Gilead (NASDAQ:GILD) has rapidly become one of the pioneers when it comes to developing a treatment for the novel coronavirus. As a result, GILD stock has surged over 15% this year.
Over the course of the Covid-19 outbreak, plenty of contenders and pretenders have developed potential treatments for the virus. But Gilead’s remdesivir looks like one of the more credible options out there. Much of the gains of Gilead’s stock this year can be credited to the drug’s expected viability and its status as one of the coronavirus treatments that’s furthest along in clinical trials.
“Gilead has initiated two Phase 3 clinical studies to evaluate the safety and efficacy of remdesivir in adults diagnosed with COVID-19 following the U.S. Food and Drug Administration’s (FDA) rapid review and acceptance of Gilead’s investigational new drug (IND) filing,” according to the company.
Gilead may provide an update on those trials later this month. If the news is positive, GILD stock could rise considerably.
There Has Been Some Positive News
I wrote this column on Apr. 10 while the U.S. markets were closed for the Good Friday holiday. Midway through my writing, I discovered a press statement from Gilead with good news about remdesivir and its efficacy as a treatment for Covid-19.
“The majority of patients in this international cohort demonstrated clinical improvement and no new safety signals were identified with remdesivir treatment,” according to the company. “Compassionate use data have limitations and multiple Phase 3 studies are ongoing to determine the safety and efficacy of remdesivir for the treatment of COVID-19.”
The timing of Gilead’s announcement on remdesivir, which isn’t approved in any country, is interesting if for no other reason than that companies usually want to release such news on days when the markets are opened.
Even if the statement hits the wires after the market is closed, at least there would have been some after-hours activity to potentially propel the stock into the following day. But there was no trading at all on Apr. 10.
While Gilead acknowledges that there were limitations in the revealed data set and that more data from clinical studies of remdesivir are needed to draw strong scientific conclusions, the news will likely boost the stock in the near-term. Furthermore, additional remdesivir catalysts could be on the horizon.
“Gilead has multiple clinical trials underway for remdesivir with initial data expected in the coming weeks,” said Gilead Chief Medical Officer Merdad Parsey in the statement released by the company. “Our goal is to add to the growing body of evidence as quickly as possible to more fully evaluate the potential of remdesivir and, if appropriate, support broader use of this investigational drug.”
The Bottom Line on GILD Stock
Although the coronavirus is a new health threat, plenty of companies are developing treatments for it. But many of these companies present risk to investors because their performance will be based almost entirely on the performance of their coronavirus treatments.
Specifically, some companies working on Covid-19 therapies are halting work on the other drugs in their pipelines, while others have essentially no pipelines to speak of. That’s not the case with Gilead, and that’s good for the owners of GILD stock.
There is plenty of optimism about remdesivir baked into Gilead’s shares today, and any bad news about the drug would likely send the stock tumbling. But the company’s pipeline beyond Gilead is strong.
Including remdesivir, Gilead has at least five viral disease therapies in Phase 2 or 3 trials. In the inflammatory disease space, the company has eight Phase 2 or 3 trials cooking.
Gilead’s shares would drop if remdesivir flops, but the company’s strong pipeline could be a buffer against a large decline. As a result, the shares may be compelling for long-term investors.
Todd Shriber has been an InvestorPlace contributor since 2014. As of this writing, he did not hold a position in any of the aforementioned securities.
