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From Gilead To AstraZeneca, Investors Should Watch These Biotech Giants Right Now

By Michael Dean McGrady Jr – Updated May 8, 2020 at 11:50AM

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Despite a busy few months with emergency use authorizations due to coronavirus, the Food and Drug Administration is expected to approve several new drugs in May.

Editor's Note: This article was updated to reflect that the FDA issued priority review status to Clovis' rubraca drug for advanced prostate cancer.

The outbreak of the novel coronavirus has prompted many investors to pay attention to the realm of healthcare services and drug manufacturing. Even folks who normally prefer investing in consumer goods and tech stocks may be more likely to dip their toes into the healthcare sector due to the market conditions from the COVID-19 pandemic. 

Gilead Sciences (GILD -1.43%) is one healthcare stock that has been hard to ignore. The company made global headlines last week when the Food and Drug Administration granted its antiviral remdesivir an emergency use authorization for use as an investigational COVID-19 treatment. But this is far from the end of the story and there are many other pharma industry developments for market watchers to contemplate before deciding how to invest.

Gilead's elephant in the room

On May 5, the company announced it intends to expand the availability of remdesivir by partnering with companies that can facilitate rapid manufacturing and support the supply chain infrastructure. Gilead said that these partnerships are in discussions with companies that dominate pharmaceutical manufacturing in the European and Asian markets. 

Gilead's stock will likely remain volatile for the foreseeable future. The company's stock shot up upon the March announcement of the test results tied to the treatment of cases contracted on the Diamond Princess cruise liner. At the end of the initial testing phase, where 17 passengers received intravenous remdesivir daily for 10 days, Gilead's stock climbed 3.2%. From March to April, Gilead's stock also saw pops ranging from 1.9% to 5.4% and even hit a two-year high on March 6.

A man looks into a microcope

Image Source: Getty Images

You can't overlook Gilead's latest drama

Now that its potential COVID-19 therapy is now in production, Gilead is facing two challenges. First, the company is being scrutinized for its track record on drug pricing. Analysts believe, as long as the pandemic continues, that remdesivir could generate more than $750 million in the next year and $1.1 billion in 2022. The specter of a 2013 pricing controversy overshadows these plans, with investors recalling how Gilead sold Sovaldi, a life-saving hepatitis C drug heralded as a cure, for $1,000 per pill, which critics said was too high. The company could face a major blowback if it prices the treatment so that patients can't afford it, including those in at-risk populations and low-income communities.

Second, Gilead's highly valuable HIV treatment portfolio is also in the crosshairs. At the end of April, the company sued the Centers for Disease Control and Prevention and the federal government before the U.S. Court of Federal Claims. Gilead claims the agency "secretly" violated several agreements by obtaining patents stemming from research that was done in collaboration with Gilead and the CDC, and that led to the groundbreaking HIV prevention pill Truvada.

The company had petitioned the Patent Trial and Appeals Board to invalidate the patents held by the U.S. government in August, but the board denied the challenge in February. The Department of Health and Human Services also sued Gilead for patent infringement in November. 

Gilead's latest lawsuit, if successful, could provide the company with more momentum in the market. Truvada and the company's HIV treatment portfolio makes up 74% of its total revenue. So, a legal victory in this multi-year battle between HHS and Gilead could bode well for investors looking for post-pandemic era bets.

Clovis could fall short to AstraZeneca and Merck

For a change of scenery, consider stocks that are approaching approval deadlines with the FDA. Clovis Oncology (CLVS -5.08%) is expected to see an FDA decision on May 15 for its rubraca drug in a new treatment category, which covers metastatic castration-resistant prostate cancer. 

The drug, itself, has approvals for forms of ovarian, fallopian tube, and other peritoneal cancers that are complete or in partial response to platinum-based chemotherapy. According to the design of the federal Prescription Drug User Fee Act, the FDA typically has 10 months to review new drug applications. The FDA issued Rubraca priority review status for advanced prostate cancer, so the agency has six months to review that drug for that indication.

AstraZeneca (AZN -3.07%) and Merck (MRK -0.83%) recently concluded a study that tested lynparza in the treatment of prostate cancer patients similar to the types of patients Clovis tested and is targeting with rubraca and the initial findings were positive. Sales numbers show that rubraca has only generated an annualized $157 million take while on the market. Total operating expenses are about $524 million for the same timeframe. 

Bristol Myers may have something special 

Bristol Myers Squibb (BMY -0.81%) has a noteworthy PDUFA deadline coming soon, too. Bristol's combination Opdivo plus Yervoy treatment was granted priority review status in January. A PDUFA approval date is expected this month; likely May 15. 

Opdivo plus Yervoy is heralded by the Bristol Myers thoracic cancers team lead, Dr. Sabine Maier, as an "important milestone for patients with lung cancer in the United States." Maier also said, "Lung cancer is the third tumor type where the combination of Opdivo and Yervoy has demonstrated significant long-term overall survival benefit in a randomized phase 3 trial, which further validates the immunologic rationale for dual immuno-oncology therapy."

This is also the case in clinical environments testing the use of the drug for pleural mesothelioma cancer, which is caused by asbestos. For this, the survival rate "significantly improved" as the remainder of the clinical trials will persist into 2021. If the results hold, this could be huge news for interested investors. 

Michael McGrady owns shares of Gilead Sciences. The Motley Fool owns shares of and recommends Bristol Myers Squibb and Gilead Sciences. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Merck & Co., Inc. Stock Quote
Merck & Co., Inc.
$86.78 (-0.83%) $0.73
Bristol Myers Squibb Company Stock Quote
Bristol Myers Squibb Company
$70.71 (-0.81%) $0.58
Gilead Sciences, Inc. Stock Quote
Gilead Sciences, Inc.
$62.86 (-1.43%) $0.91
AstraZeneca PLC Stock Quote
AstraZeneca PLC
$54.58 (-3.07%) $-1.73
Clovis Oncology, Inc. Stock Quote
Clovis Oncology, Inc.
$1.12 (-5.08%) $0.06

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