Gilead could be sitting on close to $20 billion in untapped stock market value, provided it has success with a potential new coronavirus vaccine.
Oppenheimer analyst Hartaj Singh estimates that a worldwide release of remdesivir — currently in Phase 3 trial for Gilead —could lead to $500 million in yearly “pandemic sales stocking.” The analyst assumes the coronavirus pill would cost $50 to $100 per patient compared to $16 a pill for flu treatment Tamiflu in the U.S. Singh sees the pill reaching 5 million to 10 million people in terms of pandemic stock-piling.
Gilead’s trials of remdesivir include one targeting patients with severe manifestations of coronavirus. The other focuses on patients with more moderate affects from COVID-19.
“Assuming such a conservative model, successful Phase 3 outcomes in the moderate patients are worth 5% to 10% to Gilead. If both Phase 3's are successful, we foresee greater pricing leverage in developed markets and higher stocking; leading to a 10% to 20% valuation bump. Clearly a pandemic stockpiling of remdesivir (like Tamiflu) is where Gilead stock benefits most. Acute treatment for millions of patients would be more a harbinger of a Street meltdown,” Singh writes.
Using the aggressive side of Singh’s estimates for remdesivir, Gilead’s market cap could approach $115 billion versus $94 billion today.
The market has begun to lock in on Gilead — and to a lesser extent Moderna — as coronavirus vaccine winners.
Shares of Gilead has rocketed 10% higher over the past month while the broader stock market has gone in the tank on fears of a global economic slowdown. On the other hand, Moderna — which has a coronavirus vaccine in Phase 1 — has seen its stock skyrocket 31% in the past month.
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