The Real Catalysts Are Still Ahead For Gilead

  • GILD led the COVID-19 therapeutic race earlier this year with the emergency use of remdesivir approved in May.
  • GILD now has full approval and demand for remdesivir is still high.
  • Setbacks with filgotinib and spending on acquisitions could be weighing on the stock.
  • Competitor readouts represent a near-term catalyst for GILD in October/November.

Gilead Sciences (GILD) announced additional good news concerning remdesivir recently, but competitor readouts ahead mean enthusiasm could be short lived. This article takes a look at how competitors might spoil the party for GILD.

A catalyst has passed

October 22nd saw the approval of GILD’s Veklury (remdesivir) for the treatment of COVID-19 requiring hospitalization (in patients 12 years and older, at least 40 kg in weight).

The reaction of the stock was positive afterhours on Thursday, with an initial 3% jump strengthening to a 7% run by 8 pm (Figure 1).

Figure 1: GILD trading on October 22, 2020. Source: Google.

Those following the name should look to see how well those gains hold up during Friday’s session as GILD has been giving back its gains this year despite coming up with a drug for COVID-19. What has been weighing on the stock? There are some obvious answers. Firstly, there have been delays and issues with filgotinib, the company’s anti-inflammatory drug being developed in collaboration with Galapagos NV (GLPG) in the US. Secondly there is possibly concern with the fact that GILD has been spending heavily. Seeking Alpha’s Shock Exchange notes that at 15x 2024 revenues, the IMMU acquisition could be considered expensive and might limit GILD’s ability to make other big acquisitions. There is another potential issue though.