Gilead Analyst Sees Catalyst Ahead In Data Readout For Potential Coronavirus Treatment

Gilead Sciences, Inc.'s GILD remdesivir is one of the frontrunners among investigational drugs to treat COVID-19.

With a data readout imminent and following an update from CEO Daniel O'Day, an analyst at Cantor Fitzgerald looked at what could lie ahead for the company with respect to remdesivir as a coronavirus treatment.

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The Gilead Analyst

Alethia Young maintained an Outperform rating on Gilead with a $78 price target.

The Gilead Thesis

Gilead shares are likely to move on upcoming remdesivir data that's expected in mid-April from Chinese studies, despite the lack of significant revenue potential, Young said in a Monday note. (See her track record here.)

With the company stating all available supply will be given away, there isn't likely to be any revenue impact to 2020, the analyst said.

Gilead said it has about 1.5 million individual doses available that could treat about 140,000 patients.

The company seems to be spending a bit more on cost of goods sold due to an aggressive ramp in manufacturing since January to accommodate the compassionate use program, Young said.

"Post 2020, we think that there is a possibility that world governments could stockpile remdesivir if successful in clinical studies, which could create some revenue in the long run."

The scale of stockpiling could be lower than for regular flu medicines such as Tamilflu, which fetched sales of $733 million in 2015 and $806 million in 2016 before going generic, the analyst said. 

Cantor also noted that manufacturing of remdesivir is more complicated than initially thought, as it is a linear process requiring specialized chemistry and multiple reactions.

Apart from the China studies, there are two more Gilead-sponsored trials on the horizon, possibly sometime in May, Young said. 

"We note that the GILD-sponsored trials do have differences in endpoint and design, which could potentially lead to different outcomes." .

GILD Price Action

Gilead shares were down 2.43% at $76.31 at the time of publication Monday. 

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