Even though Gilead Sciences’s (NASDAQ: GIlD) stock has dropped slightly in 2018, GILD stock is still more volatile than ever. But as investors wait for Gilead to report its earnings on Oct. 25, they will appreciate the company’s stable business which gives them peace of mind.

Gilead’s earnings report may shed some light on the progress of its Kite Pharma acquisition. Kite, which develops targeted treatments for cancer, continues to show promise.

Earlier this month, Gilead’s Kite Pharma reached an agreement to collaborate with HiFiBiO Therapeutics. The companies will jointly research therapeutic antibiodies using single B cell screening and analysis. The goal is to develop neoantigen-reactive T cell receptors that target various cancers, including solid tumors.

In August 2017, GILD bought Kite Pharma for a massive price tag of $11.9 billion. Given the huge investment, shareholders are looking for favorable clinical results sooner rather than later. While it takes a great deal of time to develop drugs, the latest collaboration could speed things up, benefiting both firms. HiFiBiO, which will get $10 million upfront and additional payments when milestones are met, gets much-needed cash that will enable it to continue its R&D activities. Meanwhile, Gilead moves one more step closer to getting positive results from its Kite unit.

New Products Will Lift GILD Stock

Gilead received permission from the EU to market  Yescarta for the treatment of relapsed or refractory DCBCL (diffuse large B-cell lymphoma) and PMBCL (primary mediastinal large B-cell lymphoma). The approval allows the company to offer the therapy in 28 European countries. Since this drug treats patients who have no other recourse, the treatment could meaningfully boost the company’s revenue and GILD stock. In a statement reported on the company’s press release, Professor Gilles Salles said:

“Many patients with these aggressive forms of non-Hodgkin lymphoma who have not responded to or failed commonly available treatment options have a very poor prognosis and there is an urgent need for new therapies.”

GILD worked hard to lay the groundwork for the drug’s approval. Now it has to convince insurance companies to cover the drug.

Already, the company has a year of data that illustrates the drug’s efficacy, and soon it will have two years of data. Gilead also has data on subjects with indolent and mantle cell lymphoma who took the drug. Yescarta may eventually be approved as a treatment for that disease, further increasing the potential revenue that could be generated by the drug.

Treatment for Liver Disease

In the area of liver cirrhosis, Gilead is conducting Phase 2 and Phase 3 trials involving subjects with pre-cirrhosis. GILD believes that there are 400,000 people who have been diagnosed with the type of pre-cirrhosis that could potentially be alleviated by its drugs

Already, in tests on animals, Gilead proved that a combination of its FXR inhibitor, ACC inhibitor, and selonsertib prevents the progression of fibrosis (the medical term for scarring of the liver which can lead to cirrhosis). It will eventually obtain clinical data on the patients enrolled in the study.

HIV Drug Still Growing

There has been constant skepticism about the strength of Gilead’s HIV drug business. But that business can expand because many patients still need therapy. Gilead has developed Biktarvy, which the company has called a best-in-class pill for HIV. Beyond this product, GILD is developing a long-acting injectable as an alternate form of treatment. The company hopes that the infrequent injections would both treat HIV and prevent at-risk people from contracting it while conveniently cutting down how often they must see the doctor.

Bottom Line on GILD Stock

With a forward price-earnings ratio of around 11 times, Gilead stock is trading as though GILD is not an innovative company and does not have any promising drugs in the pipeline. That is clearly incorrect. As its new products roll out, Gilead’s earnings growth may meaningfully accelerate.

As of this writing, the author does not own shares of any of the companies mentioned.