Entering text into the input field will update the search result below

Gilead: Why I'm Buying More

May 02, 2020 11:01 AM ETGilead Sciences, Inc. (GILD)201 Comments


  • Sell-side analysts are very skeptical on the value of remdesivir.
  • Meanwhile, remdesivir was approved for emergency use.
  • The emergence of a therapy may have a reflexive effect.
  • Near $80 with remdesivir approved, I think there's value here.
  • This idea was discussed in more depth with members of my private investing community, Special Situation Report. Get started today »

On Friday, I added some extra Gilead (NASDAQ:GILD) to my portfolio after several sell-side reports cast skepticism on the profitability of remdesivir. Remdesivir, of course, is Gilead's highly-anticipated antiviral candidate for COVID-19. After the close on Friday, the FDA approved the emergency use of Gilead Sciences' remdesivir. I think many analysts are underestimating the potential for this drug. Some examples via Seeking Alpha:

Raymond James rings the register, downgrading to Market Perform. "We aren't going to wild guess Remdesivir NPV," goes the title of their note.

SunTrust downgrades to Sell from Hold: "Lack of visibility to growth." Their $70 price target suggests nearly 20% downside from last night's close.

Another analyst has a peak sales assumption north of $2 billion in 2021 and about $500 million in 2020.

Peak sales assumptions of $500 million in 2020 let that bearish assumption sink in. At $5,000 per treatment that's 100,000 treatments six months into a global pandemic.

I liked Gilead (GILD) a lot down in the mid-$60s. Remdesivir was basically a freeroll back then. Here you can find links to all my previous public remdesivir discussions. I agree it's a lot more speculative in the $80s, even after remdesivir is now approved for emergency use. Having said that, here's why I think it's still worth holding and believed analysts induced a buying opportunity with their bearish interpretation on the cusp of FDA emergency authorization.

The main fears on the sell side seem to revolve around the profitability of this drug. They seem worried that Gilead is giving away 1.5 million doses (max 300k treatments) and doesn't reveal much about the economics while the company is incurring substantial and tangible costs associated with this rollout.

This is a classic case of confusing uncertainty with risk.

Let's not forget that Gilead was a

Check out the Special Situation Investing report if you are interested in uncorrelated returns. I look at mergers & acquisitions, spin-offs, companies with buyback programs, rights offerings as well as unique opportunities like Gilead today, which is so well positioned with its Remdesivir cure. 

This article was written by

Bram de Haas profile picture
15 years of investing and I feel like a rookie in his first year at the academy. My roots are in the value school but over time I've learned to respect different approaches. I'm interested in what quants do, options traders do, and even what WallStreetBets is doing (keep your friends close and...)

I gravitate towards special-situations. That means situations around companies or the market where the price can move in a certain direction based on a specific event or ongoing event. This eclectic and creative style of investing seems to suit my personality and interests most closely.

Since 2020 I host a podcast/videocast where I discuss (special-situation/event-driven) market events and investment ideas with top analysts, portfolio managers, hedge fund managers, experts, and other investment professionals. I highly recommend it (pick episodes around topics that interest you) for the amazing guests that come on with regularity.

I've been writing for Seeking Alpha since 2013 after playing p0ker professionally. In 2018 I founded Starshot Capital B.V. A Dutch AIF manager. Follow me on Twitter @Bramdehaas or email me Dehaas.Bram at Gmail

Analyst’s Disclosure: I am/we are long GILD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (201)

European investor 99 profile picture
Agree, I am not selling for sure and i have a good position. As soon as it goes closer to $70 I am buying again. It is a good company and I cant believe that everyone has become a virologist professor on SA suddenly analysing if REM is working or not, and an expert CFO to decide that it will make a profit or not.

The fact that it has been approved in the US and being approved in Japan, which always means European approvals too. Even if doesn't work at all, it doesn't matter - bottom line it is APPROVED as treatment and will be SOLD for profit, period. Everyone can lament, argue, assume what will happen but it is simply dumb when it is a done deal. Price the revenue that will bring in (or anyone really thinks that Gilead will give this as a charity to all countries and US forever? really?)
NDHT profile picture
Yes, for profit. But how much of it?

