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PreMarket Prep Stock Of The Day: Gilead Sciences

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PreMarket Prep Stock Of The Day: Gilead Sciences

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

How many times have you witnessed an issue move higher on the same news and more times and then not surrender those gains eventually? One issue that has done so repeatedly over the last several months is Gilead Sciences (NASDAQ: GILD), which is the PreMarket Prep Stock Of The Day.

On The Decline Since 2015: Gilead made its all-time high in June 2015 at $123.37. That high came a few years after the company achieved a scientific breakthrough when it developed a cure for hepatitis C, the viral infection that can have severe and deadly complications.

Unfortunately for the company as patients were being cured and fewer cases were discovered, the sales of the drug began to decline in the years following.

With no blockbuster drugs being approved, sales and revenue began to decline.

Attempts To Buy Growth: In August 2017, the company announced it would acquire Kite Pharma for $11.9 billion, equating to $180 cash per share. The premise behind the deal was that the Kite’s CAR-T candidate for cancer treatment would complement drugs in their existing portfolio. Later in the year, the company acquired the remainder Cell Design Labs for $567M million that it had indirectly acquired a 12.2% stake in via the Kite Pharma deal.

In March 2020, the company announced it would acquire Forty Seven Inc. for $95.50 a share ($4.9 billion in total).

Finally, in September, Gilead announced it had reached a deal to acquire Immunomedics for $21 billion ($88 per share), to gain control of the cancer treatment Trodelvy.

From its sagging share price, it's evident the Kite Pharma deal hasn't yet worked out and it remains to be seen about the latter two deals.

Remdesivir To The Rescue: On several occasions over the last few months, the issue had rallied on results or positive announcements regarding its drug to treat COVID-19, Remdesivir. Back in March and April, it drove the share price into the middle $80 handle before fading back into the lower $70 handle.

In June and July, the issue would rally and eventually faded back in the lower-to-middle $60 handle. In August, the rallies were capped in the lower $70 handle and the issue faded back into mid-$60 handle.

In September, it wasn't even able to reach $70, as its high for the month was $67.92 and traded as low as $61.65.

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Same News, Same Price Action: When it was revealed that President Trump was taking the drug for the treatment of COVID-19 this weekend, the issue spiked to $65.91 in early premarket trading. However, it opened the regular season at $63.33, had a brief rally to $64, but reversed course and declined to $63.10. As of 1 p.m. ET, it has rebounded back towards the highs for the session.

Long-term, co-host Dennis Dick isn't a fan of the issue.

"When it comes to biotech stocks, this is the dog,” said Dick. “Someone gets up at 4 a.m. to pay nearly $66 for it because they give it to the president... That is dumb money right there."

 

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