Gilead Analysts Tackle Early Results From Remdesivir Study In COVID-19, Morgan Stanley Says Stock Move Looks Overdone
In a trial conducted by the University of Chicago Medicine, remdesivir has been associated with rapid recovery and near-term discharge from hospital stays, according to the publication, which said it obtained video from a conference call on the trial.
Of 125 trial patients who received the daily treatment — including 113 suffering “severe” symptoms — most were discharged within six days of administration. Two died.
“The results are the first definitive piece of good news that there is something that works to treat COVID-19 symptoms,” Tigress Financial analyst Ivan Feinseth said in a note.
Similarly, Wells Fargo analyst Jim Birchenough consider the outcome a harbinger for Phase 3 success.
But optimism across the Street was tempered.
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Gilead Analysts Skeptical
Some analysts were skeptical of the results given the absence of a placebo.
“Yesterday's anecdotal data for remdesivir suggests strong activity, but we stress that these data include the benefit of best practices/ therapies in severe COVID-19 patients without a control group,” BofA Securities analyst Geoff Meacham said in a Friday note.
RBC Capital Markets highlighted further limitations to data interpretation given information gaps on the mix of ventilated and non-ventilated patients, post-discharge follow-up and site comparisons. Raymond James also noted that the study’s patients were not as “severe” as those enrolled in a lopinavir study. The remdesivir trial excluded patients with certain risk factors and those who were on ventilators at the time of enrollment.
Additionally, the reported results do not appear to align with the drug mechanism.
“‘Rapid recovery’ of fever and symptoms seems like conjecture given in our view it is incongruent with the mechanism of remdesivir, a direct antiviral,” Raymond James analyst Steven Seedhouse said in a Thursday note.
BofA highlighted remdesivir’s “non-trivial side-effect profile,” and Raymond James said new data from a trial in primates shows low efficacy even when administered within 12 hours of infection.
Overall, Raymond James said it awaits clarification on followup, case severity and patient mix, but it notes reasons for optimism due to the consistent results of compassionate use cases.
“If the details from the STAT article are taken at face value … a single-digit mortality rate and 90% discharge rate in a non-intubated population is probably sufficient for FDA to provide emergency use authorization like with HCQ given the hurdle for EUA appears exceedingly low, and the market and lay press will be bullish about ‘having an effective treatment,’” Seedhouse said.
Despite their critiques of the study, analysts remain optimistic about Gilead as a company.
“We continue to see remdesivir as more impactful to GILD's image and enabling recognition of their strong commercial portfolio and pipeline optionality, more so than a materially monetizable nearterm driver,” RBC analyst Brian Abrahams said in a Thursday note.
Still, some rejected the market’s re-valuation.
“While a potential treatment for patients with severe COVID is encouraging, the market cap increase in GILD on this news (~$15B) appears inconsistent with the potential financial value to Gilead in our view,” Morgan Stanley analyst Matthew Harrison said in a Thursday note.
- Bank of America Merrill Lynch maintained a Neutral rating with a $75 price target;
- Morgan Stanley maintained an Equal-weight rating and $75 target;
- Raymond James maintained an Outperform rating and $81 target;
- RBC Capital Markets maintained an Outperform rating with an $89 target; and
- Wells Fargo maintained an Overweight rating and $87 target.
GILD Price Action
Gilead shares were trading 8.53% higher at $83.07 at the time of publication Friday.
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