiracy.

Martoma alleged, unsuccessfully, that the government’s center business transactions were made on the advice of Dr. Holman’s expert advice, rather than on inside information. Dr. Holman had previously left SAC at the time of the transactions in question, but continued to advise the hedge fund on its health assets.

The SAC Capital scandal would eventually spread to one of the largest insider trading cases in history. In 2013, the hedge fund pleaded guilty to insider trading, paid a record $ 1.8 billion in penalties and had to return money to outside investors. In 2016, Mr. Cohen was not allowed to manage outside money for two years.

Dr. Holman left Mr. Cohen’s company in 2006 to create his own investment fund, Ridgeback Capital, which lists the couple’s $ 28 million home in Miami as an address in Securities Deposits.

In 2014, Ms. Holman, a former investment manager, formed Ridgeback Biotherapeutics with Dr. Holman as co-founder and scientific advisor. The company has already developed an Ebola drug, which is awaiting regulatory approval.

In January, when the coronavirus epidemic was in its infancy, the Holmans spotted a drug that others in the biotech industry had missed. Discovered by researchers at Emory University in Atlanta, EIDD-2801 was designed as a drug for rare encephalitis viruses, but has also shown promise in fighting coronaviruses such as Sars and Mers.

“Wendy met people [at Emory] before anyone knows something is going on with a coronavirus, “said Dr. Holman. “Ridgeback was the only one who understood this drug, and who was immediately willing, able and ready to do the job.”

On March 23, Ridgeback announced that it had authorized the drug from Emory and agreed to conduct the necessary clinical trials. Then, in early April, a scientific journal published a study showing that the drug could hinder the ability of Covid-19 to replicate in human lung cells in test tubes, while preventing the replication of other coronaviruses in mice. .

Scientists at Merck, the large US pharmaceutical company, were impressed with the animal study and contacted Emory regarding the drug acquisition, but discovered that they had been defeated by Ridgeback.

At this point, the Holmans had already studied the drug in phase one trials that attempted to determine whether a drug was safe for human consumption.

On May 2, Merck announced a collaboration agreement with Ridgeback. Terms of the deal, which is awaiting regulatory approval, have not been released.

Merck was interested in EIDD-2801 because it is a tablet, while other antiviral drugs for Covid-19, such as Gilead’s remdesivir, are given by intravenous infusion. Theoretically, this means that EIDD-2801 could be given to patients as soon as they test positive and before they get sick in hospital. Not only would this change the course of the pandemic that has killed nearly half a million people, it would mean a much bigger market for the drug.

The fast-paced chain of deals has led to accusations that the Holmans “spill” the drug in order to make a quick profit. Dr. Holman bristled at the allegation, noting that the couple had so far used their personal wealth to fund clinical trials. In addition to the phase one trial, they began enrolling patients in two phase two trials – one for hospital patients and one for “outpatients” who tested positive.

“All the money we used to develop 2801 came from Wendy and myself – we funded every penny ourselves,” he said. “We didn’t want to spend time raising funds [from outside investors] and very few were interested at the time. ”

However, when Merck expressed interest, Ridgeback was eager to reach an agreement. Part of the reason is that Dr. Holman already knew Merck’s best scientist Roger Perlmutter, one of the industry’s longest-serving research and development leaders.

“We were not looking to partner with anyone, but as we got more public attention, people reached out,” he said. “If Roger wants to help develop a potentially vital drug for [Covid-19], you talk to Roger.

Dr. Holman said that Merck’s participation meant that the drug would end up costing less if it worked. “Merck has substantial manufacturing capacity to do it on a large scale at the lowest possible cost,” he said. “If it works, then there will be a huge need globally.”

Ridgeback has announced plans to manufacture 4.5m doses by the fall to ensure sufficient supplies if the trials produce positive results.

Even by the standards of the US biotech industry, which has demonstrated its ability to develop drugs at breakneck speed, Ridgeback has accomplished a lot in a short time. Within 20 days of Emory’s license, the drug began phase one trials, with phase two trials starting two months later.

The Holmans worked hard – 16 hours a day, according to Dr. Holman – but they were also lucky. They were able to quickly secure a clinical site in the UK for the Phase One study because there was unused capacity due to the coronavirus outbreak, which had led to the postponement of many trials.

Ridgeback’s drug is a nucleoside analog that prompts viruses to use the wrong building blocks, leading to a series of mutations that cause the virus to form a weak chain.

Some scientists have expressed concerns about the safety of the drug, which can cause mutations in bacteria. While this does not necessarily mean that it will do the same in humans, certain mutagenic drugs may increase the risk of developing cancer.

Ridgeback and Merck claim that this risk is less with EIDD-2801 because it is intended to be administered to patients for a short period – only five days – but Merck will need to perform carcinogenicity studies to satisfy medical regulatory authorities.

Rick Bright, a former government scientist who has become a whistleblower, previously said he faced political pressure to give government funding to the Holmans, but resisted because he was concerned about the safety of the drug.

Dr. Bright’s lawyer Lisa Banks told the Financial Times that he had been “under significant pressure to depart from the scientific and contractual review processes.” But she also added that her views on the potential dangers of the EIDD-2801 had changed after the success of the first phase of the trial.

“He is encouraged to see that the drug has now been evaluated in human clinical studies and that Merck has found that the data supports the future development of the drug,” she said.

There is no doubt that if EIDD-2801 finally succeeds, it will become a best-selling drug with the ability to slow the progress of the coronavirus, and potentially future pandemics.

In a recent note, analysts at Morgan Stanley said that investors “underestimated” the drug, adding, “[It] has a potential for blockbuster if successful. Covid-19 patients may take this [tablet] after the initial diagnosis to reduce the severity and risk of the disease. ”

However, brutal drug development laws mean the odds are against EIDD-2801, and even Dr. Holman recognizes the challenges Ridgeback and Merck face.

“We went through the most risky part and. . . with better data than we hoped for, ”he said. ” [But] we know little precious [about Covid-19], so it’s very difficult to design and run clinical trials. This is the most difficult part. ”

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