What Remdesivir Pricing Means For Gilead Stock

by Trefis Team
Rate   |   votes   |   Share

[Updated 6/30/2020] Remdesivir Pricing 

Gilead Sciences (NASDAQ:GILD) has priced Remdesivir, its anti-viral drug targeted at severe Covid-19 cases, at about $2,340 for a five-day treatment (which uses 6 vials) for patients outside of private insurance and $3,120 for private insurers. The company has also partnered with generic drug makers in developing markets where treatments are expected to cost less than $500. The prices are lower than expected and come at a fraction of some of Gilead’s other drugs – such as the hepatitis C treatment, Sovaldi, which was initially priced at over $80,000 in the U.S. Overall, we don’t think Remdesivir will be a big revenue driver for Gilead in the long-run, for multiple reasons.

Firstly, the drug is not a sure-fire way to cure Covid-19 and has only shown relatively moderate levels of effectiveness in hospitalized cases.  Competition for alternative Covid-19 therapeutics is also mounting. For instance, Dexamethasone, a cheap off-patent steroid, has shown reasonable effectiveness in reducing mortality in serious Covid-19 cases. The long-term volume potential of Remdesivir is likely to be very limited, as the race for a vaccine has gathered pace, with phase 2 trials already underway and phase 3 studies planned for July. The development of a safe and effective vaccine would drastically reduce the need for treatments such as Remdesivir.

Even if Gilead sells 1 million treatments of Remdesivir, optimistically, over the next year, with a majority of doses going to developed markets, revenues from the drug would stand at roughly $2 billion. This is a small (and potentially fleeting) sum for Gilead which is likely to post close to $23 billion in revenues over FY 2020. However, Gilead could broaden the reach of the drug, as it develops an inhaled version that could be used at earlier stages of the disease, outside a hospital setting.

For more details on the stock price and fundamental performance of some of the key U.S. listed companies developing coronavirus therapeutics, view our theme of  Covid-19 Treatment Stocks

[Updated 6/25/2020] Inhaled Remdesivir Clinical Trials To Commence

Gilead has indicated that it would be starting clinical trials for an inhaled version of Remdesivir shortly. While the wide-spectrum anti-viral drug is currently given intravenously for severe cases of Covid-19 in the hospital, the new delivery method could enable treatment at earlier stages of the disease. [1] While Remdesivir has shown moderate levels of effectiveness in hospitalized cases, there is a chance that administering the drug at an earlier stage could make it more effective. Antiviral drugs treating other viruses have typically had a better therapeutic effect when administered earlier in the course of the disease. [2] This could also increase the revenue potential for the drug, which had an estimated development cost of $1 billion. Separately, Gilead also provided updates on its production plans for the drug, noting that it expects to have over two million Remdesivir treatment courses manufactured by the end of 2020, with the number rising further over 2021, as it optimizes the manufacturing process.

For more details on the stock price and fundamental performance of some of the key U.S. listed companies developing coronavirus therapeutics, view our theme of  Covid-19 Treatment Stocks

Covid-19 treatment stocks have run up a fair bit this year. Interested in other large-cap stocks that could outperform? Our 5 In the S&P 500 That’ll Beat The Index: TWTR, ISRG, NFLX, NOW, V looks promising.

[Updated 5/7/2020] Gilead Stock Is Trending Lower Despite Progress On Remdesivir

Last Friday, Gilead received U.S. FDA authorization for emergency use of its wide-spectrum anti-viral drug Remdesivir for severe cases of COVID-19 after the drug showed some effectiveness in reducing recovery times. Separately, Japan has also approved the drug for the treatment of COVID-19. However, Gilead stock is down by over 7% over the last 5 days and there could be a couple of reasons for this.

