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Remdesivir Gets Emergency Approval: What's In Store for Gilead?

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Even after putting the global economy to a standstill, locking down countries and infecting more than 3.58 million people, the novel coronavirus hasn’t shown signs of slowing down. Rather the virus has mutated into multiple different and distinctive strains and spread across the world unevenly.

But this has not discouraged researchers, scientists and pharmaceutical companies. In fact, more than 70 vaccines are at development stage at present. Among them, Gilead Sciences, Inc.’s (GILD - Free Report) antiviral drug Remdesivir, is considered the front-runner in the race toward developing a treatment for the deadly coronavirus. It has recently been successful in curing some coronavirus patients.

Gilead's Remdesivir – First Drug on COVID-19 Treatment

On May 1, the FDA granted an emergency use authorization to Remdesivir for coronavirus treatment. The drug has been experimented for a long time now, and was first tested on Ebola disease patients.

Remdesivir will be used in treating adults and children with severe coronavirus disease, ones with low blood oxygen levels or those who require mechanical breathing support like ventilators.

Though the drug has shown significant results in shortening the time of recovery in some COVID-19 patients, the safety and effectiveness is still questionable. However, unavailability of adequate, approved, or alternative treatments, gives the FDA reasons to believe that Remdesivir may be effective based on scientific evidence available.

Gilead is constantly running clinical trials to generate more data on the safety and efficacy of Remdesivir. So far, the company has donated 1.5 million individual doses of Remdesivir, for treating more than 140,000 COVID-19 patients in a 10-day administered treatment course.

Remdesivir’s Positive Outcome to Boost Gilead

Gilead reported first-quarter 2020 earnings on May 1. Earnings of $1.68 per share beat the Zacks Consensus Estimate of $1.58. Total revenues came in at $5.55 billion, surpassing the Zacks Consensus Estimate of $5.41 billion and have grown 5.1% year over year. The company believes increased customer buying patterns and patient prescription trends benefited the top line.

However, Gilead’s costs have also gone up due to research and development spending on this experimental coronavirus treatment. But with FDA’s stimulus, the company has begun advancing remdesivir and is rapidly increasing its production.

In the next quarter, the stay at home orders could lead to fewer patients accessing treatment and prescriptions for HIV or hepatitis C. This could hamper sales of the drugs it markets for those diseases in the second quarter of 2020. But with the progress and positive results from remdesivir, losses could be compensated.

Several other pharmaceutical companies like Amgen Inc. (AMGN - Free Report) , Moderna, Inc. (MRNA - Free Report) and Incyte Corporation (INCY - Free Report) have also begun clinical studies. Amgen’s inflammatory medicine Otezla may be able to treat respiratory distress in late-stage COVID-19 patients.

Gilead, which belongs to the Zacks Medical - Biomedical and Genetics industry, has an expected earnings growth rate of 1.9% for next year. The Zacks Consensus Estimate for the company’s next-year earnings has been revised 0.8% upward over the past 60 days. Gilead carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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