SVB Leerink analyst Geoffrey Porges predicts that Gilead Sciences' remdesivir, which has shown modest benefits for the treatment of COVID-19, will bring in revenues approaching $2 billion this year, and hit a peak of $7.7 billion in 2022. The projection marks a reversal for the analyst, who had previously suggested investors were giving the company a "generous amount of credit" for a drug that was unlikely to be sold for a profit.
Porges also anticipates SARS-CoV-2 will be around a long time, even after vaccinations become available, with stockpile sales after 2022 potentially maintaining remdesivir revenue at between $6 billion and $7 billion per year, versus a consensus he says hovers around $1 billion annually.
The boosted sales forecast prompted Porges to raise his price target on Gilead's shares from $85 previously to $94. "This forecast has more uncertainty than any that we have published in the last 15 years," Porges noted, "but it reflects our view that remdesivir works."
Recent published data from the ACTT trial showed remdesivir shortened the time to recovery in adults with COVID-19 with moderate-to-severe disease, particularly those on supplemental oxygen. Gilead has also recently reported results from its SIMPLE trials demonstrating remdesivir helped patients with moderate or severe COVID-19 improve.
Pricing expected soon
"A valuation of $94+ is realistic, perhaps as soon as the company declares its price for commercial sale of remdesivir," Porges said, estimating that it will be around $5000 per treatment course in the US, $4000 in Europe and $2000 elsewhere. Early last month, he suggested that at $4500 per patient, remdesivir "would have a gross margin and overall profit contribution that is below the company's other products, but not highly dilutive to the company's future profitability outlook." Gilead has said it is donating 1.5 million vials of remdesivir globally, with Porges indicating the company has likely already handed out that supply and will have to announce a price soon.
The $94 target also takes into account more than $1 billion in sales from potential cancer immunotherapies stemming from a recent partnership with Arcus Biosciences, which Porges said gives Gilead "critical mass in oncology" (for related analysis, see ViewPoints: Arcus, Gilead look for shared spaces in I/O).
However, the analyst does not expect profit from remdesivir will approach what Gilead makes on its HIV or hepatitis C portfolios. Still, he believes the experimental COVID-19 therapy, together with a pipeline of investigational treatments against cancer will revive growth for Gilead, on top of steady sales from its HIV and hepatitis C drug franchises.
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