  • Firstly, the long-term demand for Remdesivir is nebulous, as billions of dollars are being invested by companies and governments in finding vaccines and alternative treatments for the coronavirus. (Which Is The Best Coronavirus Vaccine Stock?) The development of a safe and effective vaccine would drastically reduce the need for treatments such as Remdesivir. This is a significant risk, as Gilead indicates that it could invest as much as $1 billion into the development of Remdesivir.
  • Secondly, Gilead may not have a similar level of pricing power for Remdesivir as it does for its other anti-viral drugs given the higher profile of the coronavirus pandemic. For instance, the company’s hepatitis C treatment, Sovaldi, was initially priced at ~$84,000 in the U.S. Remdesivir could be priced at a fraction of this.
  • Gilead is a large-cap company, with a majority of revenues coming from HIV drugs and its hepatitis C (HCV) offering, which has seen revenue decline significantly over the last few years (Gilead’s revenue is down ~30% over the last 4 years). Investors could be a little more circumspect about the company’s valuation considering that the stock is up almost 20% year to date while factoring in risks that Remdesvir and the HCV drug face.

For more details on the stock price and fundamental performance of some of the key U.S. listed companies developing coronavirus therapeutics, view our COVID Treatment Stocks

[Updated 4/26/2020] An Overview of  Coronavirus Treatment Stocks

While the stock markets have declined this year due to the spread of the novel coronavirus, stocks of pharma companies developing treatments and vaccines for the highly contagious viral infection have fared quite well. Our indicative group of 6 U.S. listed companies working on therapeutics for Coronavirus has gained a solid ~39% year-to-date on an equally weighted basis. In comparison, the S&P 500 is down by 13% YTD.

While anti-viral therapeutics are generally very complex to develop, it’s likely that a successful treatment will be developed before a vaccine considering that many treatment candidates are drugs initially developed for other diseases that could also prove effective against COVID-19. Companies already have treatments in phase 3 of clinical trials, compared to vaccines where human trials have just started.

While the stock of smaller, specialized player Vir Biotechnology has rallied by around 160% year-to-date, it could also have higher levels of price risk, given its limited alternative revenue streams. On the other hand, biotech majors Gilead and Regeneron, who have seen their stocks rally by 24% and 51% respectively this year, could offer better downside protection, considering that they already have other revenue-generating products.

Gilead (24% YTD return, $100 billion market cap): Gilead has been the most high-profile name in the race for a coronavirus treatment, given the company’s impressive track-record with treating viral infections such as HIV and Hepatitis C. For coronavirus, Gilead is leveraging its wide-spectrum anti-viral drug Remdesivir, which was initially developed for Ebola. While late-stage human trials are ongoing in China, Asia, and the U.S., the anecdotal evidence coming from the trials has been somewhat mixed. Gilead is expected to provide clinical updates on the drug in the coming weeks.

 

Regeneron (51% YTD return, $62 billion market cap): In March, the company indicated that it was developing a combination of antibodies that could be used either for the treatment of COVID-19 or to protect people from being infected by the virus. Human trials could begin as early as June. Separately, the company is also collaborating with Sanofi to carry out clinical trials of rheumatoid arthritis drug Kevzara, as a potential treatment for COVID-19 – although this could be less successful. The company posted about $8 billion in revenue in 2019.

Vir Biotechnology (160% YTD return, $3.6 billion market cap): Vir Biotechnology, a clinical-stage biotech company, which has focused on infectious diseases including hepatitis B, is exploring multiple approaches for its Coronavirus treatments. GlaxoSmithKline announced that it would collaborate with Vir on a potential treatment, that would leverage Vir’s monoclonal antibody platform, besides making a $250 million equity investment into the company. Separately, Vir expanded a previous partnership with Alnylam Pharmaceuticals to develop therapeutics for the coronavirus. However, the downside risk for Vir stock could be high if the company fails to deliver, considering that the stock has soared by 160% this year, despite posting revenues of just $8 million in 2019.

U.S. listed companies working on Coronavirus vaccines, have fared better that companies working on therapeutics, gaining 130% year-to-date. View our dashboard analysis COVID Vaccine Stocks for a list of companies

See all Trefis Price Estimates and Download Trefis Data here

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams

Notes:
  1. An Open Letter from Daniel O’Day, Chairman & CEO, Gilead Sciences, Gilead, June 2020 []
  2. Gilead to Begin Human Testing of Inhaled Version of Covid-19 Drug Remdesivir, WSJ, June 2020 []
Rate   |   votes   |   Share

Comments

Name (Required)
Email (Required, but never displayed)
Be the first to comment!