Here’s a better reason to buy Gilead Sciences shares than a possible coronavirus treatment

Gilead Sciences (NASDAQ: GILD) might have achieved pole position in the race to fight coronavirus. On Friday, the big biotech announced that it was working with Chinese authorities on a clinical trial to evaluate remdesivir, which has failed as a treatment for Ebola, in the treatment of the 2019-nCoV strain of coronavirus which has caused serious problems with health around the world.

Remdesivir has already demonstrated its potential against MERS and SARS, two other coronaviruses that are structurally similar to 2019-nCoV. A study published in The New England Journal of Medicine Last week, a Washington state man with the strain of coronavirus experienced improvement after being treated with Gilead’s investigational drug.

Optimism over remdesivir fueled investor enthusiasm on Monday, pushing Gilead shares up 8.7% during the day. But there’s an even better reason to consider buying Gilead shares now than its prospects for treating the coronavirus.

Image source: Getty Images.

More important to the future of Gilead

Perhaps the best reason to buy Gilead Sciences stock right now is the potential of the immunologic drug filgotinib. There is no doubt that it is more important to Gilead’s future than remdesivir.

On the one hand, filgotinib has already been evaluated in several advanced clinical studies as a treatment for rheumatoid arthritis, and has demonstrated both its efficacy and its safety. Gilead is currently waiting for regulators in the United States, the EU and Japan to render their decisions on this matter. In contrast, while remdesivir has shown promise as a possible treatment for coronavirus, there is no guarantee that it will be successful in clinical trials.

Then there’s the relative size of the drug market: over 1.3 million Americans have rheumatoid arthritis, as does up to 1% of the world’s population – about 78 million people in all. And as the size of the older adult population increases globally, the prevalence of rheumatoid arthritis will increase as the likelihood of developing the disease increases with age.

Compare these numbers to what has been seen so far with the coronavirus. As of February 3, there were 17,391 confirmed cases of the virus, more than 99% of which are in China, according to the World Health Organization (WHO). The death toll from the 2019-nCoV coronavirus strain has risen to 361, including 360 in China.

These are worrying statistics, of course, as the number of confirmed infections is increasing at an alarming rate. However, there are many other diseases, including rheumatoid arthritis, which have a greater impact on health globally, and which would still be so even if 2019-nCoV spreads significantly.

Great expectations

There have been other coronavirus outbreaks in the past. SARS (Severe Acute Respiratory Syndrome) first appeared in 2003. MERS (Middle East Respiratory Syndrome) made headlines in 2012. But despite initial concerns, no vaccines or antiviral drugs have been approved for it. one or the other of the viral strains.

Gilead may earn a lot of money if remdesivir is found to be effective in treating 2019-nCoV. But based on the past, there seems to be a good chance that the worries will go away once this viral strain has run its course.

Meanwhile, analysts believe filgotinib will generate maximum annual sales of around $ 3 billion in the treatment of rheumatoid arthritis. Gilead is also evaluating the drug in several other autoimmune indications, including Crohn’s disease, psoriatic arthritis, and ulcerative colitis. If filgotinib gets approval for all of these indications, it could generate an additional $ 3 billion in annual sales.

Gilead liked the outlook for filgotinib so much that he spent $ 5.1 billion last year to expand its partnership with Galapagos, the biotechnology that initially developed it. Prior to this agreement, Gilead held the license to market filgotinib. The company now also has an exclusive license and option rights to develop and market all Galapagos programs anywhere outside of Europe.

More pipeline prospects

Biotechnology actions up and down on the outlook for their pipelines. As promising as the potential treatment for Gilead’s coronaviruses may be, filgotinib is clearly the jewel in the crown at the moment. And there are more candidates potentially on the way which makes Gilead even more attractive.

The company has several ongoing Phase 2 and Phase 3 clinical studies evaluating cell therapies to treat blood cancers. Analyst believes long-acting investigational anti-HIV drug GS-6207, currently in early clinical trials, could ultimately be Gilead’s biggest winner. Regardless of what happens with the company’s efforts to deal with this strain of coronavirus, the big biotech pipeline deserves serious consideration for long-term investors.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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