Gilead Sciences (NASDAQ:GILD) is one step closer to winning the coronavirus treatment race. The U.S. Food and Drug Administration granted Gilead emergency use authorization last week for remdesivir in severe cases of COVID-19, the illness caused by the novel coronavirus. This isn't an approval -- trials to support an approval are ongoing -- but the authorization allows temporary broader use of remdesivir in hospitals across the country. This is great news for patients, and from a drug development point of view, it's also great news for Gilead.

But from a financial point of view, the picture isn't as clearly positive for the company.

A nurse prepares an injection for a patient.

Image source: Getty Images.

Donating 1.5 million doses

First, it's worth noting that Gilead isn't yet selling doses of remdesivir. The company has offered to donate its existing supply, totaling about 1.5 million individual doses. As part of the original 10-day treatment duration, that represented about 140,000 treatments. But data from a Gilead-sponsored trial showed the therapy could be shortened to five days, meaning more patients may be treated with the current supply. Gilead aims to treat more than 1 million patients by year-end.

Now here is the big question mark: Gilead hasn't said what it would charge for remdesivir once current supply runs out, making it impossible to predict future revenue from its COVID-19 work. The Institute for Clinical and Economic Review, which evaluates the value of prescription drugs, estimates a price of $4,460 per treatment course would be cost-effective. As an example, that price point would represent sales of more than $4.4 billion, assuming 1 million patients pay for the treatment. The institute's report is just an analysis, however, and companies don't have to price their drugs accordingly.

But there's more to the pricing story -- and this part represents a risk ahead. Gilead has faced criticism in the past for its pricing of drugs. The company came under fire when it priced its hepatitis C drug, Sovaldi, at $1,000 a pill. Considering the widespread nature of a pandemic, and often the government funds involved, pricing can be particularly controversial.

Federal money for remdesivir

The development of remdesivir, at the University of Alabama, involved a five-year federal grant of $37.5 million. Now, two House Democrats want to know more about taxpayers' contributions to the research. Reps. Lloyd Doggett of Texas and Rosa DeLauro of Connecticut wrote a letter to the U.S. Department of Health and Human Services, asking for a breakdown of exactly how much federal money was used for remdesivir research, and requesting that the drug be affordable to all.

On Gilead's recent earnings call, CEO Daniel O'Day said that the pricing of remdesivir can't be compared with the model the company has used for other medications, such those treating HIV or hepatitis C. The CEO said Gilead plans to make remdesivir accessible and affordable to patients and seeks to do so in a "sustainable way" for the company and for shareholders.

The next concern is how much Gilead is spending on remdesivir -- without knowing how much revenue the drug will generate. Gilead is prepared to invest as much as $1 billion in remdesivir this year. The investment would include further development costs as well as scaling up manufacturing. But Gilead will decide exactly how much it will spend only after studying various factors, including the expected length of the coronavirus pandemic. Costs linked to remdesivir already have climbed, with Gilead spending $50 million in the first quarter on manufacturing and clinical trials.

What happens after?

And finally, the duration of the coronavirus pandemic and the "what happens after" remain risky unknowns. The need for remdesivir may decline if cases dwindle, and the virus either doesn't return or returns on a much smaller scale. Future sales of the drug also might suffer if a successful vaccine comes to market and a large portion of the population goes for vaccination. Considering the expense of the remdesivir program, the problem of pricing, and the unpredictability of how long the crisis will last, I'm not convinced the drug will be a financial victory for Gilead.

So why am I still optimistic about Gilead shares? As I've written before, I don't recommend buying a stock for a coronavirus program, but instead, for the company's entire pipeline and product portfolio.

Gilead has seen revenue of its hepatitis C drugs slow, but HIV treatments remain a growth area. Sales of blockbuster HIV treatment Biktarvy more than doubled in the first quarter compared with the year-earlier period, to nearly $1.7 billion. And Gilead is awaiting an FDA decision on its rheumatoid arthritis drug, filgotinib. That drug could become another blockbuster, bringing in global sales of $1.3 billion in 2024, according to EvaluatePharma.

These products, along with a robust pipeline, should drive both Gilead's revenue and its share price higher in the future -- whether remdesivir is successful or not.