The narrative around Gilead Sciences (GILD) has taken a turn. From February through April, the stock surged as excitement built over the company’s antiviral drug remdesivir, which a study found reduced COVID-19 patients’ recovery time.
However, after receiving Emergency Use Authorization (EUA) from the FDA for the drug on May 1, Gilead received a host of downgrades from Street analysts who argued the stock is fully valued. They also questioned remdesivir’s commercial potential.
Following a talk with members of Gilead’s management team, Oppenheimer analyst Hartaj Singh reminds investors that “GILD is still the only company with an approved COVID-19 therapy and first-mover advantage.”
So, where does progress currently stand? Remdesivir is currently making its way through clinical trials in various locations, both in the US and China, with updates expected by the end of June or early July.
On top of the EUA, remdesivir has already received the go ahead from the EMA (European Medicines Agency) for compassionate use, and the company has signed non-exclusive licensing deals with five generic pharmaceutical manufacturers to produce and sell the drug in 127 countries.
Remdesivir’s availability could also increase “by a factor of 3x to 4x”, with a potential inhaled (nebulized) version currently being developed. This version will require “only one-third as much drug product,” and data is slated for release in 2H20.
Concerning remdesivir’s commercial opportunity, earlier this month, Gilead said it will donate its entire remdesivir supply to the federal government. While the move has been commended, it has also raised concerns among investors, which, according to Singh, Gilead is ready to address.
The 5-star analyst said, “On our call, management indicated that shareholder concerns have been heard and that after the initial donation of remdesivir, a thoughtful yet robust business model is being developed. Investors should expect an update in the next few weeks, perhaps with the moderate COVID-19 Phase 3 readout next few weeks.”
To this end, Singh has an Outperform rating on GILD shares and a price target of $90, which implies nearly 22% upside from current levels. (To watch Singh’s track record, click here)
As mentioned above, Singh’s colleagues aren’t quite as confident. TipRanks analysis of 28 analyst ratings shows a consensus Hold rating, with 8 analysts recommending Buy, 15 suggesting Hold, and 5 saying Sell. The average price target among these analysts stand at $79.39, representing an 8% rise. (See Gilead stock analysis on TipRanks)
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