Gilead Sciences (GILD -2.19%) released more positive results relating to remdesivir and its effectiveness in battling COVID-19 earlier this month. Updated data showed that patients who took the drug were more likely to recover earlier from COVID-19 than those patients who didn't. But despite the good results, investors aren't all that bullish on the stock; in the last month, shares of Gilead are up just 3%, while the S&P 500 is up around 5%.
Let's take a closer look to see whether investors are missing out on a great opportunity here, or if remdesivir's results aren't enough to make Gilead's stock a buy.
Why investors may be underwhelmed
Gilead released additional data on remdesivir's effectiveness in treating COVID-19 on July 10. That data indicated that 74.4% of patients who were taking remdesivir recovered from COVID-19 by the 14th day, compared with 59% of patients who recovered when receiving the current standard of care. For every 1,000 patients, that's 154 more that will recover by day 14 when taking remdesivir, compared with those patients who aren't taking the drug.
It's a modest improvement, but what's clear is that remdesivir is not the silver bullet many people were hoping it would be to stop COVID-19 in its tracks. What may be most disappointing about the data is that one of the factors that Gilead identified as being "significantly associated with clinical improvement" was whether a patient was under the age of 65. Seniors are the most vulnerable to COVID-19 and its effects. Data from New York City Health indicated that as of May 13, people 65 and over made up three-quarters of COVID-19 deaths in the city.
Remdesivir is effective in helping to treat some patients with COVID-19, but it likely isn't going far enough (especially in helping seniors) to justify a five-day treatment cost of $2,340 -- and that's the discounted price for governments and veterans. The price for insurance companies is 33% higher and comes in at $3,120 for an individual patient.
Has the ship sailed for remdesivir?
There's another reason investors may not be so excited about remdesivir, and that's because there are 14 possible coronavirus vaccines in the works. If a vaccine is created, then there may be limited use for a drug to treat COVID-19.
It's been four months since the World Health Organization declared COVID-19 a pandemic back in March, and some experts are saying a vaccine could be ready in months rather than years.
Without definitive results proving that remdesivir can effectively treat COVID-19 for all patients, it could be that Gilead has simply run out of time. Investors are now focused on vaccine companies including Moderna, which plans to launch a 30,000-person study on its vaccine on July 27.
Year to date, shares of Moderna are up by more than 300%, while Gilead's risen by a modest 17% (the S&P 500 is flat thus far in 2020).
Should you buy Gilead?
Remdesivir is just not effective enough in fighting COVID-19 to make the drug a reason to buy shares of Gilead.
But if you need a good dividend stock, then Gilead may be an intriguing option, as it yields 3.6% annually -- well above the S&P 500's average of 2%. But beyond that, unless you're excited about the company's rheumatoid arthritis drug, filgotinib, which is awaiting approval from the U.S. Food and Drug Administration, there's just not a whole lot of reason to invest in Gilead today. Although the company's recorded a profit in each of the last 10 years, its revenue was flat last year, and prior to that sales were declining for three years in a row.
There are simply better options out there for healthcare investors to consider right now.