Trump announced on Friday that the US Food and Drug Administration has cleared the emergency use of Remdesivir as a COVID-19 treatment. Gilead Sciences (NASDAQ:GILD) will play a vital role in producing 1.5 million doses for patients across the US suffering critical complications from COVID-19. The now infamous Remdesivir has made headlines over the past month, as speculators look to cash in on the drugs anti-viral capabilities. We first brought Gilead to our readers attention after the first trials for “compassionate use” showed promising signs resulting in a surge in the stock price.
— Bloomberg (@business) May 1, 2020
What Emergency FDA approval will mean for the stock?
Starting Monday, Gilead will be donating the first 1.5 million doses of Remdesivir across the country for emergency use against COVID-19. If shown to be an effective, the demand for the drug across the country and the rest of the world will surge. Although too early to tell, health professionals are divided on whether or not the use of Remdesivir is a safe and effective treatment for critically ill patients.
Relation to Remdesivir – “has a clear-cut and significant positive effect in diminishing the time to recovery.” Dr Anthony Fauci.
Being the only current FDA approved drug to treat COVID-19, it’s clear Gilead is winning the race in speculators eyes. The increase in demand for the drug should see the stock rally over the next week however in recent days investor confidence is beginning to slip. It is hard to tell the exact impact of this news until we see pre market movements on Sunday night.
What’s next for investors?
Before I start, I am obliged to remind our viewers that this is not advice, only general commentary from my extensive research in this area. The stock is likely to rally on Monday as the US backs Gilead to deliver some relief to US hospitals across the country. Although positive news for the company, with such a fast-tracked process there are things that can go wrong. Side effects and other complications remain a threat to the success of Gilead in the battle against COVID-19.
A Chinese study on the drug found no benefit of Remdesivir leaving investors clueless on whether the investment is a waste of time. From my research analysis, this week Gilead is likely to hit $85-90 before correcting back down to $80. The company is a bio-tech that is aiming to solve a world pandemic, they are not looking to profit as of yet. This leaves investors to make a conscious decision whether or not taking on a company that does not aim to profit is worth your time.
If the drug remains effective on a national scale, Gilead will see a huge spike in revenue. Only time will tell whether Remdesivir will have what it takes to fill such a huge role in our current global crisis.
Here is our free, uncomplicated, and extensive ASX portfolio
Here is our free, uncomplicated, and extensive breakdown of smart COVID-19 Strategies
If you enjoy our articles or are wanting to learn more, you can subscribe to us for free via email and get updates when we post new articles. From all of us at YIG, thank you for the support.
The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.