Remdesivir is the first coronavirus treatment. So why is Gilead’s stock plunging?

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You’re in the midst of an unprecedented pandemic. A well-known biotech giant gained emergency authorization for its coronavirus drug to beat back the virus wreaking havoc. Encouraging clinical trial data from both the company and the federal government have been unveiled in the past 48 hours.

But now, the company’s stock is down about 4.8% as of Friday afternoon trading—a massive decline for a firm with more than $100 billion in market value. So what gives?

Drugmaker Gilead has been on a tear this week over its experimental COVID-19 treatment remdesivir. The drug was the first treatment granted emergency Food and Drug Administration (FDA) authorization for COVID-19.

It’s no miracle cure, as experts like Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases (NIAID), have stated—but it’s a critical first step to reducing the burden on the health system and improving the lives of patients with the most severe COVID-19 cases.

You’d think that investors would be rushing into the breach given the circumstances. Why not put your chips into a company that’s trying to save thousands of lives and the economy at large?

The reality is more complicated given the nature of treatments for infectious diseases and a global outbreak which may force, via public pressure, considerably lower price points which don’t turn a profit.

“Biotech investors know there’s no money in this,” says Brad Loncar, an experienced biopharmaceutical investor. “What’s happening during this crisis is that biotech is front and center, and biotech ‘generalists’ are throwing money at everything they see in the headlines.”

Put another way: Investors who aren’t as savvy to the complexities of medicine and biological science are basing their investment decisions on short-term news cycles rather than long-term public health effects.

“This is emblematic of what I call ‘virus stocks,’ because the coronavirus isn’t going to be that much of a money-making thing for most companies, from Gilead to to firms like Johnson & Johnson which are investing in COVID-19 vaccine research,” says Loncar.

Gilead plans to give away its first batches of remdesivir essentially for free. It also said on Thursday that it will invest $1 billion into continued development and manufacturing for remdesivir—a massive commitment which may not garner a whole lot of financial return.

Company executives seem to be aware of the financial challenges.

On Friday, Gilead CEO Daniel O’Day told CNBC that, going forward, it would have to be cognizant of its duty to the public to make remdesivir accessible while also making it a sustainable product for shareholders in a tough balancing act. “We understand our responsibility both to patients and also to shareholders,” he said.

Antibiotics, antivirals, and infectious disease treatments can be a tough sell to the investing class since they’re usually not lucrative profit-makers, and the conditions they treat may often afflict the most vulnerable in society.

But while this individual drug might not be a big money maker, Loncar believes the innovation Gilead has shown is worth considering for long-term investors. The science that goes into developing drugs like remdesivir—which has been more than a decade in the making—is obviously a strength.

“Gilead is a world class company with world class drugs, and some investors are throwing money at it based on the headlines,” he says. “But I do think, over the longer term, this situation will change how investors think about these things.”

More coronavirus coverage from Fortune:

—The coronavirus pandemic could have unexpected environmental effects
—Latest round of unemployment claims puts real jobless rate near Great Depression peak
Could COVID-19 kill coal?
Unemployment claims are taking some states weeks to process. What to know
—Fearing wine lakes and rotten potatoes, Europe’s farmers demand coronavirus rescue package
Gilead’s remdesivir won’t be a COVID-19 miracle cure, but it’s an important first step
—Buccaneers of the basin: The fall of fracking—and the future of oil
—PODCAST: How 2 CEOs outside of health care decided to pivot to fight COVID-19
—WATCH: Fortune’s top 10 heroes of the coronavirus pandemic

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