Pharma Stock Roundup: PFE, MRK, LLY Q2 Earnings, Upjohn-MYL Merger

The strong earnings performance of pharma companies continued this week with AbbVie ABBV, Merck MRK and Lilly LLY delivering better-than expected results and also boosting their guidance for the year. Pfizer PFE and Sanofi SNY reported mixed results. Pfizer also announced plans to spin-off its Upjohn unit and merge it with generic drugmaker Mylan to create a leading generic pharmaceutical company. Meanwhile, the Committee for Medicinal Products for Human Use (“CHMP”) of the European Medicines Agency (“EMA”) gave positive recommendations to grant marketing approval to several drugs this week.

Recap of the Week’s Most Important Stories

Earnings Reports Continue to be Impressive: Lilly, AbbVie and Merck beat estimates for both earnings and sales in the second quarter. While Pfizer and Sanofi beat earnings estimates, they fell short of the consensus mark for revenues.

AbbVie and Merck raised their full-year outlook for both earnings and sales on a strong first-half performance. Pfizer, however, lowered its guidance for full-year sales and earnings to reflect the formation of the Consumer Healthcare (CHC) JV with Glaxo and the completion of Array BioPharma (ARRY) acquisition. Pfizer announced completion of the formation of the CHC JV with Glaxo and the closing of the Array acquisition this week. Lilly raised its earnings guidance, for the second time this year, while keeping the revenue guidance intact. Sanofi also upped its earnings growth expectations for the year

Pfizer to Merge Off-Patent Unit, Upjohn with Mylan to Form New Company: Pfizer announced a definitive agreement to spin-off its Upjohn unit and combine it with generic drugmaker Mylan in a Reverse Morris Trust transaction to create a new generic pharmaceutical company. Together Mylan and Upjohn, with brands like EpiPen, Lipitor and Viagra, expect to generate revenues between $19 billion and $20 billion.

Per the terms of the deal, each Mylan share would be converted into one share of the new company. Pfizer shareholders will own 57% of the combine new company while Mylan’s stockholders will get a 43% stake in the new entity. Pfizer’s current head of the Upjohn unit, Michael Goettler will become the CEO of the new company while Mylan’s current CEO, Heather Bresch will retire when the deal closes. The deal is expected to close by mid-2020. The deal has been approved by the boards of both the companies. From Mylan’s perspective, the deal is considered to be well valued. However, Pfizer’s stock declined the day the deal was announced indicating that investors were probably not impressed by it.

CHMP Nod to Several Drugs: The CHMP gave a positive opinion recommending approval of Roche’s Tecentriq in combination with carboplatin and Celgene’s Abraxane for the first-line treatment of metastatic non-squamous non-small cell lung cancer. The cancer immunotherapy regimen is under review for a similar indication in the United States with a decision expected in September this year. The CHMP also recommended approving Bayer’s precision oncology treatment, Vitrakvi for the treatment of locally advanced or metastatic solid tumors that have a rare genetic mutation called an NTRK gene fusion. Vitrakvi was approved by the FDA in November last year.

Bristol-Myers’ label expansion application looking for approval of a Empliciti-based combination for multiple myeloma patients who have relapsed or are refractory to prior therapies was also granted a positive opinion by the CHMP. Novartis also received positive CHMP opinion for label expansion of eye drug Lucentis for the treatment of preterm infants with retinopathy of prematurity, a disease causing visual impairment and blindness.

Merck also gained a CHMP nod for an application for label expansion of its antibacterial medicine, Zerbaxa for two types of pneumonia infections — hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia. The CHMP also gave a positive opinion recommending approval of Merck’s blockbuster PD-L1 inhibitor Keytruda in combination with Pfizer’s Inlyta (axitinib) for the first-line treatment of advanced renal cell carcinoma.

While the authority to grant final approvals is with the European Commission, it generally follows the CHMP's recommendation and is expected to give its decisions in a few months.

