Gilead Sciences (GILD -1.21%) navigated the coronavirus market crash better than most. At one point, the biotech's antiviral drug, Veklury (remdesivir), was considered one of the most promising potential treatments for COVID-19. In May, the U.S. Food and Drug Administration (FDA) granted Veklury an Emergency Use Authorization (EUA), which allowed the drug to be administered to patients with serious cases of COVID-19. As a result, enthusiastic investors bid up shares of the company. However, the healthcare giant lost some momentum after the FDA warned about potentially harmful drug interactions involving remdesivir, and consumers realized the treatment was just that -- a treatment -- not a fail-proof cure for the virus. 

While the stock market has recovered since its low in March, Gilead Sciences has been moving in the opposite direction. Overall, the company's stock is up by 1.66% year to date, while the S&P 500 is up by over 6% in the same period. What's more, Gilead and its shareholders just received some discouraging news. The FDA denied the approval of the company's treatment candidate, filgotinib, as a therapy for rheumatoid arthritis (RA). Let's see why this rejection was significant and what it means for Gilead Sciences moving forward. 

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A potential blockbuster drug

The market for RA drugs is competitive. Some of the top-selling products that treat the condition include AbbVie's Humira, Johnson & Johnson's Remicade, and Amgen's Enbrel, among others. Athough the field is crowded, Gilead Sciences had high hopes for filgotinib. Only one out of five RA patients achieves complete remission, a period in which symptoms are under control, after a year of treatment. That's despite the widespread availability of therapy options, according to the company's chief commercial officer, Johanna Mercier. 

In their Q4 2019 earnings call earlier this year, Mercier went on to say that filgotinib had a "compelling and differentiated clinical profile" suited to send more patients into remission at a faster pace. Gilead is also investigating the candidate as a treatment for Crohn's disease, ulcerative colitis, psoriatic arthritis, and other conditions. The company originally hoped it would earn would earn five new indications for filgotinib over the next four years. But since the FDA's rejection, the future of the drug is uncertain. 

What's next for Gilead Sciences?

Filgotinib could still go on to be approved by the FDA. The regulator has requested data from studies on whether the drug has an impact on sperm parameters, such as concentration and mobility, before it can move forward in the approvals process. Gilead expects preliminary results from these studies in the first half of 2021, which means filgotinib won't earn regulatory approval until sometime next year at best. How will the company fare in the meantime? Note that during its second quarter, which ended on June 30, Gilead's sales declined by roughly 10% year over year to $5.1 billion.

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The decrease in the company's top line was due in part to sales of its hepatitis C virus (HCV) products plunging by 47% year over year to $448 million. While the company blamed the COVID-19 crisis for its slumping HCV business, its struggles predate the pandemic. During the fiscal year 2019, revenue from this segment came in at $2.9 billion, compared to $3.7 billion during the fiscal year 2018. The decline was due to lower average net selling prices, according to the company.

Gilead's human immunodeficiency virus (HIV) therapy business is starting to close the gap, however. During the first quarter, sales from this unit decreased by only 1%, to $4 billion. This is good news, considering sales from the segment make of 79% of current revenue. Gilead's HIV business also gained some market share during the quarter. Biktarvy, one of Gilead's top products, is now used to treat 50% of patients new to HIV therapy and the majority of those switching their HIV therapy.

Gilead expects to continue its reliance on these HCV and HIV drugs, but also hopes that Veklury sales will accelerate internationally. The COVID-19 treatment has received regulatory approval in Japan and earned conditional marketing authorization in Europe. The company said it expects to sell between 1 million and 1.5 million treatment courses by the end of the year. Gilead revised its fiscal 2020 guidance with this market in mind. The biotech previously expected sales to come in between $21.8 billion and $22.2 billion. Now, it thinks it will be able to generate sales between $23 billion and $25 billion. Thanks to its thriving HIV business and the potential market for Veklury, the company should be able to keep its revenue and earnings afloat. 

Is now a good time to buy?

Gilead Sciences still aims to introduce 10 new therapies over the next decade. The company has been collaborating with other biotechs, including Galapagos, to achieve this goal. Per their July 2019 agreement, Galapagos received an upfront payment of $3.95 billion and a $1.1 billion equity investment from Gilead Sciences. In return, Gilead acquired the option to develop any of Galapagos' pipeline candidates and to commercialize them outside of Europe.

One of the candidates Gilead got its hands on through the deal is GLPG-1690, a potential treatment for idiopathic pulmonary fibrosis, a fibrotic disease that leads to scarring of the lungs. The treatment is currently in phase 3 testing. In other words, filgotinib wasn't Gilead Sciences' last hope. Despite the FDA's recent rejection, the company has found other avenues for sales growth and hasn't given up on the RA treatment's possible approval. In short, I think Gilead Sciences is worth buying, and given its recent woes, it seems like a great time to initiate a position in this biotech stock.