On October 22nd, 2020, The FDA approved Gilead Science’s antiviral medication, remdesivir, as a COVID-19 treatment for patients requiring hospitalization. Earlier in the month of October, Gilead Sciences had already come to an agreement with the European Union (EU) to supply the countries within the EU remdesivir for hospitalized patients. This EU deal is estimated to be worth more than $1 Billion. Some scientists have voiced concerns with the efficacy of this medication regarding patient outcomes, which has made headlines since its approval. These controversial efficacy results, the recent EU supply deal, and FDA’s latest approval are sure to affect Gilead’s market value.
In the beginning of October, the new supply deal with the EU provided a 2.5% gradual increase in Gilead’s stock price from October 8th (when the deal was signed) to October 12th. After October 12th, Gilead experienced a steep decline over the next 9 days resulting in a 6.7% in market value. On October 22nd, when FDA approval was announced, there was a sharp increase of almost 6% in a day. Since that sharp increase, Gilead Science’s market value has been a steady decline.
So why the steady decline for a company with a new supply deal and the first FDA approval for this COVID-19 pandemic? A contributing factor to this decline is the controversy on the efficacy of remdesivir against the coronavirus. A handful of studies, including the largest study conducted recently by the WHO, have shown a lack in significant reduction in COVID-19 disease duration and mortality rates. On the other hand, another large trial set by the US National Institutes of Health did show a modestly shortened duration of disease with the treatment of remdesivir compared to placebo but did not significantly reduce mortality between the groups. Some scientists have cited this lack of significant data as a drawback to a “premature” FDA approval. Stockholders may lack faith in the longevity of this COVID-19 treatment which has driven the recent decline of Gilead’s stock price.
In addition to the controversy in the efficacy of Gilead’s treatment, some other factors that can contribute to the decline are the alternative COVID-19 treatment options coming to light. Dexamethasone, other corticosteroids, and convalescent plasma are being used in several clinical trials to attempt to treat the coronavirus. There are a few positive features to the alternative treatment options being studied, especially dexamethasone. Dexamethasone is an established corticosteroid with anti-inflammatory effects that is used for a variety of indications. It also has an oral formulation (liquid or tablet) as well as an IV option which is an appealing aspect to healthcare professionals who administer the drug. Dexamethasone is also a fairly inexpensive medication which is appealing to the patient and the prescriber. Regarding efficacy, the World Health Organization (WHO) published preliminary findings showing a reduction in mortality for patients on ventilators by 33% and 20% for patients requiring oxygen only. Convalescent plasma is an option that uses the plasma of recovered patients to help combat the virus in infected patients. This type of treatment has been used for decades to treat varying diseases such as measles, polio, chickenpox, SARS, and more. It is a very safe treatment option. Hydroxychloroquine is still being used in some cases to help treat COVID-19 patients but hopes of FDA approval have essentially been dismissed. These competitive alternative options, and more not listed, can syphon the COVID-19 treatment market space away from Gilead’s FDA approved remdesivir, continuing to drive down the stock price.
As treatment options continue to develop, it will be interesting to see how much Gilead Science’s stock continues to fall despite being the first to FDA approval for COVID-19 treatment.
Written by Joseph Mancini, PharmD Candidate 2022, University of Pittsburgh School of Pharmacy
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