Please explain the following news that Gilead has partnered with generics companies in 127 countries? For premium price, or for saving life?

Gilead inks deals to sell remdesivir in 127 countries
May 12, 2020 2:14 PM ET|About: Gilead Sciences, Inc. (GILD)|By: Douglas W. House, SA News Editor

Gilead Sciences (GILD -1.2%) has out-licensed non-exclusive rights to antiviral remdesivir to India's Jubilant Life Sciences allowing the latter to sell the drug in 127 countries including India.

Under the terms of the agreement, Jubilant may manufacture the med and scale up production.

Gilead previously disclosed that it was in talks with several generic drug firms in India and Pakistan to produce remdesivir for developing countries.

Update: The company says it has also inked non-exclusive licensing agreements with four other generic drug makers in India and Pakistan: Cipla, Ferozsons Laboratories, Hetero Labs and Mylan (MYL -2.2%) that apply to the same 127 countries.
I remain skeptical that physicians will be quick to use Remedesvir in a hospital setting due to the unpredictability of the virus. There are so many variables and many patients recover. Also the hospital may be reluctant to give Remedesvir on a routine basis plus with the tremendous deficit building who ever wins the White House post in November is liable to push for extreme conditions on pharmaceutical pricing that is charged by pharmaceuticals paid for by the federal government. Gilead has many drugs that could have profit margins lowered. Do not bank on Gilead. DO not buy the stock. It will go down not up.
If you think this is the last viral epidemic you will see in our lifetime you have not been paying attention. Remember SARS?,MERS? Ebola? (Just to name a few). International travel is here to stay and testing, whether low tech (temperature measurements before you get on a plane) or higher tech (antibody testing) will not stop the spread of viral diseases throughout the world.

Think that zoonotic infections are unusual? (Spread of animal infectious to humans and vis versa) then, again, you have been living in a cave somewhere. They are common. Except that doctors usually see just the patient (and not patient+pet/environmental exposure) and extremely few physicians are either Toxicologists or Epidemiologists. Since I have credentials in both I can assure you that the scientific data supports both conclusions- that zoonotic infections are common and easily spread. (And neither are Democratic plots to get rid of tRUMP).
Will specific (antibody) testing prevent the spread of new, not previously seen infectious diseases? Will a vaccine against SARS2-COVID-19 prevent novel infectious diseases? No and no.

Thus we need to start thinking about this in a different way. If we are looking for drugs to "cure" Covid19 then we are only half-way to a true cure. We need to start taking a more holistic look at the immune system and create cocktails that diminish the ability of viral particles to latch onto cellular receptors, decrease viral loads, reduce potential cytokines storm and attack organ systems. This will involve a lot of trial and error and most likely will not result in one single "Superdrug", but several drugs working in tandem.

I am afraid I have bad news for all you "when we get a vaccine this problem will be fixed". The history of vaccine production is littered with failure. There are the high profile failures (like HIV and malaria) then the moderately disappointing (yearly influenza vaccines), then the thousands upon thousands of viruses that we have spent $100s of million and decades of research and have never successfully developed vaccines for.
ArizonaLuke profile picture
Brilliant commentary!!! Although, prolonging the lockdown facilitates further weakening of the economy which also weakens Trump's chances of re-election. Luke, an Arizona Cowboy
...and sadly, (in lockdown in Spain since 15 March 67 years of age allowed to go out shopping, but not too far), those under lockdown are not doing their immune systems any good, not to mention cardio-vascular issues.. my BP has been creepin' up again.. I'll sneak out for a second shopping stroll.. different clothes, glasses and a mask..gotta love the masks. We're all Banditos in the end.
Bull & Bear Trading profile picture
Hang in there @aljanssens@aim.com and stay healthy! Prayers are with you. We will all get through this together. God bless.
ryanmollaun profile picture
MSC's / Stem cells are the answer to the mortality rate, Remdesivir is a low efficacy and 'only option' early in the disease process. The real problem is the mortality rate.

