Gilead Sciences (NASDAQ:GILD) has been getting a lot of attention these days for remdesivir, its possible treatment for the coronavirus, which so far has resulted in more than 2,000 deaths. Even though remdesivir could be a plus for the company if approved, there are still too many unknowns to make it a reason for buying shares of Gilead Sciences.

Instead, eyes should be on the fate of filgotinib, the rheumatoid arthritis treatment now under review at the U.S. Food and Drug Administration. Addressing a much broader market, this treatment could compensate for declines in sales of the company's older drugs.

A doctor holds a chart that says: "Diagnosis: rheumatoid arthritis"

Image source: Getty Images.

In December, Gilead Sciences submitted filgotinib to the FDA along with a priority review voucher, which reduces the review time. Standard review takes about 10 months, while priority review is completed in about six months. Filgotinib is an oral JAK1 inhibitor for adults suffering from moderate to severe rheumatoid arthritis. JAK inhibitors block the action of enzymes that support the inflammation process.

Global sales of $1.3 billion

For Gilead Sciences, the opportunity is significant. The global rheumatoid arthritis market is forecast to reach $34 billion by 2025, according to Fortune Business Insights, which said the North American market alone was worth $9.9 billion in 2017. Arthritis Foundation data show that 1.5 million Americans have rheumatoid arthritis. EvaluatePharma predicts filgotinib could bring in global sales of $1.3 billion in 2024. Gilead Sciences has also applied for approval in Europe and Japan. While Gilead is solely responsible for the commercialization of the drug in the U.S., partner Galapagos (NASDAQ:GLPG) will co-commercialize the drug in certain European countries.

More good news is that filgotinib has the potential for launches in five new indications over the next four years, the company said in its recent earnings call. Indications now in late-stage trials include ulcerative colitis, Crohn's disease, and psoriatic arthritis.

The big question, if filgotinib is approved, is about labeling. Safety issues have come up with some JAK inhibitors, and last year, the FDA ordered a "boxed warning" about increased risk of blood clots and death with higher doses of Pfizer's tofacitinib. The FDA also approved a boxed warning for another rival, AbbVie's upadacitinib, mentioning thrombosis and other risks. For Gilead's filgotinib, the concern is that the FDA might decide to apply boxed warnings to the whole drug class even if some have better safety profiles than others.

Durable safety and efficacy

While the application of such a warning across an entire drug class isn't great news for filgotinib, its impact might be limited. Sure, some doctors may turn away from the entire drug class, but others may look further into the data and choose the safest options. Here, Gilead Sciences' drug may stand out. Filgotinib's FDA submission is backed up by safety and efficacy data in a trial involving 3,452 patients over a period of 52 weeks. The company said filgotinib showed durable safety and efficacy in a variety of patient populations.

Overall, filgotinib is a reason to be optimistic about Gilead Sciences. Though a 15% drop in chronic hepatitis C product sales in the fourth quarter disappointed investors, and earnings of $1.3 per share fell short of analysts' expectations, HIV product sales and the company's pipeline provide additional bright spots. HIV product sales rose 12% in the quarter and for the whole year, and the HIV drug market is growing, with Allied Market Research predicting the market will reach $26 billion by 2022 from $20 billion in 2015. In the earnings report, Gilead Sciences said that at year end, it had $25.8 billion in cash, cash equivalents, and marketable debt securities, meaning it has the resources to support pipeline development. Of the more than 35 drug candidates, seven are in phase 3 trials. That number doesn't include filgotinib for the rheumatoid arthritis indication.

Is Gilead Sciences a buy?

And finally, let's talk about its stock price and valuation. The shares posted a lackluster performance last year, rising 3.9%, and so far this year, they're up 3.3%. Analysts expect 11% upside from here. While the valuation of nearly 16 is higher than that of Pfizer, which trades at a bit more than 12 times earnings, it's lower than peer AbbVie, which trades at almost 18 times earnings. The valuation could be considered reasonable, especially in light of the pipeline and the number of late-stage candidates.

So, is Gilead Sciences a stock to buy? Yes. Any weakness is a good opportunity to get in on a company with products for vast markets and many others waiting to grow revenue in the years to come.