There are various facts and factors surrounding US drug company Gilead Sciences at the moment, all of which go to make it one of the most fascinating situations on the stock market. Gilead also provides insight as to how both the world of corporate finance, investment banking, financial journalism and financial social media works currently. All in all, it is quite a heady mix.
The Eye Of The Covid-19 Hurricane
As far as the background fundamentals are concerned, there is little doubt that just on its own Gilead is at the eye of the Covid-19 hurricane. With its flagship drug remdesivir, we have the best weapon in the fight against Covid-19, with the antiviral in the frontline of the battle. This will continue to be the case, not only in the run up to a possible vaccine for Covid, but even after one is developed – if indeed, we ever get one in an adequate timescale. As we know, it was predicted that there might be a vaccine by September in the Spring, something which is increasingly looking as solid as an end to the Great War “by Christmas” of 1914.
The second issue with Gilead is that remdesivir is so ahead of the pack, the company effectively has a monopoly on Covid treatment, a point which has been underlined by the BMJ in an article yesterday, as it called for the US to end the company’s monopoly on production. This is certainly a curious state of affairs for what is after all still an unapproved investigational drug. The question perhaps is how this state of affairs can be rectified, and how quickly? In the meantime, the shortage of supply is perhaps one of the more disastrous aspects of the pandemic, given that even with a full supply the battle against Covid would be an uphill one.
Moving away from the use of remdesivir, we have Gilead’s position within the pharma sector off the back of its star treatment. It is rare that any company sits on IP which gives it such an advantage in terms of the market place, whether in pharma or tech or anywhere else. But remdesivir is Gilead’s Golden Goose, and means that even though this is just one antiviral, currently the company stands as tall, if not taller than its peers.
What is interesting is that even without reports of M&A interest on social media, and beyond, it is inconceivable that Gilead would not be in the sights of major pharma players. The goal of every pharma company is to be in a monopoly situation as far as a blockbuster drug, and historically this means that if you have not developed one yourself, then you would acquire that of a competitor. Therefore, with such an edge at Gilead, it seems inconceivable that moves have not been made on Gilead. Whether the indications that it is AstraZeneca or Roche or whoever, one could say that it would be negligent if talks had not occurred or were ongoing.
It is also logical that in order to avoid its monopoly situation being endangered, Gilead would not necessarily find such talks unwelcome. Being part of a largely entity would give it more fire power against such a scenario of having its star asset diluted.
Stacked Up Story?
But it may be that the most interesting aspect of the Gilead / remdesivir affair, is not its monopoly, or that it should be welcoming suitors, it is that the financial mainstream media has not been able to press the button on Gilead being a M&A play. Ironically, the protocol of the likes of Bloomberg, Wall Street Journal and the Financial Times, mean that while parts of what is going on in and around Gilead tick some of the boxes to serve up a stacked up story, as things stand it falls between various stools. Indeed, the analogy here is that in terms of Gilead, no one so far seems willing to be the first on the dance floor.
Fundamentally In Play
Of course, the rumour mill can live on social media for some time, and as gossip among traders. But in Gilead as things stand we have a company which is in play fundamentally, if not in actuality – even if the mainstream media has not been able to get its respective story over the line regarding who is talking to whom, advisors on a deal, or timeframes. While the remdesivir shortage continues, Gilead remains in the limelight, and M&A is increasingly likely as a remedy to this state of affairs.
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