Shares of Gilead (NASDAQ:GILD) plunged on a Financial Times report which implied that the company’s potential novel coronavirus treatment, remdesivir, flopped in its first randomized clinical trial. As of this writing, GILD stock was down more than 6% on the news.
But investors shouldn’t read too much into this Financial Times report, which cites accidentally published documents from the World Health Organization. After all, the Chinese study which the documents refer to had shortcomings. It was under-enrolled. It was incomplete. And it did not produce meaningful or conclusive results.
Although the study does illuminate that we really don’t know whether or not remdesivir works in treating Covid-19, the weight of evidence today continues to suggest that it does.
As such, buying the dip in GILD stock here and now makes sense.
Now, I wouldn’t go all in. There’s a lot of uncertainty surrounding remdesivir and the stock at the moment. But I do expect robust clinical trial data to be released in May. That data should be positive, and corroborate positive early findings about remdesivir.
If so, then today’s dip sets up Gilead stock for a big May.
Inconclusive Results
The Financial Times report cites information from documents about a Chinese clinical trial of remdesivir which were accidentally published online by the World Health Organization. According to those documents, remdesivir did not improve Covid-19 patient outcomes in the study.
That’s not good news. But the results which the study produced are not meaningful or conclusive.
That’s because, as previously said, the study had its share of issues. It was under-enrolled, and therefore terminated early. Because it was terminated early, it did not produce statistically meaningful or conclusive results.
As such, in the grand scheme of things, the report is a negative finding. But it should be taken with a grain of salt.
Positive Early Findings
Although we do not know whether or not remdesivir works in treating Covid-19, the weight of evidence today suggests that it does.
Thus far, results from four preliminary studies and trials have been either released or leaked. One of those studies — the incomplete Chinese clinical trial cited in the FT report — showed that remdesivir didn’t improve patient outcomes. Three of the studies, however, showed that it did.
Leaked clinical trial data from the University of Chicago Medicine found that remdesivir meaningfully improved severe Covid-19 patient outcomes. Meanwhile, in an unofficial trial which administered remdesivir on a compassionate use basis, the New England Journal of Medicine found that 68% of patients improved while on the drug. Further, the U.S. National Institutes of Health recently found that the drug was effective in treating Covid-19 in monkeys.
None of this data is robust. It’s far from perfect. But it’s the best we have today. Importantly, among these inconclusive results, it’s three to one, in favor of remdesivir working against Covid-19.
Robust Data Coming Soon
At present, official clinical trials of remdesivir are taking place all across the globe. In May, robust data from all of these trials will be published. This data will either confirm or negate the idea that remdesivir works in treating Covid-19 patients.
Given that the weight of evidence today suggests that it does, I think there is reason to be cautiously optimistic that the May clinical data will confirm remdesivir as a potential Covid-19 treatment. that should act as a potential upward catalyst for GILD stock.
If so, then now is the time to buy the dip. Gilead will bounce around until clinical data is released. When that data is released, it will either make or break this stock. Positive data will send the stock flying. Negative data will send it reeling.
If, like me, you are cautiously optimistic that the data will be positive, then buying GILD stock here on recent weakness ahead of May clinical data is the right move.
Bottom Line on GILD Stock
At this point in time, Gilead is all about remdesivir. If remdesivir works, the stock will pop to $90. If remdesivir doesn’t work, you could see shares drop to $60.
While it’s still largely a black box, the weight of evidence today suggests remdesivir does work. As such, the weight of evidence suggests that GILD stock will pop to $90 in May.
Ahead of that big move higher, buying the dip ibelow $70 makes a ton of sense.
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 did not hold a position in any of the aforementioned securities, but may initiate a long position in GILD within the next 72 hours.
