New drug that could treat COVID-19 has been licensed to Merck by a hedge fund manager for a huge profit– with little risk and no actual study except to commission human safety research

echidna (hedgehog) image courtesy of pixabay.com

This article in the Washington Post from June 11 describes the machinations of a hedge fund investor who bought the rights to a drug developed by Emory University with $16 million in taxpayer funds in March.  His company, Ridgeback Biotherapeutics, turned around and sold it to Merck for a big profit (the exact amount is not public) in two months, after he commissioned a human safety study– which he tried to get the US government to pay for.  His company has lots of capital but no actual medical staff nor research infrastructure.

According to the article, “That wager paid off with extraordinary speed in May when, just two months after acquiring the antiviral therapy called EIDD-2801 from Emory, Ridgeback sold exclusive worldwide rights to drug giant Merck.”  The hedge fund manager formed a company, Ridgeback Biotherapeutics, which purchased the rights to the drug from Emory on March 19.  “Ridgeback launched a human safety trial of the drug in the United Kingdom and transferred rights to Merck in late May.”  But first, the company tried to get hundreds of millions of dollars in government grants to develop the drug.  The company was the subject of a whistleblower complaint by Rick Bright, former director of the Biomedical Advanced Research and Development Authority.

It seems that Ridgeback happened to find out that the drug had been thoroughly studied in preclinical work, found it to be available, and snapped it up for an undisclosed sum.  It is unknown how the drug came to be on the market for purchase by Ridgeback nor how the owner learned that it would be a major advance for coronavirus therapeutics.

The hedge fund manager is Wayne Holman, and his wife is Wendy Holman.  Wayne Holman has a medical education but his career lies elsewhere:

Wayne Holman, who holds a medical degree from New York University, is a hedge-fund manager with a long track record of investing in pharmaceutical stocks. He founded his fund Ridgeback Capital Management in 2006. Wendy Holman, chief executive of Ridgeback Biotherapeutics, is a former investment manager who was named to President Trump’s advisory council on HIV/AIDS in 2019.

Emory University received a $30 million grant five years ago to develop the drug, but spent just over half the money on preclinical research.  EIDD-2801 is an orally administered drug which is active against Ebola and many other coronaviruses.  It has a similar mechanism of action to remdesivir.  I previously featured this drug in a blog post on May 31 and it is quite promising.  Remdesivir was also developed with public money– $70 million according to the Washington Post article.  The big question to taxpayers is: how much profit will GIlead and Merck garner from sales of these drugs, and how much will they cost to consumers?  Those with public (“socialist”) feelings will want to know why taxpayers should pay for development of a drug that turns out to be a big moneymaker for private companies– shouldn’t the profits as well as the costs be socialized?