Gilead Sciences (NASDAQ:GILD) made history last night. After months of clinical trials, international studies and everyday use of its antiviral drug remdesivir, it finally received full approval from the U.S. Food and Drug Administration. This is no doubt huge for Gilead stock, but what does it actually mean? Join InvestorPlace as we go in depth below.
Here are some of the most basic details. At the start of the pandemic, Gilead Sciences began repurposing remdesivir, an antiviral treatment it developed originally for Ebola. Then, because of early success, it received emergency-use authorization from the FDA. This means that patients around the world have already received it as part of standard coronavirus care. Last night, things became even more influential for Gilead stock. Why?
Remdesivir became the first and only treatment to receive full FDA approval for coronavirus use.
But what exactly is remdesivir, and how does it work? Here is what you need to know:
How Remdesivir Works
- Once the novel coronavirus has infected the body, it starts to begin replicating rapidly.
- This virus is an RNA virus, which refers to its genetic material. To replicate, it relies on an enzyme called polymerase.
- How does the polymerase work? Essentially, it weaves together new sequences of the genetic material found within that virus. Each sequence has four components.
- This is where remdesivir, the drug from Gilead Sciences comes in.
- Remdesivir poses as one of those components, specifically, adenine.
- As the coronavirus polymerase rapidly looks for those sequence components, weaving them together to replicate faster, remdesivir throws it a curveball.
- If the polymerase enzyme accidentally picks up remdesivir instead of a real adenine component, that entire sequence breaks down and becomes ineffective.
- For Gilead Sciences and remdesivir, this means that the goal is then to disrupt the replication process in as many sequences as possible. If the virus fails to replicate at a higher level, it becomes less powerful within any individual.
- Importantly, this ties into the major benefit of remdesivir. According to the FDA, remdesivir improves the time to recovery in hospitalized patients by an average of five days.
What Does FDA Approval Mean for Gilead Stock?
It is a BIG deal that Gilead Sciences has received full FDA approval for its drug remdesivir. Not only is it a reward for the company that has been working since the early days of the pandemic, it is also a relief to many individuals who simply want semblance of normalcy in their daily lives.
Remdesivir promises to free up hospital beds as the second wave starts. Importantly, it also promises to make the infection a little less scary.
But what the FDA approval really mean for Gilead stock?
According to the regulatory agency, full approval is the result of a risk-reward calculation. For investors, this means that the benefits remdesivir offers are greater than the risks it could pose. It also grants Gilead rights and protection to market remdesivir, now called Veklury, as a treatment for the novel coronavirus. Because many hospitals have already accessed this drug under its EUA, this should just further boost the availability of and in interest in remdesivir.
The other key component here is pricing. There will be activist pressure on Gilead to not profit from this treatment — and there has already been controversy. However, investors undoubtedly want to see Gilead benefit from its historical drug. According to some experts, that is a given. With a $3,120 price tag, one estimate says that Gilead should make $9 billion off remdesivir in just 2020 and 2021.
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.