There’s a lot of hope that Gilead Sciences, Inc. (NASDAQ:GILD) could have a possible treatment option that can help people who have COVID-19, and that’s remdesivir. Without the drug, it may be hard to consider the healthcare stock a buy given that it’s shown no revenue growth in recent years and sales in 2019 were down more than 30% from where they were back in 2015.
In short, Gilead needs remdesivir to work for the stock to have a realistic shot of producing good returns for investors. Year to date, shares of Gilead are up more than 20% and those gains have largely come since the outbreak of the coronavirus.
Over the past five years, Gilead’s stock is down more than 23%. While it does offer a dividend that today yields around 3.4%, that may be the only reason left to invest in the stock if remdesivir flops.
Earlier this month, there was a report from a Chinese trial of the drug that showed it did not appear to provide a significant benefit to patients with COVID-19. There was a higher percentage of people with the disease who took the drug and died than those who didn’t.
However, the study was only on 237 patients and the company’s called the results “inconclusive” and believes there are benefits if patients use the drug in the disease’s early stages.
Nonetheless, investing in a company based on the success of a possible drug is risky. While remdesivir may still prove to be effective, it’s impossible to gauge if that will happen or not. The rewards will be high, but so too will the risk. And given the market’s volatility of late, investors shouldn’t take the chance on Gilead.