Currently, there is no vaccine for COVID-19 and treatment options are limited for patients with severe or life-threatening symptoms. However, one treatment that is rapidly gaining ground is Gilead Sciences » (NASDAQ: GILD) remdesivir. This viral inhibitor has shown a preliminary survival benefit when administered to patients with life-threatening symptoms of COVID-19. Today, let’s take a look at why I think remdesivir is already a multi-billion dollar opportunity for Gilead.
The best COVID-19 treatment so far
On July 10, Gilead announced the benchmarking results of its phase 3 clinical trial of the efficacy of remdesivir in critically ill patients with COVID-19. In a real study of seriously ill COVID-19 patients, 12.5% of hospitalized patients who did not receive remdesivir died within two weeks; this number was 7.6% for those who received it.
In addition, patients who took remdesivir had faster recovery times than those who did not. Interestingly, hydroxychloroquine, a drug touted by the Trump administration as a miracle cure for COVID-19, has actually reduced patient recovery rates when administered in addition to remdesivir.
The results of remdesivir are simply superb. Indeed, even before the results were published, the Trump administration bought the entire Gilead stock of 500,000 vials of remdesivir. At $ 390 per bottle, that meant $ 195 million in new revenue for Gilead in just over a month. It is a lot for a company that has had declining revenues for some time; revenues reached $ 22.5 billion last year.
Why Gilead is a strong buy
Gilead plans to produce up to 2 million treatment courses (each containing six vials) by the end of the year, including the amount already sold. At 12 million vials costing $ 390 each, this represents $ 4.7 billion in potential revenue, compared to the research and manufacturing costs of approximately $ 1 billion to develop the drug! In addition, the company has a large production capacity to produce several million courses in 2021. The United States, the EU, India, Australia and Japan have all authorized remdesivir for emergency use or have approved it for the treatment of COVID-19. Gilead has authorized generics of remdesivir in 127 countries, all of them middle and low income.
With 14% of COVID-19 patients developing severe symptoms and 5% requiring intensive care, I expect Gilead and his stock to be widely rewarded for producing life-saving treatment. Due to recent mutations, the currently circulating strain of SARS-CoV-2 can be 2.6 to 9.3 times more infectious and just as deadly. Therefore, I do not expect the COVID-19 pandemic to abate anytime in the near future. With a growing demand for remdesivir, I strongly recommend that biotechnology investors add Gilead to their portfolios.