Mesoblast in Australia has the answer and is in funded FDA trials (in the US and Australia) after getting a 80+% cure rate when the mortality rate for patients with ARDS is 80+% (yes a complete flip).

calstang66 profile picture
Gilead Lays Out Plan to Boost Production of Remdesivir. Will There Be Enough for All Patients? -- Barrons.com
BY Dow Jones & Company, Inc.
— 8:15 PM ET 05/05/2020
Gilead Science's investigational antiviral remdesivir --proved effective against the Covid-19 virus in initial clinical trials--is being closely watched by the world. After receiving the U.S. Food & Drug Administration's emergency authorization last week, the company said the drug could be available to U.S patients as soon as this week. Now, the biopharma company is looking to expand that supply globally.
How to make remdesivir both accessible and affordable to patients around the world--especially in developing countries--is one of the pressing challenges facing Gilead. The company in a statement on Tuesday laid out plans to achieve that goal.
Gilead said it's in discussions with leading chemical and pharmaceutical manufacturing companies to produce remdesivir under voluntary licenses for Europe, Asia and the developing world through at least 2022.
KingdomWar profile picture
Hydroxychloroquine will be proven the cure for covid-19 and other health issues. Guaranteed. It's cheap, and big pharma does not want people to know how effective it is. Do not invest in any other so called cures or vaccines for covid. You will regret it. And Dr. Fouci knew this back in 2005. Don't always trust the BS be pushed your way.
tompbl profile picture
Suggest you read up on the recent clinical evidence on hydroxychloroquine. While there's still some uncertainty, there is mounting evidence that it's not effective. It is also known to cause heart arrhythmias including potentially fatal QT interval prolongation.
Please look at the scientific research not the headlines for your comments. Trump is not exactly a "scientific authority". Incidentally Tony Fauci (this is the correct spelling) has never done any research with hydroxychloroquine. The theory behind why it *might* work is interesting, but clinical trials have not supported efficacy. Adverse effects (sudden cardiac death) are REAL, predictable and demonstrable in clinical trials when this drug has been used as an antimalarial as well as in trials for other diseases.
ArizonaLuke profile picture
in a hospital setting, the side effects of Plaquenil are no worse than a score of other routinely use pharmaceuticals. ICU nurses are pros at dealing with EKG issues.... there is evidence suggesting that rheumatology patients in Italy on Plaquenil have a statistically lower incidence of Covid-19... but like everything in this area: details will slowly emerge as we get more experience.
By the end of May Remdesivir will be a fond memory. Check out Cytodyn. They have a candidate that brings the sickest folks back from the brink of death. And its a shot, not an IV.
What if the Oxford vaccine proves out in June? Won't they get to market only a few months after remdesivir and cut into those >300k receipts?
jortiz profile picture
The shortest reasonable vaccine timelines put herd immunity in early 2021, which is ironically (and sadly) the same time frame for non-vaccine herd immunity if the US fed govt allows current true (non confirmed-case) infection rates to double as they are expected to for "the economy".
Buy BCRX! Galidesivir! Will prove superior to Gilead’s! All studies have shown superiority thus far! Soon people will see the actual benefits and Remdesivir will be forgotten!
calstang66 profile picture
Agree? Disagree? I guess it may depend upon which stock one owns.
What about the trials giving Remdesivir to patients EARLY ... like anti-virals are supposed to be given ?
SA-NJ52 profile picture
@jack bee

I don't think you get how much money has been thrown at a vaccine for the virus around the world. Any other effort to hunt for a cure to a disease pales in comparison.

SARS, even though it started in a bat/cat market in China, did not reach the crisis proportions of this virus. I only had one colleague whose son died of SARS.

You cannot catch HIV by touching a surface, like the keys on an ATM, like you can with the virus. We never had 100s of seniors dying from HIV all around the world.

So the push to have a vaccine is enormous and I believe it will succeed. That is why increased my PFE weighting.

I hope that CYDY and GILD will do well in the short term. We should have some answers by Christmas.

If we do not, we are in serious trouble around the world.

China needs to be blamed for this mess. That Lego cartoon I saw on the weekend was offensive, misleading and is typical from a bunch of despots who currently run China. It will only inflame The Donald to do something stupid and unhelp in our fight with China for dominance in the 21st century.

