One Wall Street analyst attributes the drop-off to market skepticism around staying power for the experimental COVID-19 treatment
In the four months since Gilead Sciences Inc. first received emergency authorization for the experimental COVID-19 drug remdesivir, its stock has done the opposite of what you would expect — it has dropped 21%.
The decline is still evident even after the drug manufacturer received a new emergency-use authorization from the Food and Drug Administration on Friday that broadens the allowed use of remdesivir in patients who have been hospitalized with moderate forms of COVID-19, not just the severely ill.
Shares of Gilead GILD, +2.28% were up 1.9% near the close of trading on Monday.
Gilead’s stock hit a year-to-date high of $84 on April 30, which was the day it released the first comprehensive set of clinical trial data about how remdesivir performed in severely ill COVID-19 patients. The FDA awarded the EUA on May 1. (The stock’s low for the year was $62.63 on Jan. 21.)
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One Wall Street analyst attributes the drop-off to market skepticism around remdesivir’s staying power. Much of the excitement for remdesivir and Gilead stems from the fact that the drug was the first new COVID-19 treatment to receive an EUA during the early stages of the public health crisis in the U.S.
“Its utility may be continually lessened going forward as better therapies emerge,” Raymond James analyst Steven Seedhouse wrote in an Aug. 27 email. “Dexamethasone and perhaps even convalescent plasma already appear to be good alternatives to treat hospitalized patients.”
Researchers in the U.K. reported in mid-June that the steroid dexamethasone can reduce the risk of death in COVID-19 patients, which is a far more definitive clinical finding than remdesivir’s ability to reduce recovery times for some hospitalized COVID-19 patients. The FDA last week granted an EUA to convalescent plasma as another new treatment for coronavirus patients.
“The data that were relied upon for emergency-use authorization of remdesivir have never been followed in my view by any more compelling data including any evidence that a bona fide survival benefit is conferred by remdesivir,” Seedhouse added. “In fact it’s the opposite, [and] there has been persistent skepticism backed by data/analysis.”
Many but not all of the so-called virus stocks — companies developing and in some cases selling tests, treatments and supplies used in the treatment of COVID-19 patients — are outperforming standard indexes like the S&P 500 SPX, -0.21% and the Health Care Select Sector SPDR Fund XLV, +0.24%. However, Gilead’s stock has struggled to maintain its momentum since April’s peak.
Looking at the last three months, Gilead’s stock is down 14.6%. The S&P 500 has gained 15.8%, and the Health Care Select Sector SPDR Fund is up 4.3%. Abbott Laboratories ABT, -1.19%, which has received emergency authorization for six COVID-19 tests, has watched its stock jump 15.2%. Shares of Moderna Inc. MRNA, -3.85%, which is developing one of the front-running COVID-19 vaccine candidates, have rallied 4.9%. Johnson & Johnson’s stock JNJ, -0.15% is up 3.3% over the last three months as it has moved forward with a vaccine candidate of its own.
However, shares of Pfizer Inc. PFE, -0.31%, which is jointly developing COVID-19 vaccines with BioNTech BNTX, -4.29%, are down 1.2%.