The initial tests are starting to come in for Gilead Sciences (NASDAQ:GILD) and its experimental treatment for the novel coronavirus, and the news is good for GILD stock.
Early indications show that Gilead’s remdesivir drug is performing well in clinical trials. Two-thirds of a small group of patients very ill with coronavirus showed improvement after taking remdesivir.
It’s a dose of good news that we all need during a pandemic that so far has killed nearly 130,000 around the world, including more than 26,000 in the U.S. Overall, there are more than two millions cases worldwide.
That said, I’ve been watching GILD stock and its remdesivir trials closely because I think the drug could be a game-changer for Gilead stock. And with that in mind, let’s take a closer look at GILD.
GILD Stock at a Glance
GILD stock is up more than 16% so far in 2020. Shares are trading amid high volatility as investors drink up any information they can find about possible coronavirus treatments.
On a typical day, about 21 million shares of GILD stock will change hands on Wall Street. However, there’s been many days this spring where that number was up to 30 million or more.
Moreover, GILD stock is trading at a reasonable trailing price-earnings ratio of 17.8. And it has a solid dividend yield of 3.6%, paying out at $2.72.
Fourth-quarter earnings were also a big dud for GILD stock. Gilead reported earnings per share of $1.30, missing analysts’ expectations of $1.67 per share. But that was before Gilead identified remdesivir as a possible coronavirus treatment, which quickly spread around the world.
Gilead developed remdesivir to treat Ebola, as well as MERS and SARS — which are both coronavirus strains with similarities to the strain that created today’s global pandemic. So, it appears this could be good for treating COVID-19.
GILD Stock and Remdesivir
Believe it or not, Gilead’s possible coronavirus treatment is flying a little under the radar. It doesn’t get promoted in President Donald Trump’s daily late-afternoon press briefings, as the commander-in-chief seems to prefer the malaria drug hydroxychloroquine.
However, in the scientific community, there’s hope that Gilead’s drug could be effective. The World Health Organization has touted remdesivir as one of the best possibilities to treat the coronavirus.
In fact, Evercore ISI analysts called the early results “a ray of hope” — and analyst Brian Abrahams of RBC agreed:
“The data are likely not sufficient to convince people that this could substantially end the crisis, but enough to believe there is some chance remdesivir, along with other meds in development, could play a potential role helping somewhat blunt morbidity/mortality from the disease.”
Doctors in Wuhan, China — where the pandemic originated — are doing two Phase 3 trials with more than 800 patients, although it’s unclear if investors will see the data as at least one study ended early because of low enrollment.
Gilead is also conducting two Phase 3 studies of its own in Asia. And while it hoped to have results at the end of this month, the company now says the first readout will be available in late May. Also, remdesivir was granted “expanded access” status to doctors in New York, New Jersey and Louisiana for severely ill patients.
Additionally, chairman and CEO of Gilead Daniel O’Day says the company is prepared to spend “hundreds of millions of dollars” to manufacture remdesivir should the trials be successful.
The Bottom Line on GILD Stock
Remdesivir trials will be the biggest catalyst for GILD stock into the second quarter and beyond. Should trials that are due to be complete this spring continue to show effectiveness, expect remdesivir to become a household name.
GILD stock holds a “B” rating in my Portfolio Grader.
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.
