Gilead (GILD) Up 19% in the Past Month: What Lies Ahead?

Shares of Gilead Sciences, Inc. GILD are up 19.3% in the past month. The company, had an eventful 2020 and was in the spotlight due to its coronavirus treatment, Veklury (remdesivir). The FDA granted full approval to Veklury for the treatment of patients with COVID-19 and the European Commission (“EC”) also granted conditional Marketing Authorization for the same.

The stock has gained 7.2% in the past year compared with the industry’s growth of 13.9%.

Last week, the company increased its annual sales guidance for 2020 as the worsening of the coronavirus pandemic drove sales for Veklury. Total product sales are now projected to be $24.3-$24.35 billion for 2020, up from the previous guidance of $23-$23.5 billion. Veklury sales witnessed growth as hospitalization and treatment rates were higher than expected, given the most recent COVID-19 surge. Veklury sales are estimated at $2.8-$2.825 billion.

Total product sales, excluding Veklury, are projected to be $21.5-$21.525 billion, considering the underlying strong Biktarvy uptake, partially offset by the loss of exclusivity of Truvada in the United States and the impact of COVID-19 primarily on Gilead’s pre-exposure prophylaxis (“PrEP”) franchise and chronic hepatitis C virus (“HCV”) franchise.

While Veklury sales were strong as the pandemic worsened in the last couple of months, the rollout of vaccines from Pfizer PFE and others might lead to a decline in sales eventually.

Nevertheless, Gilead is likely to maintain momentum on its strong HIV franchise led by Biktarvy despite stiff competition from the likes of Glaxo GSK. The label expansion of Descovy (emtricitabine 200 mg and tenofovir alafenamide 25 mg tablets; F/TAF) as a prevention option has boosted sales of the treatment. The FDA had earlier also extended the indication for Truvada as PrEP to include at-risk adolescents. Approval of new therapies has strengthened the franchise.

We remind investors that the massive decline in sales of its once lucrative HCV franchise has prompted it to focus on the HIV franchise, Yescarta and other newer avenues.

Gilead is diversifying into the oncology space. To that end, it acquired Immunomedics for approximately $21 billion and entered into strategic collaborations to foray into the lucrative oncology space. In April 2020, Gilead acquired Forty Seven for $4.9 billion and gained magrolimab, an investigational monoclonal antibody in clinical development for the treatment of a number of hematological cancers. Gilead also acquired a 49.9% equity interest in Pionyr Immunotherapeutics, Inc., a privately-held company pursuing novel biology in the field of immuno-oncology.

It has also collaborated with Novo Nordisk NVO for developing treatments for non-alcoholic steatohepatitis (NASH).

Gilead currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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