Biotech firm Gilead Sciences announced the price of its Covid-19 antiviral drug remdesivir Monday morning. While the figure is lower than some estimates, shares of Gilead are bouncing on the news.
Gilead (ticker: GILD) was up 2.9% in premarket trading Monday. The stock closed Monday flat at $74.56, while the S&P 500 rose 1.5%.
In an open letter Monday morning, Gilead CEO Daniel O’Day said that a five-day course of remdesivir will cost private health insurers in the U.S. $3,120, and will cost governments of developed nations, including the U.S., $2,340.
The company said it believes that remdesivir’s ability to shorten recovery times for Covid-19 patients will result in hospital savings of $12,000 per patient in the U.S. It said it chose to set its price for remdesivir lower “to ensure broad and equitable access at a time of urgent global need.”
The Institute for Clinical and Economic Review, an influential research group that issues drug pricing recommendations, said on June 24 that Gilead could charge between $4,580 and $5,080 per treatment course if remdesivir were priced based on the drug’s cost-effectiveness. The group said the company could charge between $1,010 and $1,600 dollars if the drug were priced based on Gilead’s costs, including its clinical development expenses.
Shares of Gilead are up 14.8% so far this year. The stock trades at 11.8 times earnings expected over the next 12 months, according to FactSet, above its 5-year average of 9.5 times earnings. Of the 30 analysts tracked by FactSet who cover Gilead, 17 rate it Hold, while 10 rate it a Buy.
The FDA granted remdesivir an emergency use authorization on May 1. The company donated its initial supply of 1.5 million doses of the drug. Gilead has said it plans to manufacture 2 million treatment courses of remdesivir this year. In the U.S., the U.S. Department of Health and Human Services is allocating the drug to hospitals through the end of September.
On June 22, the company announced it had received Food and Drug Administration approval to begin testing an inhaled version of the drug. It said it hoped to begin a Phase 1 trial of the inhaled version in August.“In making our decision on how to price remdesivir, we considered the full scope of our responsibilities,” Gilead’s CEO, Daniel O’Day, said in his letter. “We started with our immediate responsibility to ensure price is in no way a hindrance to ensuring rapid and broad treatment. We also balanced that with our longer-term responsibilities: to continue with our ongoing work on remdesivir, to maintain our long-term research in antivirals and to invest in scientific innovation that might help generations to come. As with many other aspects of this pandemic, we are in unchartered territory in pricing remdesivir.”