Monday’s trading session was rather brutal for most stocks in the market. The spread of the coronavirus beyond China into South Korea and more cases in Italy have the markets spooked that the Covid-19 outbreak will become a pandemic. When outbreaks occur, some pharma stocks and biotechs that have vaccines and treatments actually see their shares rise on the bad news. After all, there is big business treating diseases and viruses, particularly if they are potential pandemic events.

Gilead Sciences Inc. (NASDAQ: GILD) shares surged while the broader market was being battered on reports that a senior official from the World Health Organization (WHO) said that Gilead’s remdesivir may currently be the best bet on defeating the coronavirus. The drug already has been ramped up in testing in China where the outbreak occurred, but WHO officials have also said that the results could become available within weeks.

As with all speculative drugs and treatments around any fresh outbreaks and pandemic scares, there are no assurances that remdesivir actually will work in a strong enough manner that it would become the most common or even a frequent treatment in patients.

A report from Merrill Lynch addressed an expert presentation on the likelihood that a global pandemic from Covid-19 may be coming. This conference call was with Dr. James Shepherd, who is from the Yale School of Medicine and is an infectious disease expert and practicing physician with experience at CDC and WHO. The report did name remdesivir, which was originally developed as a treatment for Ebola and Marburg virus infections. Remdesivir has shown antiviral activity against other single-stranded RNA viruses and coronaviruses such as SARS and MERS, and it is being studied for 2019-nCoV. While that is a big treatment potential, Dr. Shepherd indicated that he is waiting for clinical trial evidence to determine appropriate treatment. That report said: “For remdesivir, he currently will only consider its use when his patients face life or death situation.”

A separate report from Merrill Lynch’s equity team covering Gilead did acknowledge the upside move but also maintained the Neutral rating and $72 price objective. The team believes that a best-case scenario is where Gilead could receive a one-time revenue pop of about $2.5 billion, which would translate into $0.70 to 0.75 in added adjusted earnings per share. That report from Geoff Meacham and others warned:

The update comes on the heels of escalating fears the virus spread may significantly impact global markets, given the updates of increasing numbers of reported cases. But while we certainly recognize the optionality of remdesivir to Gilead – especially given the growth concerns that have weighed on the name following the last two earnings calls – we continue to believe remdesivir offers little lasting, meaningful P&L upside. As we previously noted, the economics of addressing epidemics/pandemics are generally low, a result of limited durability due to the eventual containment of spread and very little pricing power (particularly given the negative optics of profiting off a global threat). And although Gilead’s programs are admittedly significantly further along in development than other Biopharmas working on competing approaches including vaccines (e.g., Moderna, JNJ) or antibodies (e.g., Regeneron, Vir), last week a number of news media reported Gilead’s ongoing clinical trials in China have experienced slow enrollment due to a lack of eligible participants, i.e., those infected who cannot have taken another treatment within 30 days.

Gilead Sciences stock was last seen up 4.5% at $72.85 a share on Monday morning, but it traded as high as $74.51, a new 52-week high, earlier in the morning. At 11:00 a.m. Eastern Time, the 18.4 million shares that had traded hands were already nearing twice as much trading volume as an entire trading day on average. Remember, Gilead has a $92 billion market cap, which ranks it among the top few biotechs in the world.

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