Gilead Sciences (NASDAQ:GILD) has been in the news lately, with President Trump receiving doses of Gilead’s experimental antiviral drug Veklury (remdesivir) earlier this month to help treat his coronavirus infection. It’s already been an up-and-down year for Gilead — in March, the stock hit a 52-week high of $85.97 on hopes that Veklury, originally tested to fight Ebola, would be the big answer to ending the coronavirus pandemic.

The stock slowly came down to earth, however, hurt by a May report in the New England Journal of Medicine that said Veklury only shortened the time of hospitalization by four days in COVID-19 patients, compared to a placebo.

Earlier in October, the stock was trading at about $62 a share, which — while a long way from $85 — is more than three times what it went for after its initial public offering (IPO) in January of 1992.

Businessman holding onto a climbing arrow that shows compounding interest.

Image source: Getty Images.

Patient investors would have done quite well

On Jan. 22, 1992, the day of its IPO, Gilead traded for $20.16 per share. So, if you had $1,000 to spend on the stock back then, you would have been able to purchase 49 shares of Gilead. Over time and several stock splits, that would have grown to 1,568 shares today, which would make your original investment, not counting any reinvested dividends, worth $99,724.80 as of Monday’s close. That’s a compound annual growth rate (CAGR) of 17.9% and an overall return of 9,995%.

More recent Gilead investors haven’t been as fortunate. As recently as the summer of 2015, when the company’s drugs dominated the hepatitis C market, the stock was trading at $118 per share. Since then, facing growing competition in that market, the company’s revenues have fallen each year, from $32 billion in 2015 to $22 billion last year. Halfway

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Alaska’s Department of Revenue materially increased investments in Gilead Sciences and Eli Lilly stock in the third quarter.


David Paul Morris/Bloomberg

Alaska’s Department of Revenue made big changes in some of its biggest holdings in U.S.-traded equities.

The state agency, which is charged with collecting and investing funds for public purposes, materially increased investments in

Gilead Sciences

(ticker: GILD) and

Eli Lilly

(LLY), two companies working on treatments for Covid-19, in the third quarter. The Department of Revenue also bought more

Wells Fargo

(WFC) stock and cut holdings in

Bank of America

(BAC). The Alaskan agency disclosed the trades, among others, in a form it filed with the Securities and Exchange Commission.

Alaska’s Department of Revenue, which managed $8.1 billion in U.S.-traded equities as of Sept. 30, didn’t respond to a request for comment on its stock transactions.

The agency bought 253,419 more Gilead shares in the third quarter, raising its investment to 749,107 shares of the biotech.

Gilead stock slid about 18% in the third quarter, and the shares are now down about 2% for the year to date through Friday’s close. By comparison, the

S&P 500 index,

a broad measure of the market, is up 7.6% this year.

Gilead announced in September that it had agreed to acquire

Immunomedics

(IMMU), which has a promising new treatment for cancer, Trodelvy. Gilead’s earlier deals for companies developing cancer treatments haven’t paid off yet. Gilead has come into focus in recent days as President Donald Trump was treated with its antiviral drug remdesivir, to help speed his recovery from the coronavirus.

The department of revenue bought 130,879 additional Lilly shares, raising its investment in the drug giant to 326,523 shares as of the end of September.

Lilly stock slid about 10% in the third quarter, but remains up about

Our indicative theme on Covid-19 Treatment Stocks – which includes companies selling or developing treatments for Covid-19 –  is up by 13% year-to-date, compared to the S&P 500 which is up about 4%. While anti-viral therapeutics are quite complex to develop, companies have largely been adapting existing therapies for Covid treatments while also developing new treatment options. Now the long-term demand for Covid-19 treatments is hazy, considering that the development of a safe and effective vaccine could drastically reduce or possibly eliminate the need for treatments. However, most of the companies on the list have other established products that provide significant downside protection. Below is a bit more about these companies and how they have fared this year.

Regeneron Pharmaceuticals (REGN) recently indicated that its experimental Covid-19 treatment that involves a cocktail of two antibodies was effective in reducing viral loads and improving symptoms in non-hospitalized Covid-19 patients. The stock is up 53% year-to-date.

Eli Lilly and Company (LLY) is developing multiple potential neutralizing antibodies to prevent or treat the novel Coronavirus. The company is also working with Amgen to manufacture and boost supplies of the potential treatments. The stock is up 12% this year.

LLY

Gilead Sciences’ (GILD) wide-spectrum anti-viral drug Remdesivir, which was initially developed for Ebola, received emergency authorization from the FDA for use in severely ill Covid patients in May and this was expanded in August to apply to any hospitalized patient. The five-day course of treatment is priced at $3,120 for private insurers. The stock is down by about -2.7% this year.

Incyte (INCY): is leveraging some of its existing drugs for Covid-19 treatment, including the arthritis drug baricitinib which it co-developed with Eli Lilly. The company is also working with Novartis on using a blood and bone marrow cancer medicine called ruxolitinib in Covid

The market cycles are in a bottoming phase. However, October is the most volatile month, has brought the largest one-day declines, but has usually closed on the upside. Bullish sentiment was only partially doused by the correction. This month and the quarter are likely to close out on the upside but a large short-term decline cannot be ruled out.

Here are two stock recommendations for the short term.

Lam Research is entering a cycle buy phase. The daily cycle turns up on the 6th and tops on October 15th. Seven of the last eight cycles have been profitable over the last year. The weekly cycle (87% profitable) and the monthly cycle (80% correct) are also rising. Seasonality is supportive of higher prices. The stock has risen in the month of October 64% of the time, the strongest month in any year.  The short-term target is $340.

Chart 1

Chart 2

Chart 3 shows that the daily Gilead cycle tops on the 5th; a point to sell the stock short. I would cover the trade on October 15th. Eight of nine signals have been profitable in the last year. The weekly cycle (90% accurate) is also falling. The $58-$60 level is likely to be reached. Relative strength continues to hit new lows.

Chart 3

Chart 4

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