Gilead stock popped to a nine-month high Thursday after the biotech giant said its twice-yearly shot prevented 99.9% of HIV infections in a second key study.
The company tested its shot, lenacapavir, in 2,180 people at risk of contracting HIV. Lenacapavir cut HIV infections by 96% compared to other treatments. Only two participants contracted the virus.
Notably, lenacapavir proved 89% more effective at preventing participants from contracting HIV than Gilead Sciences' once-daily pill, Truvada. Out of 1,087 participants who received Truvada, nine developed HIV.
The results were so promising that an independent data monitoring committee suggested Gilead stop the study early.
"Lenacapavir is a potential growth driver for the stock, we believe," Mizuho Securities analyst Salim Syed said in a report.
Gilead stock rose 2.7%, closing at 83.16. Shares broke out of a cup-with-handle base with a buy point at 78.45 on Aug. 28. The news Thursday sent shares bounding above the 5% chase zone, which runs up to 82.37, according to MarketSurge.
Gilead Stock: A $4 Billion Opportunity?
Gilead is planning to file for Food and Drug Administration approval later this year. That would put lenacapavir's launch in 2025.
Mizuho's Syed estimates lenacapavir could generate a peak of $4 billion in sales. Brian Abrahams, an RBC Capital Markets analyst, estimates a $2.1 billion opportunity for lenacapavir. This comes as Gilead is bracing for patent expiration for Descovy, another HIV prophylactic.
"Likely inclusion of cisgender women in the label, as well as potential immediate step-up in compliance vs. Truvada/Descovy should also contribute to the upside and expand peak sales potential vs. Descovy," Abrahams said in a report.
Abrahams says the Street could be "a bit optimistic given the intrinsic challenges in this market." For that reason, he kept his sector perform rating and 74 price target on Gilead stock.
"Lenacapavir's strong performance in (pre-exposure prophylaxis) could also set it up well as core backbone for life cycle initiatives," he said. "Fundamentals are improving, but valuation looks to now already reflect this."
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