But as Jim Cramer said today, we are not in good shape right now to fight with China.

We must regroup and look at what we can to to protect ourselves and our economic future.

Look at what Gov Cuomo said on Friday about creating the seven state regional council to prepare for the next pandemic that does not rely on China for masks and gowns, etc.

If Trump cannot lead here in a positive manner, others will step into his place.

Bull & Bear Trading profile picture
Would this be the same Cuomo who refused to purchase even a SINGLE ventilator when he was given a directive in a 2015 preparedness study to purchase 15,000 ventilators? The same governor who was totally under-prepared for a terrorist attack or pandemic with nearly zero stocks of PPE? The same "leader" whose NY government mandated sending coronavirus patients to NY nursing homes? The list goes on.

Please. At a time like this the partisan sniping is highly inappropriate. Furthermore, we all have a responsibility to invest the time and work into observing a diversity of media. Finally, isn't it time for all of us to drop the emotional baggage of being emotionally invested in either the "blue tribe" or the "red tribe." We no longer have the luxury of treating our politics in a tribal fashion as if we were rooting for our tribal sports teams.

Tribalism only serves a small number of people who have learned to profit from the division of the American people into warring tribes on the left and right. We the people are greatly damaged by this divisiveness. No more tribalism in politics. We the people must hold all politicians and other public servants accountable. We cannot allow incompetent public servants to "hide" in their base for cover while we the people get less competent work from these individuals. These jokers who come around asking for our votes every few years, these government servants who draw a direct deposit twice a month from our taxes... they need to deliver excellence to we the people... and only if we are united can we the people hold them accountable. For our own benefit, that is needed now more than ever, no more political tribalism.

We need national unity in a national effort to beat the virus, revive the economy, balance our national budget, pay down our debt, rebuild our own American-centric supply chain, and help the Chinese people to liberate from that dangerous communist regime. That is a long list of major challenges for us as a people. The days of political tribalism as a luxury sporting event are gone now. Govern yourself accordingly.
“Please. At a time like this the partisan sniping is highly inappropriate.” This statement appeared directly after your first paragraph which was 100% partisan sniping...
Those things quoted were facts.....facts, not sniping.
First. Great Article. Most articles are being way too general surrounding remdesivir.

The biggest problem with how remdesivir is being reported has to do with how it works and when it's most effective. Let's be clear. Remdesivir is most effective for EARLY STAGE OR MILD COVID patients because it doesn't actually attack the virus, it just prevents it from multiplying. Note: The only reliable test data surrounds SEVERE patients. ( already with pneumonia). The fact that remdesivir is STILL EFFECTIVE for severe patients is astounding! It's like waiting for a small cut to get infected and fester until the person needs to be hospitalized, and THEN putting polypsorin on it.

As for profit. I think Gilead is holding their cards close to their chest. They probably already know that remdesivir is best for mild or early covid patients. Chances are treatment instructions will instruct doctors to administer as early as possible in order to minimize the virus complement in the body, to better allow the body's immune system to address the virus. It this happens, the patient candidate number becomes significantly higher.

Assuming all this to be true, and add the urgency to re open the economies creating a higher risk for future waves of infection, there's a massive opportunity for remdesivir. We're talking the population for the ENTIRE WORLD. EVERY HOSPITAL IN THE WORLD WILL NEED A SUPPLY OF REMDESIVIR. At least until something else better comes along.

I assume Gilead will blast through the free supply and will be taking orders from governments and hospitals alike. As we speak infection rates are still rising in spite of unprecedented yet unsustainable restrictions. Maybe not the silver bullet, but remdesivir is the ONLY mitigating recourse available, and I think the main issue will be how fast it can be made. Governments and individuals alike will not hesitate to pay if this is the only effective treatment.
@firstaidriankit well and politely stated.
European investor 99 profile picture
very well said mate. though on this "Remdesivir is most effective for EARLY STAGE OR MILD COVID patients", while it is true also it is showing good results on severe cases (all trials were severe and critical so far). Even great antibiotics dont work for nearly final stage of bacterial infections if given too late.

