Pharma Stock Roundup: MRK's Keytruda MM Combo Studies on Clinical Hold, Bayer to Revise Outlook

Merck’s MRK Keytruda has hit a stumbling block with the FDA placing three combination studies on clinical hold. Meanwhile, Bayer BAYRY said that it will be revising its outlook when it reports second quarter results later this month to reflect inventory issues associated with the Crop Science Division as well as negative currency impact on its Consumer Health Division.

Recap of the Week’s Most Important Stories

Merck’s Keytruda Multiple Myeloma Studies on Clinical Hold: Merck’s Keytruda has run into further trouble with the FDA placing a clinical hold on three combination studies (KEYNOTE-183, KEYNOTE-185 and KEYNOTE-023) being conducted with the anti-PD-1 therapy for multiple myeloma (MM). Last month, patient enrolment in two of these studies (KEYNOTE-183 and KEYNOTE-185) was paused based on the recommendation of an external Data Monitoring Committee following reports of death in the Keytruda groups.
 
The FDA’s decision to place the studies on clinical hold was based on the conclusion that the available data indicates that the risks associated with the use of Keytruda plus Pomalyst (pomalidomide) or Revlimid (lenalidomide) outweigh any potential benefit for multiple myeloma patients. While KEYNOTE-183 and KEYNOTE-185 have been placed on full clinical hold, KEYNOTE-023 Cohort 1 has been placed on partial clinical hold. Moreover, patients in these three studies will no longer receive treatment with Keytruda.

Merck, which is conducting several studies with Keytruda, said that the hold is not applicable to any of the other ongoing studies.

Merck’s shares were down 1.7% on the news (Read more: Merck Falls as FDA Puts Hold on 3 Keytruda Myeloma Studies).

Bayer to Cut 2017 Outlook: Bayer has guided towards a cut in its outlook for 2017 when it reports second quarter results on Jul 27. The company said that following regular stock taking at the end of the harvest season in Brazil, the company discovered an unexpectedly high channel inventory level of crop protection products. As a result, the company’s Crop Science Division will have to adjust its business forecast for the year. Bayer expects the inventory issue to impact 2017 earnings (EBITDA before special items) by €300 million - €400 million.

In addition to this, Bayer also expects unfavorable currency movements to impact the performance of its Consumer Health Division. As far as the other units are concerned, the company said that both the Pharmaceuticals Division and Covestro continue to perform strongly while the Animal Health segment is performing as per expectations.

So far in 2017, Bayer has performed better than the Zacks categorized Large Cap Pharmaceuticals industry with shares gaining 20.8% while the industry is up 12.1%. Bayer is a Zacks Rank #1 (Strong Buy) stock -- you can see the complete list of today’s Zacks #1 Rank stocks here.

Bristol-Myers’ Opdivo Impresses in Melanoma Study: Bristol-Myers’ BMY Opdivo showed superior recurrence-free survival compared to Yervoy (ipilimumab) in an adjuvant setting in a late-stage study in resected high-risk melanoma patients.

Results from the planned interim analysis support the potential use of Opdivo in this patient population. There is unmet need for additional options in this area as most stage III and resected stage IV high-risk melanoma patients experience disease recurrence after surgery.

Label expansion into this patent population will boost the company’s sales significantly though there may be some cannibalization of Yervoy sales (Read more: Bristol-Myers' Opdivo Superior to Yervoy in Melanoma Study).

Meanwhile, Orencia gained approval for a third autoimmune disease indication -- the treatment of adults with active psoriatic arthritis (PsA).

Endo Gives in to FDA, Will Remove Opana ER from Market: Endo ENDP has given in to the FDA’s request to withdraw pain drug, Opana ER, from the market even though the company said that it continues to believe in the safety, efficacy, and favorable benefit-risk profile of the drug when it is used as intended. With the voluntary withdrawal, Endo expects a pre-tax impairment charge of about $20 million in Q2. Opana ER had delivered sales of $158.9 million last year and $35.7 million in the first quarter of 2017.

Meanwhile, Endo continues to focus on divesting non-core assets with the company entering into an agreement to sell Mexico City based Grupo Farmacéutico SOMAR to Advent International for about $124 million. SOMAR is focused on the development, manufacture and marketing of high-quality generic and branded generic products in Mexico.

We note that Endo has been working on divesting non-core assets so that it can focus its resources on core growth areas. The sale is expected to close in the second half of the year.

Earlier this week, the company said that it has divested its South African based operations, Litha Healthcare Group, to Acino Pharma AG for about $100 million plus a contingent consideration of up to $11 million.

Endo’s shares are down 32.2% year-to-date (YTD), lagging the Zacks-categorized Medical-Drugs industry which is up 7.3%.

Pfizer Leukemia Drug Approved in the EU: Pfizer’s PFE cancer treatment, Besponsa, gained approval in the EU as monotherapy for the treatment of adults with relapsed or refractory CD22-positive B-cell precursor acute lymphoblastic leukemia (ALL). This makes Besponsa the first and only antibody drug conjugate (ADC) available for patients with this type of leukemia in the EU.

Besponsa is currently under priority review in the U.S. where a response is expected in Aug 2017 (Read more: Pfizer's Leukemia Candidate Receives Approval in EU).

Glaxo Signs up with AI Company: GlaxoSmithKline GSK is teaming up with Exscientia, a company focused on artificial intelligence (AI)-driven drug discovery, for the discovery of novel and selective small molecules for up to 10 disease-related targets across multiple therapeutic areas. Exscientia’s AI enabled platform will be used for this purpose.

Exscientia could get up to £33 million in research payments from Glaxo if all 10 projects are advanced.  

Performance

Large Cap Pharmaceuticals Industry 5YR % Return

Large Cap Pharmaceuticals Industry 5YR % Return

The NYSE ARCA Pharmaceutical Index declined 1.3% over the last four trading sessions. Among major stocks, Glaxo was down 2.3% while Merck declined 1.9%. Over the last six months, AstraZeneca was up 18.3% while Bristol-Myers was down 7.8% (See the last pharma stock roundup here: Sanofi RA Drug Gets EU Nod, Merck CETP Inhibitor Surprises).

What's Next in the Pharma World?

The FDA’s Oncologic Drugs Advisory Committee (ODAC) will be meeting on Jul 11 to discuss Pfizer’s regulatory application for cancer treatment Mylotarg while all eyes will be on the outcome of the Jul 12 meeting of the ODAC when Novartis’ NVS CAR-T treatment, tisagenlecleucel-T, will be reviewed.

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