6 ★ FINANCIAL TIMES Thursday 26 March 2020

DO N ATO PAO LO M A N C I N I— LO N D O N

H A N N A H KU C H L E R— N E W YO R K

Gilead Sciences has asked US regula-

torstorescind“orphandrug”statusfor

its potential coronavirus treatment,

after it was criticised by activists for

abusing a process reserved for medi-

cinesforrarediseases.

Gilead’s U-turn on remdesivir comes

just two days after it disclosed that it had

been granted the status by the Food and

Drug Administration.

The company said yesterday that it

was waiving all benefits of the status,

which include significant tax incentives

and control over prices for at least seven

years in a de facto monopoly.

On Tuesday, the Financial Times

reported that activists had slammed the

designation, calling it “morbid calculus”

in the face of a the pandemic.

Orphan drugs are intended for dis-

eases affecting up to 200,000 people in

the US. Nearly 60,000 are infected with

coronavirus in the US, but the number is

likely to be an underestimate. Globally,

more than 436,000 people have been

infected.

“Gilead is confident that it can main-

tain an expedited timeline in seeking

regulatory review of remdesivir, with-

out the orphan drug designation,” the

company said.

Activists had criticised the move for

orphan status, which was disclosed

hours after the drugmaker said it would

be limiting some of its compassionate-

use supplies.

“Gilead acknowledged it did not file

for orphan status until early March,

after it was clear it was a pandemic,” said

Jamie Love, founder of intellectual

property advocacy group Knowledge

Ecology International.

“Gilead’s decision can fix one prob-

lem, but we don’t know what other

drugs will qualify for orphan status. The

FDA made the mistake, and the FDA

procedures need to be fixed,” he added.

Many analysts believe remdesivir,

originally developed to treat Ebola, is

one of the best bets for treating Cov-

id-19. Studies in animals have shown it is

successful against other coronaviruses.

Data from a small study using it to

treat Covid-19 patients in China is

expected to be released in the coming

weeks. Large trials of hundreds of

patients have been started by the

World Health Organization and the US

National Institute of Health, among

others.

Gilead bows

to pressure

over potential

virus drug

L AU R A N O O N A N A N D DAV I D C R OW
N E W YO R K

Frenzied trading around the coronavi-
rus crisis helped the world’s biggest
investment banks boost markets reve-
nues by as much as 30 per cent in the
first quarter, the Financial Times has
been told.
Traders said the past few weeks —
when Treasury yields dipped to record
lows and equity markets were repeat-
edly suspended for breaching their daily
price movement limits — have been
some of the busiest they have seen, with
some desks handling more trades than
in the financial crisis.
“We are looking at at least a 20-30 per

cent increase across the 12 [biggest]
banks in global markets across equities
and fixed income [sales and trading],”
said Amrit Shahani, research director at
Coalition, a leading data source on
investment bank revenue.
That is better than public guidance so
far. Mark Mason, Citigroup’s chief finan-
cial officer said on March 11 that its first-
quarter trading revenues would be up in
the “mid single-digit range”, while Dan-
iel Pinto, JPMorgan Chase’s investment
bank boss, offered a similar forecast on
February 25. One person at a European
bank said Citi’s numbers were probably
5-10 percentage points higher than Mr
Mason suggested.
The biggest rises are expected in equi-
ties. An average of 9.3bn shares changed
hands every day on US stock markets in
February, the highest level of activity

since December 2018, according to data

from Sifma, a trade association, and

market swings in March have been even

more ferocious. One big US bank said

that it was regularly putting through

twice its usual daily volumes in its cash

equity trading division.

“Equity volumes have been off the

charts and the trading firms’ equity

trading revenues will reflect the

strength,” said Gerard Cassidy, analyst

at RBC, who has increased his first-

quarter trading revenue forecasts for

Bank of America, Citi, Goldman Sachs,

JPMorgan and Morgan Stanley.

The year-on-year growth in equities

revenues will be flattered by a poor first

quarter for the business in 2019, where

banks posted declines of between 14 per

cent (JPMorgan) and 24 per cent (Citi).

