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Apr 29, 2020

Gilead COVID-19 drug likely to win speedy approval: Wall Street

Gilead says Remdesivir hit primary target in COVID-19 study


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Gilead Sciences Inc.’s remdesivir is likely to get some form of accelerated approval or expanded use after a pair of company statements said the drug worked in COVID-19 patients, Wall Street analysts said.

Piper Sandler analyst Tyler Van Buren said he expects an approval “very soon.” Gilead’s stock rose 3.2 per cent, paring a more than seven per cent gain. A Food and Drug Administration official further bolstered those expectations, saying the agency is talking with Gilead about getting the drug to patients and making it available as appropriate.

Some on the Street, like SunTrust’s Robyn Karnauskas took a more cautious approach. She said the stock may “overshoot its mark near-term” because the revenue proposition is cloudy.

Analysts have recently warned about Gilead‘s stock market valuation, with at least three dropping their ratings in the past few weeks.

Piper Jaffray, Tyler Van Buren

“Patients treated within 10 days of symptom onset did better and observed clinical improvements appear positive in both arms, though we need to see proper natural history to better understand magnitude of effect.”

“Regardless, we view the seven per cent mortality rate observed in the trial outside of Italy positively based on natural history we have collected.”

Regulators are likely combing through the data now, and “remdesivir could receive approval — at least in severe patients — very soon.”

Rates overweight, US$90 price target

SunTrust, Robyn Karnauskas

“The stock could overshoot its mark near-term, because we don’t know the revenue proposition or how long the pandemic will last.” Karnauskas has said in the past she doesn’t see Gilead making a profit from the drug and doesn’t include it in her model.

“An exploratory analysis suggesting earlier treatment has better benefit” offers a positive read-through to Gilead’s placebo-controlled study in moderate patients.

Maintains hold rating, price target US$70.

Goldman Sachs, Terence Flynn

The lack of a comparator arm in the company-sponsored study “makes it difficult to draw a definitive conclusion.”

For the study from the National Institute of Allergy and Infectious Diseases (NIAID), the analyst said he was waiting on the full details “to be able to assess the magnitude of benefit,” as well as more results from a second ongoing Gilead-sponsored study in moderate patients expected next month.

“Any clinical benefit for remdesivir with an acceptable safety profile could leave it well positioned for potential FDA approval.”

Maintained at sell, price target US$58 (Street low, per Bloomberg data).

Mizuho, Salim Syed

“We still don’t know the details around the NIAID trial’s results, and this will be the next key question,” but the pair of announcements offer the “most reliable data thus far.”

“From the headline itself it seems like remdesivir is active and has a favorable impact in COVID-19. We remind investors, from a stock perspective, Gilead is positioning remdesivir more as a government stockpiling drug, and while the stock may trade higher today on headlines,” he values the impact to be US$1 to US$4 per share.

Maintains buy rating, US$81 price target

Jefferies, Michael Yee

The NIAID announcement is “important because it’s in a broader population (not just severe) and timing was early. We expect GILD to trade up given recently lowered expectations and this is good news for COVID-19” patients.

“We anticipate the FDA will probably accelerate some sort of approval or expanded use for the drug given the overall risk/benefit in a randomized study.”

While data are positive there are a handful of unknown factors that are needed, including how effective the drug is and how long it took for patients to recover. Yee would also like more color on whether the drug worked better in patients with more moderate disease or those in critical condition because he thinks it works better in less-sick patients.

Maintains buy rating and US$89 price target.

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