Data released from the National Institute of Health’s study of Gilead‘s (NASDAQ:GILD) treatment for the novel coronavirus, remdesivir, was quite positive. Indeed, a South Korean doctor who was involved in carrying out the study said that the reduction of mortality seen in novel coronavirus patients taking the drug was “meaningful.” That statement alone makes GILD stock very attractive at its current levels.
Further, the U.K. recently approved the drug, making EU approval all but inevitable, and the recent, large, rapid drop of U.S. coronavirus deaths indicates that the drug is working.
Let’s examine these points in more detail.
The Mortality Reduction Was ‘Meaningful’
In a previous column on Gilead, published on May 4, I contended that even though the NIH wrote that its study only ” suggested a survival benefit” for remdesivir, the lower fatality rate among patients taking the drug “seems quite meaningful, although it’s not technically statistically significant.”
When I was conducting research for this column, I discovered that a South Korean professor who helped conduct the NIH study, had a similar opinion, according to Korea JoongAng Daily.
Oh Myoung-don, professor of internal medicine at Seoul National University Hospital, called remdesivir’s reduction in mortality “quite meaningful.” He said that if the trial had been continued another week or two beyond its 14-day duration, the reduction in mortality would probably have been “more meaningful.”
Interestingly, Oh said “once [remdesivir] is formally approved, many patients around the world would benefit, and it is highly likely that the supply won’t keep up with the demand.” He also said that South Korea’s government is talking about buying the drug.
Other Positive Catalysts
The U.S. government first began distributing remdesivir at the beginning of May, but many hospitals did not start receiving the drug until the middle of the month. Since May 17, the number of daily U.S. deaths from the coronavirus has dropped tremendously versus prior levels.
Whereas in April, it was common for the country’s daily deaths to approach or even meaningfully exceed 2,000, the highest total from May 17 until May 27 was 1,552 on May 19. From May 17 until May 27, there were four days of fewer than 1,000 deaths and on one more day ( May 18), 1,003 people died from the coronavirus.
In all of April, there were no days during which fewer than 1,000 Americans died from the virus.
And the data suggests that the decline of deaths can’t be entirely explained by the relatively small reduction of cases that’s occurred in recent weeks. In the first 15 days of May, there was only one day (May 1) in which over 30,000 new cases were reported, whereas there were several such days in the second half of April.
But in the first 15 days of May, there were nine days in which 25,000 or more new cases were reported and only one day in which fewer than 20,000 new cases were reported. During most of the second half of April, daily new cases came in at 25,000-30,000. So, the drop in new cases at the beginning of May doesn’t entirely explain the huge decline of new deaths in the second half of the month.
On May 26, the U.K. announced that it had approved remdesivir. Since the U.K. is very close geographically and culturally to the EU, it’s very hard for me to envision a scenario in which the EU will not approve the drug after the U.K. did so. Of course, the EU is considered a major epicenter of the pandemic.
The Bottom Line on GILD Stock
Signs continue to mount that remdesivir is a highly effective treatment for the coronavirus. As a result of these signals, I am more convinced that remdesivir will move the needle for GILD stock and recommend that medium-term and long-term investors buy the shares.
As of this writing, Larry Ramer owned shares of GILD stock. Larry Ramer has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been Lyft, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.