A good friend and I volunteered to help feed the homeless one day and when the time came to head out I never heard from him which I thought was pretty weird. His wife then called me later that night and let me know that he had been in the ER that day because of a flare up due to Crohn’s disease. That bit of news got me thinking about Gilead (GILD) because I knew they have a product in the pipeline for the disease. With this article, I will look into what the disease actually is and what Gilead’s prospects are in trying to capitalize on it.

For those of you that don’t know, Crohn’s disease is a bowel disease which causes inflammation that affects the lining of the digestive tract. Currently, there are no known cures for the disease, just treatments, which means it is an unmet need that Gilead can capitalize on if it can come to market first with a cure. The disease usually causes diarrhea, weight loss, and fatigue. The patient has to undergo colonoscopies as well because there are at increased risk of having colorectal cancer. As of 2014, 1.3M people have been diagnosed with Crohn’s disease and only 800,000 are being treated with sales projected to be at $4.2B by 2022.

Currently, Gilead has partnered with Galapagos (GLPG) to test their JAK1 inhibitor, filgotinib in two Phase 2 trials; one for Crohn’s disease and the other for fistulizing Crohn’s. Gilead has been partnering with Galapagos for about a year now in several mid-stage clinical trials trying to assess their JAK1 inhibitor.

The Crohn’s Phase 2 trial has registered 100 patients and will compare two different doses of filgotinib against a placebo for a duration of 24 weeks. The clinical team is looking for remission as a successful result. In the fistula trial, 75 individuals have been registered and will also evaluate two different doses when compared to a placebo.

So what does all this mean for Gilead you ask? To put things into perspective, Gilead earned $32.2B in revenue during 2015 and saw that number decline to $30B for 2016. What is worse is that the company is projecting 2017 revenues to come between $22.5B and $24.5B. Even if Gilead were to grab the entire projected Crohn’s market for $4.2B by 2022 it doesn’t put them anywhere near what they were earning in 2015. I would go out on a limb to say that Galapagos would be the better stock to own out of the two right now and into the future.

I actually initiated my position in Gilead in early September of 2015 and have been pretty upset with the purchase thus far. I will not be buying shares because I'm now a lot above my 10% threshold. But I do believe that it offers value until around $84 which happens to be the midway point of the 52-week range.

When it is all said and done, it matters what the stock has done in an investor's portfolio. For me, Gilead is my largest position and has been doing poorly, as I'm down 16.9% on the name, while the position occupies roughly 18.9% of my portfolio. I no longer believe in the name even as a speculation stock. I own the stock for the speculation portion of my portfolio, and I will continue to hold onto the stock for now. My portfolio is up 17.2% since the inception while the S&P 500 is up 12.8%. Below is a quick glance of my portfolio and how each position is performing. Thank you for reading and I look forward to your comments!