Buy Gilead Stock Because Remdesivir Is a Covid-19 Game-Changer

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Gilead (NASDAQ:GILD) stock popped in late April on two pieces of good news which together implied that the the biopharmaceutical giant’s potential novel coronavirus pandemic treatment, remdesivir, actually works.

gild stock: Buy Gilead Stock Because Remdesivir Is a Covid-19 Game-Changer

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First, Gilead said it is aware of positive data coming out of a late-stage study on remdesivir conducted by the National Institute of Allergy and Infectious Diseases (NIAID). “We understand that the trial has met its primary endpoint and that NIAID will provide detailed information at an upcoming briefing,” the company said.

Basically, Gilead is saying that the NIAID study has concluded that remdesivir works in treating Covid-19. We will get confirmation of that soon, from NIAID itself.

Second, Gilead separately announced positive results for its own Phase 3 study on remdesivir. Specifically, the results showed that the five-day clinical treatment of remdesivir produced similar clinical outcomes as the 10-day treatment of remdesivir (good news), and that 60% of patients on the five-day treatment went from severe Covid-19 conditions, to being fully recovered and discharged within two weeks (better news).

GILD stock popped on the news. As of this writing, shares are up more than 4%.

Is this a reason to buy Gilead stock? Absolutely. Here’s why.

The Nightmare is Ending

CNBC’s Jim Cramer put it best. “What I regard this as is the beginning of the end of the true nightmare,” Cramer said on CNBC shortly after the positive Gilead results were published.

To be more specific, more good news that Gilead’s antiviral remdesivir treatment works against Covid-19 is part of a broader narrative that the coronavirus nightmare is ending.

Several recent antibody tests — from Stanford and Santa Clara, USC and Los Angeles, New York, Germany, and the Netherlands, to name a few — have shown that far more people have Covid-19 than what is being reported. These studies imply infection rates between 3% and 20% of the entire population. If so, then the true death rate of Covid-19 is probably lower than previously thought, with my  own estimates pegging it at or below 0.3%.

Meanwhile, data from four separate studies has shown that Gilead’s remdesivir works in treating Covid-19: the recent Phase 3 trial, leaked data from a University of Chicago Medicine clinical trial, a New England Journal of Medicine study, and a U.S. National Institute of Health study. If the NIAID study has come to similar conclusions, then there are five data sets which support the idea that remdesivir works.

That’s likely enough data for the FDA to approve emergency use of remdesivir for Covid-19 patients. Widespread distribution of remdesivir could save lives, and plunge the Covid-19 death rate down to ~0.1% — or roughly in line with that of the seasonal flu.

Big picture: the nightmare may be over.

That doesn’t mean this virus won’t keep spreading after we re-open the economy. Or that more people won’t die. It will keep spreading. More people will die. But, we now have the tools to appropriately fight this virus, meaning that we have the power to mitigate tragic outcomes.

Time to Buy Gilead Stock?

I’ve been pounding on the table about Gilead stock and its potential Covid-19 treatment upside for a long time. The writing has been on the wall that remdesivir has the most potential among possible coronavirus treatments to actually work at scale.

Last week, I even said buy the dip after the stock plunged on a Financial Times report which said that remdesivir flopped in its first clinical trial. Upon close inspection, I found that the leaked data Financial Times reported on wasn’t very robust or complete. Instead, the weight of evidence continued to suggest that remdesivir does work. So the weight of evidence said buy the dip in GILD stock.

Now, Gilead stock is up 28% year-to-date — and I say stick with the rally.

Yes, the revenue potential of remdesivir is very murky. But the sentiment potential isn’t. More positive remdesivir data over the next few weeks, followed by FDA emergency use approval, will tremendously lift investor spirits, and push GILD stock towards $90.

That rally may not be sustainable because, again, we don’t really know what the revenue potential of remdesivir is at this point in time. However, animal spirits and euphoria will take over GILD stock so long as the remdesivir treatment news flow remains positive. That euphoria will keep this stock on a winning path.

Bottom Line on GILD Stock

Gilead stock has been one of my favorite “coronavirus stocks” to buy over the past few months. Today, on the heels on positive results for its Covid-19 treatment remdesivir, I remain positive on the stock.

Fundamentally, shares may be overvalued. Optically, they are not. A slew of positive remdesivir-related news over the next few weeks — including more positive trial data and potential FDA emergency use approval — will boost GILD stock.

So don’t fade this rally. Stick with it. Sell only after all the remdesivir hype fades.

Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been rated one of the world’s top stock pickers by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, he was long GILD. 


Article printed from InvestorPlace Media, https://investorplace.com/2020/04/buy-gilead-stock-because-remdesivir-is-a-covid-19-game-changer/.

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