Gilead Sciences’ (GILD) remdesivir has been grabbing the headlines recently and has positioned itself as a strong candidate for COVID-19. GILD’s share price has responded accordingly, with the stock up by 26% year-to-date.
So, is now the time to load up on more GILD shares? Not according to Maxim’s Jason McCarthy, who argues the good news regarding the drug is already baked into the share price. McCarthy reiterated a Hold on the stock, yet didn’t set a price target. (To watch McCarthy’s track record, click here)
Gilead’s latest surge in the market came last week, following a report from researchers at the University of Chicago, where a Phase 3 trial for remdesivir is taking place. 125 patients with COVID-19 (113 with severe symptoms) were given daily infusions of remdesivir, with the majority recovering faster and discharged following the treatment. As the data is part of larger P3 studies, it has not been published yet.
Yet McCarthy believes the new data doesn’t justify the level of excitement it has generated and calls for a “slow and steady” approach.
“We all want a successful COVID therapy but it’s still a clinical trial. 125 patients in one center is still only a ‘snapshot’ from the P3 trials which are being conducted at 150+ centers and in up to 4000 patients. For a pandemic-sized indication, large sets of data, understanding the patient demographics, and reproducibility are paramount for a COVID therapeutic,” said McCarthy.
The analyst argues Gilead’s 30% share appreciation since the pandemic’s onset is based on “at best anecdotal” data and that conclusions should not be drawn until more “controlled data” is available. “As such,” the analyst says, “it appears that any significant success of the drug may already be priced into GILD shares.”
On top of what McCarthy views as a thin commercial opportunity (pricing will need to be lower due to the humanitarian crisis, IV drugs’ use are limited to hospitals), the analyst wonders whether remdesivir is the COVID-19 drug.
“It may have a first mover advantage, but there are many other approaches in development like antibodies, stem cells, even a glucose decoy, among many others. All options are still on the table and no one appears to be running away in the COVID race,” he said.
What does the rest of the Street make of Gilead’s prospects? Based on 13 Buys, 11 Holds and 3 Sell ratings, the analyst consensus marks GILD as a Moderate Buy. Although at $77.19, the average price target represents possible downside of 8%, and might indicate the majority also believe the stock has soared enough for now. (See Gilead stock analysis on TipRanks)
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