After months of clinical trials, Gilead (NASDAQ:GILD) has finally gotten the all clear. As of Thursday afternoon, its remdesivir treatment for the novel coronavirus received full approval from the U.S. Food and Drug Administration. Gilead stock is shooting higher as a result.
This is truly massive news. The antiviral drug entered the scene early on, offering investors hope that there would be an effective treatment for the coronavirus. Then, contradicting clinical results and pricing concerns took GILD stock out of the spotlight. It looks like that is all changing for the better on Thursday.
According to the FDA, remdesivir, also known as Veklury, improves the time to recovery in hospitalized patients by five days. Importantly, it is the first and only drug to receive full approval from the FDA for use against the novel coronavirus.
Investors can likely imagine why this matters, but here is a breakdown. Part of the issue with the second wave is that, months into Operation Warp Speed, there is still no vaccine or treatment. Individuals want to know that if they get sick, there is a good chance of recovery. Plus, with the second wave of the virus ramping up alongside flu season, we could see strain on the hospitals. Remdesivir offers a chance to combat crowded hospitals, high case numbers and coronavirus fears.
How exactly does it work? Once designed to fight Ebola, the antiviral drug actually stops the virus cells from replicating. This can improve patient outcomes and get individuals out of the hospital in shorter timeframes.
Unsurprisingly, Gilead stock is popping 4.3% in after-hours trading.
Gilead Stock Pops on Remdesivir News
There is another big reason why this matters. Remember when President Donald Trump tested positive for the coronavirus and spent a few days at Walter Reed Medical Center? While he was there, he infamously received an antibody treatment from Regeneron (NASDAQ:REGN). However, the president also received remdesivir. At the time, the antiviral was being administered under the emergency-use authorization program.
Trump has raved about the pharmaceutical and biotech companies that are leading the fight against the pandemic. Before the vice presidential debate, he touted the success of Regeneron and peer Eli Lilly (NYSE:LLY). With the last presidential debate in just a few hours, and the coronavirus once again a debate topic, could he further give support to Gilead? The stock is already climbing, but federal support, perhaps an initiative that would make remdesivir widely available, could send shares even higher.
Remdesivir is not a perfect drug. Even with the FDA approval, there is still little insight as to how it will help children or pregnant women, just to name two demographics. Plus, the treatment focuses more on improving overall time to recovery, not improving mortality rates. This means the door is still open for other drugs, like those from Regeneron and Eli Lilly, to find success.
However, as the second wave picks up, investors will likely celebrate what they can get. The news tonight from the FDA is a big boost to Gilead stock.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer for InvestorPlace.com.