Why BofA Has Low Expectations For Gilead's Remdesivir As Potential Coronavirus Treatment

Gilead Sciences, Inc. GILD shares spiked about 6.6% Wednesday in reaction to a Piper Sandler note that suggested the biopharma's remdesivir could be approved for COVID-19. 

An analyst at BofA Securities isn't convinced of remdesivir's potential.

The Gilead Analyst

Analyst Geoff Meacham maintained a Neutral rating on Gilead with a $70 price target.

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The Gilead Thesis

Gilead's remdesivir is the only COVID-19 treatment that is in late-stage development, with a potential readout in April, Meacham said in a Friday note. (See his track record here.)

While the drug is likely to have some activity, the overall clinical benefit in COVID-19 patients could be modest, the analyst said, citing infectious disease specialists with experience in viral respiratory disease.

The key opinion leaders BofA interviewed highlighted difficulties such as a high placebo effect, a high bar for efficacy in severe patients, existing lung/tissue damage and challenges with optimizing the best time of therapy in mild/moderate patients, he said. 

The BofA contacts also felt remdesivir could face challenges in adoption, as it needs to be administered intravenously over 10 days in a hospital setting and by caregivers who are already burdened by the epidemic, Meacham said. 

"While we recognize the urgent need for effective COVID-19 therapies, we are not optimistic on remdesivir." 

"Net-net, we don't view the probability of success in the two trials in China as particularly high for Gilead's remdesivir," he added.

The analyst said he favors other modalities such as vaccines and antibodies that are likely to be more effective and specific.

Pivotal data supporting approval for Gilead is unlikely to be released until the first half of 2021, according to BofA. 

Gilead Price Action

The stock was down 5.64% at $74.12 at the time of publication Friday. 

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