The trading boom is at odds with the

sharp fall expected in investment bank-

ing revenues, as fees from merger and

acquisition activity and initial public

offerings dries up amid uncertainty

about the depth of the economic down-

turn caused by coronavirus.

Banks’ core lending businesses will

also take collateral damage as newly

unemployed people and closed busi-

nesses take advantage of coronavirus

payment holidays and later default. Big

cuts to interest rates to stimulate the

economy will also hit bank profitability.

The KBW Banks index of US bank

shares has nearly halved this year.

Even in the bright spot of equities

trading, some believe that the reprieve

from coronavirus misery could be tem-

porary. “Ultimately if the world delever-

ages you will get into the deadly calm

after the storm,” said an equities boss at

a large US bank. “People will not want to

do anything.”

Additional reporting by Philip Stafford and

Stephen Morris in London

Investment

bank revenues

soar on back of

hectic trading

3 Churn boosts quarterly income 30%

3 Largest increases seen in equities

‘We are looking at at least a

20-30 per cent increase

across the 12 [biggest]

banks in global markets’

Jonathan GuthrieThe world’s combined $4.5tn virus-fighting rescue dispels private capital’s delusions of autonomyyOPINION

JA M I E S M Y T H— SY D N E Y

Qantas Airways has raised A$1.05bn

($633m), one of the first successful

private debt raisings by an airline

since countries around the world

began shutting their borders against

coronavirus.

The 10-year loan advanced by a con-

sortium of domestic and interna-

tional banks will bolster the airline’s

balance sheet. It is secured against

part of the Australian carrier’s fleet at

an interest rate of 2.75 per cent.

The debt has been raised amid

warnings by the a irline industry that

up to half the world’s carriers are at

risk of bankruptcy because of the

coronavirus crisis.

“Investors are making the call that

Qantas has enough liquidity to get

through the crisis,” said Blake Hen-

ricks, portfolio manager at Firetrail

Investments, which owns shares in

Qantas. “They got an interest rate

lower than your typical home loan at a

time when much of the airline indus-

try is uninvestable.”

Shares in Qantas closed up 20 per

cent yesterday on the ASX, the Aus-

tralian Securities Exchange, which

gained 5.5 per cent.

Iata, the industry trade body, has

warned that airlines face a $250bn

loss of revenue this year. Credit mar-

kets have tightened, with rating agen-

cies downgrading airlines. S&P cut

Delta Air Lines debt to junk on Tues-

day, while last week Moody’s placed

Qantas’s Baa2 credit rating under

review for possible downgrade.

Qantas maintains that it has suffi-

cient cash to ride out the crisis and

will not need a government bailout.

“Everything we’re doing at the

moment is focused on guaranteeing

the long-term future of the national

carrier, including making sure our

people have jobs to return to when

we have work for them again,” said

Alan Joyce, Qantas’s chief executive.

The airline has net debt of A$5.1bn,

and no large debt maturities until

June 2021. The extra A$1.05bn in

funding, which contains no financial

covenants, increases Qantas’s cash

balance to A$2.95bn, with an addi-

tional A$1bn undrawn facility

remaining available.

Unlike many global airlines, Qantas

has bought at least half its planes out-

right, which means it has a further

A$3.5bn in unencumbered assets. In

contrast to Qantas, the New Zealand

government advanced a NZ$900m

(US$525m) standby loan facility to

Air New Zealand last week at interest

rates of between 7 and 9 per cent.

Chris Wyke, joint chief executive of

Moelis Australia, described the debt

raising by Qantas as positive, adding:

“It’s good to see confidence in quality

companies emerging the other side of

the pandemic.”

Additional reporting by Peggy Hollinger

Lifted upQantas leads the way for jittery

airlines by raising A$1bn in private debt

T

he coronavirus pandemic

has caused some unusual

and apparently contradic-

tory things to start happen-

ing with money in Germany.

Cash withdrawals more than doubled

in the country a week ago as its citizens

showed their natural instinct to hoard

banknotes in a crisis.

Yet at the same time German super-

markets and chemists have started ask-

ing people to pay by card — a b ig shift in

a country where three-quarters of

transactions are in cash. Meanwhile,

contactless payment usage has jumped.