Most people forget when criticising REM efficiency that in a placebo study in critical times they give the medicine to the more critical and severe people(with much higher viral load) because they wanna give a try to those who are in worse state than the one who still have better chance of recovery w/o REM. Same thing happened in chinese study that came back "ineffective". Actually it showed that higher viral load critical patients show good improvement when administered REM. After all doctors who are running the tests are not heartless robots focusing on study materials they wanna save lives and they will give the chance to those who are most in need. So considering these facts and other experiences from Chicago, it is a remarkable improvement. No wonder that Fauci rushed to approve it and also Japan, they arent all just stupid politicians who are bribed by big evil pharma. REM works though it is not a magic cure it is still the best available option up till now.
I can't speak to the potential of Remdesivir beyond what the researchers are stating, but I think I can state with considerable assurance that no one, and no insurance company, will pay anywhere near $5,000.00 to be treated while exhibiting only mild symptoms, because the vast majority of cases never progress beyond that.......
Big Froggie profile picture
GILD ready to run.
No, first place physicians might not even use it. Also it would only make a small profit compared to all their drugs. This post is turning people in the wrong direction. You have to understand the pharmaceutical industry. Do not buy Gilead based on this drug. Stock will drop.
There's a lot of misunderstanding about remdesivir. First, it's wayyyyyy more effective for early or mild covid. The latest results is only for SEVERE patients, ones that already have pneumonia. Remdesivir only blocks the virus from multiplying. It's the only game in town right now and will probably show significant effectiveness when administered early. Once this is confirmed, it should become standard practice to administer remdesivir at an earlier stage thereby significantly expanding potential patient candidates.
I would double check the revenue per treatment. I think it was $5K for a 10 day treatment which I also think is being cut down to 5 days.

Like you I bought in the $60s and considered Rem a free roll at the time. I thought it would work but was not betting on it.
BioDan profile picture
I have owned GILD for some time now (8-years) and was thus, like many of my fellow investors, a part of the good that this company has done to society. In these dire times, however, I have greatly reduced my position since I can no longer afford to hold on to this "charity." Sorry...
European investor 99 profile picture
@BioDan sorry but you got out too early. This will bring in good revenue and stock will go up as soon Japan and European countries approve it as well after the US and will sign contracts to produce and sell it with profit. Every company donates its first stack of medicine or vaccine during a pandemic (e.g.Roche, Glaxo) otherwise people, media and politics would go rage against them. This action justifies and lays the ground for later "selling" the drug.
nicholas davout profile picture
At around the $80 mark I started selling puts far out at $65 strikes. Either I get assigned down there or I keep the premiums to use while I wait.
"At $5,000 per treatment that's 100,000 treatments six months into a global pandemic... "

Sorry. I see no money here. I see Gilead headquater burning by angry mobs.
Yes but you have not considered the government may cut the price it pays on all the drugs Gilead has in its HIV line, so it may cancel the gains from the Covid-19 drug. I see the price hanging around its present price or less.
corona with lyme profile picture
didnt Gilead just donate their entire stock? how are they going to make money giving it away?
25540633 profile picture
@cwl donations of RDV is a must otherwise, how are u going to encourage people or hospitals to enroll patients for clinical trials at such a short time spans? No pain no gain and same as risks vs. rewards, brother…
jortiz profile picture
Their "entire stock" is about 1/10th of the amount they are manufacturing by the end of the year.
peace 2 u profile picture
@Bram de Haas

It is my understanding that Remdesivir was developed for the Ebola outbreak. It is my understanding that it failed for Ebola. When Covidis - 19 broke out, researchers, in their efforts to see if there was anything which would work with Covidis - 19, went back and took a look at Remdesivir. Although Remdesivir is a long ways from being a cure, it seems to quicken the recovery rate. It is apparently the best thing going at the moment.

I do not believe that Gilead is a particularly good investment. Remdesivir will quickly be left behind when a new drug comes along, which could be as soon as next week. Although it is getting a lot of attention, there is not a moat which will protect Gilead.

Just a thought or two.
No it is not that, first it is pricey. Second physicians might only use this drug under specific situations. Gilead has problems, other problems.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.