Gilead Analysts See Questionable Commercial Opportunity For Coronavirus Candidate Remdesivir

Gilead Sciences, Inc. GILD reported an earnings and sales beat Thursday, but apprehension surrounding the drugmaker's remdesivir, under evaluation as a potential COVID-19 treatment, are weighing down on the stock.

The Gilead Analysts

Wells Fargo Securities analyst Jim Birchenough reiterated an Equal-weight rating on Gilead with an $84 price target. 

UBS analyst Navin Jacob maintained a Neutral rating and $80 price target.

Morgan Stanley analyst Matthew Harrison maintained an Equal-weight rating and $77 price target.

Raymond James analyst Steven Seedhouse downgraded Gilead from Outperform to Market Perform.

Remdesivir Prospects Fraught With Uncertainty, Wells Fargo Says

Remdesivir is as an important part of a near-term solution to the pandemic, but its value as a sustainable commercial opportunity longer-term is questionable, Birchenough said in a Thursday note. 

Gilead plans to donate its current supply of 1.5 million doses, adequate to treat about 140,000 patients, and will have at least 1 million patient doses supplied by year's end, the analyst said.

The company is working on both emergency use authorization from FDA as well as formal approval, while also engaging with other regulators globally, he said. 

"Commercial model considerations beyond initial donated supply is difficult to assess, with infection rates declining over time, expected improved preparedness for future outbreaks, emerging vaccine strategies and other therapeutics and with a potentially difficult environment to negotiate price."

See also: Gilead Says It Will Produce 1M Courses Of Coronavirus Experimental Drug 'Remdesivir' By December

Remdesivir Commercial Opportunity Still Unclear, UBS Says

Gilead management believes an inhaled nebulized version of remdesivir will likely face a lower hurdle and have shortest path to approval, potentially by late 2020, but a subcutaneous formulation is a long way from now, Jacob said in a Friday note. 

Even with a partnership with a large biopharma, it will take eight months to create "end-to-end" capabilities given the complicated manufacturing process involved, the analyst said, citing the company.

Given the lack of clarity with respect to the commercially opportunity for remdesivir, Jacob said he for now estimates peak risk-adjusted sales of $600 million.

Remdesivir Complicates The Outlook, Morgan Stanley Says

Several of Gilead's products — including Biktarvy, Epclusa, Yescarta, Letairis and AmBisome — beat expectations, but a few — such as Truvada, Genvoya, Descovy and Atripla — missed expectations, Harrison said in a Friday note. 

The company neither reiterated nor withdrew its previous guidance, but suggested uncertainty existed regarding the business outlook for the rest of the year, the analyst said. 

"Remdesivir presents a unique set of circumstances (related to both potential costs and revenues) which complicates the outlook," Harrison said.

Morgan Stanley said the majority of the business is stable, with HIV treatment unlikely to face pressure. An HCV catch-up is a real potential post-COVID, he said. 

An EUA for remdesivir is likely in the near-term, with additional data in mid-May from the next Gilead-sponsored study, Harrison said. 
Despite a lack of details from Gilead on pricing, Morgan Stanley said the drug is likely to be sold via government stockpiling. 

Raymond James Leaves Remdesivir Out Of Its Model

The recent outperformance in Gilead shares based on remdesivir, seemingly minimal activity in COVID-19 and the unclear path to profit off the antiviral drug led to Raymond James' downgrade of the shares, Seedhouse said in a Thursday note. 

"We continue to like GILD's core business but aren't willing to break our model to fit the COVID trade," the analyst said. 

Discussing Gilead's other business dynamics, the analyst said an eventual filgotinib launch will pitch it against incumbents in the rheumatoid arthritis space; Yescarta faces legal challenges; and the Forty Seven acquisition will take time to play out.

Raymond James is skeptical about whether remdesivir will be used much in COVID-19 beyond the initial 1.5 million donated doses or beyond the near-term "panic" phase of the public health crisis.

GILD Price Action

At last check, Gilead shares were sliding 6.68% to $78.39 at the time of publication Friday. 

Related Link: The Daily Biotech Pulse: Gilead Slips Despite Forecast-Beating Q1, Moderna Partners With Lonza For Coronavirus Vaccine Production, Lyra Therapeutics IPO

Posted In: CoronavirusCovid-19Jim BirchenoughMatthew HarrisonMorgan StanleyNavin JacobRaymond JamesremdesivirSteven SeedhouseUBSWells Fargo SecuritiesAnalyst ColorBiotechEarningsNewsGuidanceDowngradesHealth CarePrice TargetReiterationAnalyst RatingsGeneral