Gilead’s remdesivir drug is being used in a half-dozen clinical trials in the U.S. Doctors in Wuhan, China, where the pandemic originated, are doing two Phase 3 trials with more than 800 patients. The results of those tests should come sometime this month.
The World Health Organization has touted remdesivir as one of the best possibilities to treat the coronavirus. And should remdesivir prove to be effective, GILD stock could skyrocket this year.
What Is Remdesivir?
First, let me explain remdesivir. Simply put, it is an experimental antiviral drug developed by Gilead to treat Ebola patients. Ebola first surfaced in the 1970s and was the subject of a large outbreak in West Africa in the mid-2010s.
Gilead pushed remdesivir through clinical trials then as an Ebola treatment, and then again when another Ebola epidemic surfaced in 2018.
The drug is administered intravenously, and is designed to block viral replication — it prevents a virus from using the body’s natural cellular machinery to replicate itself.
Clinical data shows that remdesivir is effective against the MERS and SARS viruses, which share enough similarities to the coronavirus that researches suspect it could be effective there, too.
In addition to the studies in China, remdesivir was granted “expanded access” status to doctors in New York, New Jersey and Louisiana for severely ill patients.
Gilead is also conducting two Phase 3 studies of its own in Asia. It hopes to have results from those studies by the end of April.
Gilead’s chairman and CEO, Daniel O’Day, issued a statement over the weekend:
“We know from the heartbreaking letters we receive, the images we see in the news and the all-too-bleak statistics that the urgency to find broad, effective solutions becomes more intense each day. In the ways we believe it is appropriate for Gilead to play a role today — primarily through clinical trials, as well as expanded access and compassionate use — we are doing everything it takes to meet our significant responsibility with remdesivir.”
In all, Gilead says it has treated more than 1,700 patients with remdesivir.
How Remdesivir Can Help GILD Stock
Gilead has been increasing production of remdesivir since January in hopes of providing a treatment. And O’Day says the company is ready to spend “hundreds of millions of dollars” should clinical trials be successful.
Despite those hopes, analysts aren’t “all in” just yet.
“It is too early to place much confidence in the compound’s likely activity against this virus, and even if it does prove active, we would expect relatively modest activity in larger populations, rather than an immediate and potent response such as could be seen with an antibacterial,” analysts at SVB Leerink wrote in a note.
Bank of America analyst Geoff Meacham expects remdesivir to offer one-time revenue of about $2.5 billion to GILD stock. He’s clear to say it won’t be a long-term revenue driver. The drug “offers little lasting, meaningful” upside to the company’s bottom line because of the temporary nature of pandemics.
Even so, investors are enjoying the short-term ride. GILD stock is up 20% so far this year, with most of the gains coming in March. The Dow Jones Industrial Average, meanwhile is down 22% in the same period.
Plus, Gilead’s acquisition of Forty Seven (NASDAQ:FTSV) should close sometime in the second quarter.
The Bottom Line on Gilead Sciences
Despite the recent move in stock price, GILD stock remains extremely affordable. The forward price-earnings ratio of 11.4 is attractive, as is the price-book ratio of 4.1. And GILD stock pays a 3.5% dividend, which you can reinvest back into the stock to help turbo-charge your investment.
GILD stock holds a strong A rating in my Portfolio Grader. It has a solid B rating in my Dividend Grader tool, making it a solid dividend stock, too.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.