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Why Gilead Sciences Stock Is Up 13% Today

By George Budwell – Updated Feb 3, 2020 at 10:33AM

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The biotech's shares are jumping this morning after the announcement of a coronavirus research agreement in China. Time to buy?

What happened

Biotech blue blood Gilead Sciences (GILD 1.02%) saw its shares jump by as much as 13% in pre-market action Monday morning. The stock perked up in response to a research agreement with Chinese authorities to begin a clinical trial of the antiviral medication remdesivir in patients infected with the novel coronavirus known as 2019-nCoV. The trial will reportedly take place in Wuhan, China, the epicenter of the current outbreak. 

So what

The coronavirus has already killed 361 individuals, based on the latest figures from the World Health Organization. And it has quickly spread from China to neighboring Asia-Pacific nations, North America, Europe, and the Middle East. If a viable treatment isn't identified soon, the death toll from this unique respiratory disease could skyrocket in the coming weeks.

A test tube labeled "coronavirus".

Image source: Getty Images.

In fact, the challenging circumstances developing in Wuhan might be skewing the actual infection rates by health authorities in the region. Put simply, this outbreak might actually be far worse than current estimates suggest. What this all means is that health authorities in China and elsewhere may be forced to take extraordinary measures soon, such as approving novel treatments like Gilead's antiviral remdesivir in record time.  

Now what

Should investors take advantage of this rapidly developing healthcare story? While there's a growing chance that this may in fact be a boon for one or more biotechs at the end of the day, it's still a long shot. Gilead (or any other coronavirus player for that matter) is highly unlikely to get a marketing approval for a coronavirus treatment before the outbreak simply peters out. In short, this breaking news story is not a solid reason to buy this top biotech stock today.  

 

George Budwell has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Gilead Sciences. The Motley Fool has a disclosure policy.

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Gilead Sciences, Inc. Stock Quote
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