Plenty of drugmakers are developing potential treatments for COVID-19. But -- so far, at least -- only Gilead Sciences (GILD -1.29%) can claim a COVID-19 therapy that has sailed through late-stage testing. Gilead's remdesivir won FDA Emergency Use Authorization (EUA) and received conditional approval in Europe as a treatment for the novel coronavirus disease. 

Remdesivir appears to be effective in treating hospitalized patients with COVID-19. But there's another big COVID-19 opportunity for Gilead that you'll really want to watch. 

Gold coronavirus

Image source: Getty Images.

Breathe in

Thus far, Gilead's primary focus has been on an intravenous form of remdesivir. However, the company announced on July 8 that it had initiated a phase 1a clinical study evaluating an inhaled solution of remdesivir. This study will enroll around 60 healthy participants between the ages of 18 and 45.

Does the big biotech think that the drug could prevent COVID-19 since its latest study involved healthy individuals? No. Instead, Gilead plans to use healthy participants to assess the safety, tolerability, and pharmacokinetics (movement of drugs in the body) of the inhaled version of remdesivir. If all goes well, Gilead plans to conduct additional clinical studies of the inhaled version of remdesivir in treating patients with COVID-19 who haven't been hospitalized.

The upper respiratory tract ranks as the main infection hot spot for patients with early stages of COVID-19. Gilead suspects that using a nebulizer to deliver an inhaled solution of remdesivir could be effective in helping these patients recover more quickly. Gilead chief medical officer Merdad Parsey stated that the promising clinical data for intravenous remdesivir in treating hospitalized patients made it "clear that efforts were needed to investigate the drug's potential in the outpatient setting." 

A lucrative potential opportunity

SVB Leerink analyst Geoffrey Porges estimated that Gilead could make between $6 billion and $7 billion annually from remdesivir in the hospital setting. His projection, though, was based on the company pricing the drug at $5,000 per course in the U.S.

Gilead later announced a price tag of $2,340 per patient for a five-day treatment course of intravenous remdesivir. This pricing implies that the biotech could generate sales for the drug in the ballpark of $3 billion annually if Porges' calculations are on track. 

But the outpatient market for an inhaled version of remdesivir would undoubtedly be much larger. In the U.S., a little over 52,500 individuals have been hospitalized for COVID-19 so far compared to around 3.3 million positive cases of COVID-19.

Quick calculations might lead you to believe that Gilead's opportunity in the outpatient setting could be more than 60 times greater than its hospital setting opportunity. Could an inhaled formulation of remdesivir open up a $180 billion or more market for the biotech? That's almost certainly way too optimistic. Many patients with positive COVID-19 tests have no symptoms and require no treatment.

Still, it doesn't seem unrealistic that an inhaled version of remdesivir could generate sales that rival or surpass Gilead's blockbuster HIV drugs that are already on the market. The company's best-selling drug, Biktarvy, should generate in the ballpark of $7 billion in sales this year.

Don't count the money yet

You shouldn't start counting Gilead's money for inhaled remdesivir just yet. The odds of any infectious-disease drug in a phase 1 study going on to win FDA approval are less 20%, according to historical data compiled by biopharmaceutical industry organization BIO. 

For that matter, you probably shouldn't count on the IV version of remdesivir becoming a long-term commercial success for Gilead. It's possible that the emergence of vaccines and herd immunity could one day greatly reduce the need for COVID-19 treatments.

The good news for investors is that the biotech stock has other potential catalysts, notably including the anticipated U.S. and European approvals for filgotinib in treating rheumatoid arthritis. But you'll definitely want to monitor Gilead's progress with its early stage clinical study. The opportunity for an inhaled version of remdesivir is nothing to sniff at.