Remdesivir stockpiling could help push COVID-19 drug into profitable territory for Gilead: analyst

Ever since the FDA last month cleared Gilead’s remdesivir for emergency use to treat COVID-19, investors have been wondering if the drug could possibly reap returns for the company, given the Big Biotech's vow to donate millions of doses and a lack of details on pricing plans beyond that.

But one influential Wall Street firm does see a path to profitability for remdesivir—one that hinges on both commercial sales and governments around the world paying for the drug to build a stockpile after the current pandemic passes.

Analysts at SVB Leerink predicted Gilead will announce its pricing plans for remdesivir soon and start selling it commercially in the second half of the year, they wrote in a note to investors Wednesday. The analysts estimate the price will be $5,000 per course in the U.S., $4,000 in Europe and $2,000 elsewhere.

At those prices, remdesivir should bring in $1.9 billion in sales this year, peak at $7.6 billion in 2022 and then fall off from there, SVB Leerink said. The operating profit margin on the drug will peak at 19% in 2021, and governments should start scooping up the drug for stockpiling late that year, the analysts added.

Remdesivir’s contribution pushed SVB Leerink’s estimate for Gilead’s total sales in 2021 up 28% to $30 billion. The firm also boosted its earnings-per-share estimate by 10% for next year to $7.74.

“This forecast has more uncertainty than any that we have published in the last 15 years, but it reflects our view that remdesivir works, it saves medical and societal costs by shortening disease duration and reducing severity, and we believe that Gilead will be permitted to capture reduced but still real profitability from the product,” the analysts wrote.

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SVB’s forecast for remdesivir builds in several assumptions, none of which are guaranteed. They assumed a COVID-19 vaccine will be on the market next year, for example, but that herd immunity won’t be reached until 2025, when 35% of the population will be immunized.

The analysts expect that at least 60% of remdesivir sales after 2021 will come from government stockpiling, not just in the U.S. but around the world. The product will be heavily discounted for stockpiling, however, and Gilead’s sales prospects will depend on its ability to manufacture enough doses to meet the demand, they warned.

Gilead is also facing competition in COVID-19 from a range of companies developing treatments, though SVB Leerink isn’t concerned because the company should have a leg up when governments start choosing supplies to stockpile in preparation for future pandemics.

“Even if (as we expect) biological treatments such as convalescent plasma and monoclonal antibodies are effective, we still expect widespread use of remdesivir, and ultimately significant national stockpiling by governments seeking insurance against future coronavirus eruptions,” the analysts wrote.

RELATED: Gilead pens $2B Arcus pact for immuno-oncology targets of the past and future

Gilead’s future isn’t just dependent on remdesivir’s success, SVB Leerink added. Last week, Gilead formed a $2 billion research pact with immuno-oncology player Arcus. That will launch Gilead into the hot market for antibodies that inhibit TIGIT, an emerging target that’s also being pursued by the likes of Merck and Roche.

Arcus has started phase 2 clinical trials of its anti-TIGIT drug AB154, combined with its PD-1 blocker zimberelimab, in patients with non-small cell lung cancer. SVB Leerink predicts AB154 and another asset that’s part of the deal, AB928, will both succeed, with the latter potentially winning approvals in several tumor types and reaching $1 billion in peak sales.