Shares of the biotech heavyweight Gilead Sciences (NASDAQ:GILD) are poised for a strong showing today. In pre-market trading, the company's stock jumped by as much as 7.2% Friday morning.
The catalyst? Gilead's stock is trending higher today in response to the full approval of its coronavirus treatment Veklury (remdesivir) by the Food and Drug Administration for hospitalized patients age 12 or older. The drug was previously given emergency use authorization by the FDA for a portion of this same patient population back in May.
Veklury should turn out to be a particularly important new growth product for the biotech for perhaps the next year or so -- that is, until the eventual mass distribution of an approved COVID-19 vaccine and/or another therapeutic such as a monoclonal antibody.
Underscoring this point, Gilead's $21 billion acquisition of Immunomedics isn't expected to contribute to the biotech's top line in a meaningful way for at least another two years. And its high-dollar collaboration with Belgian drugmaker Galapagos ran into a major stumbling block earlier this year with the surprise rejection of the rheumatoid arthritis medication filgotinib. In short, Gilead got a much-needed win with the full approval of Veklury for hospitalized COVID-19 patients.
Is Gilead's stock a buy on this positive regulatory news? That's hard to say. Veklury's commercial shelf life is likely to be short-lived. But this large-cap biotech stock is currently trading at a rather attractive 9.1 times forward-looking earnings, and this COVID-19 therapy may be the perfect bridge for Gilead's ongoing transition to an oncology-centric biopharma company. Buying the biotech's shares in the wake of this news, though, does require a degree of faith that its recent business development moves will ultimately pan out.