by Ian Harvey
May 01, 2020
Gilead Sciences Inc stock is up 35% since January based on a study by the National Institute of Allergy and Infectious Diseases found that its experimental coronavirus drug remdesivir met its primary endpoint.
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Gilead Sciences Inc has been one of the best stocks this year, as a study conducted by the National Institute of Allergy and Infectious Diseases found that its experimental coronavirus drug remdesivir met its primary endpoint. Now, emergency use of the drug awaits approval from the Food and Drug Administration (FDA) which should occur very soon.
Gilead Sciences Inc entered the year trading around $65, and hitting an annual low of $62.23 in mid-January. Since then, the shares have seen a meteoric rise on the charts, up 35%. During this climb, GILD's 50-day moving average has contained any pullbacks associated with the volatility of the current market climate and the biotech sector in general.
Gilead Sciences Inc reported better-than-expected earnings for the first quarter yesterday and detailed more of its work on remdesivir, an antiviral COVID-19 drug candidate.
While remdesivir was immaterial to Gilead’s first-quarter earnings performance, the drugmaker said in its announcement that R&D expenses increased about $100 million from last year, in part due to ongoing development of the therapy as a COVID-19 treatment. It cited $50 million for the manufacturing scale-up and costs of clinical trials for remdesivir, though that increase was tempered by the temporary halt of clinical trials for other investigational therapies as a result of the COVID-19 pandemic.
Gilead Sciences Inc reported first-quarter earnings of $1.5 billion, or $1.22 a share, in the first quarter of 2020, down from $1.9 billion, or $1.54 a share, in the same quarter a year ago. Revenue grew to $5.5 billion in the first three months of the year, up from $5.3 billion in the year-ago period. Adjusted earnings per share were $1.68. Analysts had estimated adjusted earnings of $1.59 per share on revenue of $5.4 billion.
The results, announced after the market’s close Thursday, initially sent Gilead’s stock down 0.9% in after-hours trading. The stock closed with a 1% increase at $84 Thursday, after a 5.8% gain Wednesday following the release of the remdesivir study data and public support from Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases.
The coronavirus pandemic didn't materially impact first-quarter sales or earnings, but it could result in fewer patients accessing treatment for HIV and hepatitis C, Gilead Sciences said in a news release.
“There is significant uncertainty about the progression and ultimate impact of the pandemic on Gilead’s business and operations,” the company said in a statement. “While COVID-19 did not materially impact Gilead’s first-quarter results, Gilead Sciences Inc anticipates that COVID-19 could impact its business in the short-term due to factors such as fewer patients accessing treatment for conditions such as HIV and [hepatitis C virus], however, the impact of these developments is uncertain.”
During the first quarter, sales of HIV treatments grew nearly 14% to $4.1 billion. Gilead Sciences Inc saw a rise in customer buying and prescription patterns due to the pandemic. But sales of hepatitis C drugs slipped 7.7% to $729 million due to lower sales prices.
Yescarta, a cancer drug acquired alongside Kite Pharma, generated $140 million in sales, up nearly 46%. Gilead Sciences Inc noted the increase was due to expansion in Europe.
For that reason, Gilead Sciences Inc withheld its 2020 outlook.
Executives said that “the potential range” of its remdesivir development costs could reach $1 billion in 2020.
Analysts also answered questions about the potential cost for remdesvir if it receives marketing approval or an emergency-use authorization from the Food and Drug Administration.
“Under the emergency-use authorization, one could charge for the product,” CEO Daniel O’Day said on the call. “We made a decision, as you know, to donate 1.5 million vials, which is the entirety of our supply through the early summer.”
Gilead Sciences Inc has told investors that it plans to have more than 140,000 treatment courses of remdesivir prepared by the end of May.
Company executives also said they are looking into developing inhaled or subcutaneous forms of remdesivir for COVID-19 patients. The drug, which is currently delivered to patients using intravenous infusion, will not be tested as an oral treatment.
Gilead Sciences Inc has drawn optimism mixed with caution when it comes to consensus opinion among sell-side analysts. Out of 28 analysts in the last 3 months, 11 are bullish on GILD, 13 remain sidelined, while 4 are bearish on the stock. The stock's consensus target price stands at $77, revealing apprehension baked into analysts' expectations.
RBC Capital Markets’ Brian Abraham said in a note Thursday evening that the company has a “sustainable and well-insulated HIV franchise” and Biktarvy “continues to impress.”
J.P. Morgan's Cory Kasimov came out with a note reiterating his "overweight" rating on the stock. (To watch Kasimov's track record, click here)
In Kasimov's view, the NIAID data is the more important, inasmuch as it is "placebo controlled and should help put the impact of remdesivir into context." Although "detailed results" remain to be seen, Kasimov predicts "a high likelihood of approval" of remdesivir given the "unmet need, [statistically significant] benefit, and seemingly acceptable tolerability."
And while some analysts have raised questions about how shelter-in-place orders will impact prescription drug sales, “for the most part growth brands are still growing (Biktarvy, Dupixent, Aimovig),” Bernstein analysts wrote on Monday.
Gilead Sciences Inc is now focused on change. The company, which shot to pharmaceutical prominence in 2013 with the Food and Drug Administration approval of the hepatitis-C cure Sovaldi, has lately turned its gaze on oncology.
question of duration is important because the possibility of a shorter
treatment course is beneficial in many respects,” Gilead Sciences
Inc CEO Daniel O’Day wrote in an open letter on April 29. “Patients can return home earlier from the hospital, families can be
reunited, health care resources are freed up and more medicine is available for
other patients in need.”
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