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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Gilead Sciences, Inc.    GILD


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Gilead trades that made millions on COVID-19 drug news raise eyebrows

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06/01/2020 | 09:05am EDT
FILE PHOTO: Gilead Sciences Inc pharmaceutical company is seen during the outbreak of the coronavirus disease (COVID-19), in California

By Saqib Iqbal Ahmed and Katanga Johnson

Well-timed trades in Gilead Sciences Inc options ahead of good news on the biopharmaceutical company's COVID-19 drug treatment may draw regulatory scrutiny, experts said.

On April 17, Gilead's shares jumped nearly 10% following a media report detailing encouraging partial data from trials of the U.S. company's experimental drug remdesivir in severe COVID-19 patients.

Those gains were dwarfed by a price jump in bullish options which traded in unusually high volume just hours before the report and which more than doubled in value overnight.

Remdesivir subsequently received the U.S. Food and Drug Administration's emergency use authorization to treat COVID-19 patients on May 1.

Gilead has not heard from regulators regarding the trades, company spokesman Chris Ridley said, declining any additional comment on the matter.

Early in the trading day on April 16, with Gilead shares hovering around $75, four large blocks of its options were purchased for about $1.5 million each. Those unusually large trades bet that Gilead's shares would rise north of $80 to $87.50 by mid August.

"They are pretty big trades," said Henry Schwartz, president of options analytics firm Trade Alert, adding that the fact they were made around the same time was also unusual. "It stands out," he said.

In one of the trades, 3,143 calls betting Gilead's shares would rise above $85 by Aug. 21 were purchased for a total of $1.6 million. Through April 17, the value of those contracts jumped to $3.02 million, according to a Reuters analysis of trading data. The other three trades also made large gains.

On Friday, Gilead shares closed at $77.83.

"This looks problematic," said Howard Fischer, a partner with law firm Moses & Singer and former senior trial counsel at the U.S. Securities and Exchange Commission (SEC).

"When there is a specific spike in the firm's trading activity -- right before a finding is announced -- it can become a red flag to regulators," he said.

The SEC scans for unusual trades ahead of news announcements and has used such data to bring insider trading probes in the past, public filings show. The agency declined to comment.

While it is possible the trades were fortuitous, driven by bullish sentiment for drugmakers amid the pandemic, options trades in other pharmaceutical names did not show similar activity, according to a Reuters review.

"It does look like somebody had some sort of reason to pick that time of day to put a lot of capital to work on Gilead," said Schwartz.

(Reporting by Saqib Iqbal Ahmed and Katanga Johnson; editing by Michelle Price and Daniel Wallis)

Stocks mentioned in the article
ChangeLast1st jan.
GILEAD SCIENCES, INC. -0.70% 76.65 Delayed Quote.17.96%
RISE, INC. 0.00% 29 End-of-day quote.-3.33%
THE NEW HOME COMPANY INC. 0.30% 3.4 Delayed Quote.-27.04%
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Financials (USD)
Sales 2020 23 176 M - -
Net income 2020 4 295 M - -
Net cash 2020 1 166 M - -
P/E ratio 2020 23,6x
Yield 2020 3,52%
Capitalization 96 148 M 96 148 M -
EV / Sales 2019
EV / Sales 2020 4,10x
Nbr of Employees 11 800
Free-Float 99,4%
Duration : Period :
Gilead Sciences, Inc. Technical Analysis Chart | MarketScreener
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Technical analysis trends GILEAD SCIENCES, INC.
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 31
Average target price 80,84 $
Last Close Price 76,65 $
Spread / Highest target 26,5%
Spread / Average Target 5,47%
Spread / Lowest Target -19,1%
EPS Revisions
Daniel P. O'Day Chairman & Chief Executive Officer
Andrew D. Dickinson Chief Financial Officer
William A. Lee Executive Vice President-Research
Merdad V. Parsey Chief Medical Officer
George Pratt Shultz Director-Emeritus
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