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Novartis Hopes to Have Another COVID Therapy on the Way

Novartis (NYSE: NVS) and Molecular Partners (NASDAQ: MOLN) recently announced positive results from a phase 2 study of their experimental COVID-19 therapy ensovibep. In this Motley Fool Live video, recorded on Jan. 12, Fool.com contributors Keith Speights and Brian Orelli discuss the prospects for this COVID-19 candidate.

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Keith Speights: We've been talking about some companies that are heavily involved in COVID-19, but not necessarily about COVID-19 stories for those companies. But there was at least one significant COVID-19 story this week, Novartis and Molecular Partners announced positive results from a Phase 2 study of an intravenous COVID-19 antiviral therapy called ensovibep. What's your take on this news? Could ensovibep still have a significant market opportunity at this point?

Brian Orelli: Yeah. The drug seemed like it was destined for the trash bin after it failed the futility analysis as part of an NIH-sponsored study. But that study, I think it's designed to fail fast. Maybe the size of the clinical trial wasn't large, that part of the clinical trial. They're testing a whole bunch of different drugs in this clinical trial.

But a phase 2 clinical trial in nonhospitalized COVID-19 patients just read out this week, and the drug reduced the amount of virus over eight days. That was the primary endpoint of the trial. That certainly suggests that the drug is working. But what we really care about is clinical endpoints.

Fortunately, the company also measured outcomes as a secondary endpoint. The drug reduced the risk of hospitalizations and/or ER visits or death by 78 percent. There were 6% of the patients in the placebo that had one of those events versus 1.3% of patients got the drug. Just looking at hospitalizations or deaths. Taking out the ER visits, the reduction improves to 87 percent.

Novartis had an option to license a drug, which it smartly decided to do after this phase 2 data came out. I went back to the October 2020 deal between the two companies, and it covered two different drug candidates. There were milestone payments of 165 million and 22 percent royalties.

Based on the phase 2 data alone, Novartis plans to file an Emergency Use Authorization with the FDA. I mean, I think especially since Pfizer's supply constrained right now with its drug and Merck's drug didn't look like it was all that great at lowering events by like about 30 percent in its final data, so I think this new drug can definitely find a place in the market for sure.

Brian Orelli, PhD has no position in any of the stocks mentioned. Keith Speights owns Pfizer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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