FDA Approves Merck’s Keytruda for Advanced Esophageal Cancer:  The FDA granted approval to Merck’s Keytruda as a monotherapy, for previously-treated patients with recurrent locally advanced or metastatic squamous cell carcinoma of the esophagus whose tumors express PD-L1. The approval was based on data from the KEYNOTE-181 study.

Meanwhile, Keytruda in combination with chemotherapy met one of the dual primary endpoints in a pivotal phase III study (KEYNOTE-522) in patients with triple-negative breast cancer, regardless of PD-L1 status. Data from the study demonstrated that Keytruda plus chemotherapy led to a statistically significant improvement in pathological complete response rate — the primary endpoint — as a neoadjuvant therapy in such patients. The study has another primary endpoint of event-free survival (EFS). Per the recommendation of the independent Data Monitoring Committee, the study will continue to evaluate the EFS endpoint.

Glaxo Files for Long-Acting Two-Drug HIV Regimen in EU: Glaxo’s GSK HIV subsidiary, ViiV Healthcare filed a marketing application in the EU looking for approval of long-acting, two-drug regimen of ViiV Healthcare’s cabotegravir and J&J’s Edurant (rilpivirine). The filing was based on data from the phase III ATLAS study, which showed that the two-drug regimen, injected once a month, had similar efficacy to a standard of care, daily, oral three-drug regimen at week 48. A NDA was filed in the United States in April this year.

The European Commission granted approval to two new self-administered options for Glaxo’s severe eosinophilic asthma drug Nucala, a pre-filled pen anda pre-filled safety syringe.These new administration options of Nucala are expected to be launched this month and were approved in the United States in June.

Novartis’ Heart Failure Drug Fails in Outcomes Study: Novartis’ NVS phase III PARAGON-HF outcomes study evaluating its drug Entresto (sacubitril/valsartan) for heart failure in patients with preserved ejection fraction (HFpEF), narrowly missed statistical significance on the primary endpoint. The primary endpoint was reducing cardiovascular death and total heart failure hospitalizations in the abovementioned patient population. Entresto is presently marketed for the treatment of heart failure in patients with reduced ejection fraction. There is currently no approved treatment for HFpEF.

Meanwhile, Novartis’CDK4/6 inhibitor Kisqali, as a combination therapy, met the key secondary endpoint of overall survival in the phase III MONALEESA-3 study. In MONALEESA-3, Kisqali plus fulvestrant achieved statistically significant improvement in overall survival in post-menopausal women with HR+/HER2- advanced breast cancer in first- and second-line setting. Earlier, at ASCO 2019, Kisqali combination therapy demonstrated improved overall survival in another phase III study (MONALEESA-7) evaluating Kisqali plus aromatase inhibitor in pre-/peri-menopausal women.

FDA Approves Bayer’s New Prostate Cancer Medicine: The FDA granted approval to Bayer’s darolutamide for the treatment of men with non-metastatic castration-resistant prostate cancer. Darolutamide will be marketed under the brand name Nubeqa. The approval came three months ahead of FDA’s target action date. The candidate is under review in the EU and Japan for the same indication.

The NYSE ARCA Pharmaceutical Index declined 0.9% in the last five trading sessions.

Large Cap Pharmaceuticals Industry 5YR % Return

 

Large Cap Pharmaceuticals Industry 5YR % Return

 

Large Cap Pharmaceuticals Industry 5YR % Return

Here is how the seven major stocks performed in the last five trading sessions.

 

AstraZeneca recorded the highest increase (3.1%) while Pfizer declined the most (10.4%)

In the past six months, AstraZeneca has been the biggest gainer (19.7%) while Bristol-Myers declined the most (11.1%).

(See the last pharma stock roundup here: GSK, BMY Q2 Earnings, FDA Nod to LLY’s Hypoglycemia Treatment)

What's Next in the Pharma World?

Watch out for second-quarter earnings of Novo Nordisk and regular pipeline and regulatory updates next week.

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