Two conflicting factors appear to be at

work here. One is a worry that people

could lose access to money because of

the social lockdowns and financial tur-

moil stemming from the pandemic. The

other is a more primal fear that cash

itself could be transmitting the virus.

So far the first seems unjustified.

Even if the medical and e conomic crisis

turnsinto a banking meltdown, most

deposits should be safe thanks to

national insurance schemes. While Ger-

man banks are temporarily closing

branches, their ATMs will stay open.

It is less clear whether the second is a

genuine concern. Can people get the

virus from cash? This seems a fair ques-

tion. Yet it is one for which it is surpris-

ingly hard to find a definitive answer.

“The virus could be present on money

Banknote virus fears will not stop German habit of hoarding cash

but likely for short times — hours — and

would require direct deposit from an

infected person by hand,” says Gary

McLean, professor of molecular immu-

nology at London Metropolitan Univer-

sity, adding that the “virus would not

last on cash for extended periods” of

more than a few days.

“It would also depend on the number

of viral particles released from the

infected person and how [they were

released],” says Professor McLean. “A

sneeze on to a hand followed by imme-

diate handling of cash would be the

most likely route of transmission.”

Little research has been done on how

long coronavirus survives on ban-

knotes. One widely quoted study pub-

lished in the New England Journal of

Medicine found the virus can live for

two to three days on plastic and stainless

steel, 24 hours on

cardboard and four

hours on copper.

However, a 2008

Swiss study in the

Applied and Envi-

ronmental Micro-

biology journal

found the influ-

enza virus could survive up to 17 days on

cash, when deposited “in the presence

of respiratory mucus”.

Jürgen Haas, head of infection medi-

cine at the University of Edinburgh, says

he is surprised at how long coronavirus

survives on different materials, but it

depends on temperature, humidity and

the surface’s texture. “There is a certainty

that the virus could be transmitted by

cash,” he adds. “That’s why you should

wash your hands after handling it.”

Already, a growing number of retailers

are taking precautions. Some British

supermarkets — like their German coun-

terparts — are urging customers to pay by

card rather than cash, as are US delivery

services such as Grubhub. A Russian con-

sumer watchdog has urged shoppers and

retailers to switch, while the UK Finance

trade body has raised the limit on con-

tactless payments to £45.

Central banks are also waking up to

the risks. The US Federal Reserve has

been holding dollars it receives from

Asia for seven to 10 days before putting

them back into circulation mirroring

similar measures by central banks in

China, South Korea and Poland.

The European Central Bank, however,

is waiting for the results of a study by the

University of Glasgow and European

Centre of Disease Prevention and Con-

trol in Sweden on the risks of banknotes

transmitting Covid-19 before deciding

whether to take action.

The ECB said: “People make on aver-

age 1.2 cash payments per day in the

euro area, so it is more likely that they

get infected by other objects which they

touch more frequently.”

Germany’s Bundesbank seems

relaxed about the issue. At a press con-

ference last week, René Gottschalk, a

virologist at the Frankfurt university

clinic and head of the Frankfurt health

office, said: “If the virus were transmit-

ted via banknotes or table tops, the

number of cases would be higher.”

When German chancellor Angela

Merkel was pictured in a supermarket,

social media users were surprised she

paid by card rather than cash for her

shopping, including four bottles of wine.

Bundesbank board member Johannes

Beermann said last week: “The cash will

not run out in Germany.”

Fear of coronavirus may have boosted

use of contactless payments in Ger-

many. But it seems unlikely to break the

deep attachment to cash, as underlined

by the recent hoarding of banknotes.

[email protected]

INSIDE BUSINESS

EUROPE

Martin

Arnold

‘A sneeze on to a hand

followed by immediate

handling of cash would

be the most likely route

of transmission’

A maintenance depot at Brisbane airport: Qantas insists it will not need a public bailout— Darren England/EPA-EFE/Shutterstock

MARCH 26 2020 Section:Companies Time: 25/3/2020 - 18: 53 User: peter.bailey Page Name: Comp&Mkts1-0004, Part,Page,Edition: USA, 6, 1