Pharma Stock Roundup: GSK, PFE Ink Consumer Health JV, JNJ Hit by Talc Allegations

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The pharma sector witnessed heightened activity this week. Glaxo GSK and Pfizer PFE agreed to merge their consumer healthcare units into a new joint venture ("JV"). A Reuters article about J&J's JNJ talc/baby powders hit its stock hard. While Merck MRK and AstraZeneca AZN gained line extension approvals for their key cancer drugs, Lilly LLY , Merck and Bristol-Myers BMY announced collaboration/partnership deals. Lilly also issued an upbeat guidance for the upcoming year.

Recap of the Week's Most Important Stories

Glaxo & Pfizer to Merge Consumer Health Units: Glaxo and Pfizer agreed to merge their consumer healthcare units into a new joint venture (JV) with almost $13 billion in annual sales. While Glaxo will command a controlling stake of 68% in the JV, Pfizer will own 32%. Glaxo, within three years of transaction closing, plans to spin-off the JV as an independent company via a demerger of its equity interest. This means eventually Glaxo will split into two UK-based global companies with one dealing in prescription drugs and vaccines, and the other focused on over-the-counter (OTC) drugs. The merger will create the world's largest consumer healthcare business with a market share of 7.3%, creating substantial shareholder value. While the Consumer Healthcare unit separation will allow Glaxo to focus on its pharmaceuticals business, it will resolve a long-pending issue for Pfizer. Pfizer had been exploring strategic options for its Consumer Healthcare unit since October 2017 but was facing trouble finding a buyer for the same.

J&J Stock Hit Hard by Asbestos Allegations: A Reuters report stated that J&J knew for decades that its baby powders contained asbestos, which hit its stock hard. J&J has more than 11,000 cases pending related to its baby powders containing talc in the United States. Most of these lawsuits allege that its talc-based products, including its baby powders contain asbestos, which causes its users to develop ovarian cancer. J&J issued a statement where it called the reports by Reuters "one-sided, false, and inflammatory". J&J said that independent tests by regulators, academic institutions and leading labs have proven that its talc-based products never contained asbestos.

This week J&J also lost its motion in a Missouri trial court to overturn the verdict given by a St Louis jury in July to pay approximately $4.7 billion to 22 women in a talc lawsuit

J&J's board of directors authorized a share buyback plan worth $5 billion and maintained its previously issued guidance for 2018.

Lilly Gives Upbeat 2019 Financial Guidance: At an investor meeting, Lilly provided its financial outlook for 2019 , indicating another strong year for the company. Lilly expects revenues to be between $25.3 billion and $25.8 billion in 2019, representing mid-single digit growth, driven by higher demand for its newer medicines including the newly launched migraine drug, Emgality. Earnings per share are expected to be in the range of $5.90 to $6.00 Lilly's revenue and earnings guidance range for 2019 was above market expectations as well as the Zacks Consensus Estimate. Lilly raised its long-term revenue growth expectations as well as its quarterly dividend by 15%.

Lilly's Taltz displayed superiority over standard of care medicine, Humira in a head-to-head phase IIb/IV study, SPIRIT-H2H, on patients with active psoriatic arthritis (PsA). In the study, Taltz demonstrated superiority in improving signs and symptoms of PsA while also providing skin clearance. Taltz was launched for the psoriatic arthritis indication in the United States last December and across some EU countries in 2018.

Lilly also announced a deal to acquire a promising pre-clinical program - a TRPA1 antagonist, from a private biotech, Hydra Biosciences. The TRPA1 antagonist is being studied for the potential treatment of chronic pain syndromes. Financial terms of this agreement were not disclosed.

Lilly also announced an exclusive collaboration and licensing deal with Aduro Biotech to gain access to the latter's novel molecules that are designed to inhibit the cGAS-STING pathway. The companies will jointly develop these molecules into new immunotherapies for autoimmune and other inflammatory diseases. Lilly will make an upfront payment of $12 million to Aduro.

Merck to Buy France's Antelliq, Keytruda in Focus: Merck announced plans to acquire privately held animal health technology provider Antelliq Group from BC Partners. Merck will pay 2.1 billion euros (around $2.4 billion) in cash to acquire all outstanding shares of Antelliq and will assume the latter's debt of 1.15 billion euros. Europe's Antelliq will complement Merck's Animal Health portfolio of vaccines and pharmaceuticals with its market-leading digital products and services, which can better manage health and well-being of livestock and companion animals.

Merck gained two label expansion approvals for its blockbuster PD-1 inhibitor Keytruda this week. The FDA approved Keytruda for adult and pediatric patients with recurrent locally advanced or metastatic merkel cell carcinoma , a rare form of skin cancer.

The second approval was in EU for the treatment of high-risk stage III melanoma patients in the adjuvant setting . The drug is already approved in the EU as a monotherapy for the treatment of adult patients with advanced melanoma. The approval in the adjuvant setting will help Merck to gain access to a broader melanoma patient population.

Meanwhile, the FDA delayed its decision on a Keytruda supplemental new drug application (sNDA) by three months. The sNDA was looking to expand the label of Keytruda for patients with locally advanced or metastatic nonsquamous or squamous NSCLC whose tumors express PD-L1 protein levels of 1 percent or greater (TPS of ≥1 percent). The FDA decision previously expected on Jan 11, 2019 will now come by Apr 11, 2019. The sNDA was based on overall survival data from the pivotal phase III KEYNOTE-042 study.

Allegan Stops Sales of Textured Breast Implants in Europe : Allergan announced that it is stopping sales and withdrawing supply of textured breast implants in the European market reportedly due to a cancer risk. The action was taken following CE Mark expiration and compulsory recall request by a French regulatory authority. The French regulator said in a statement that it had not identified any immediate risk for women using these implants.

AstraZeneca's Lynparza Gets FDA Nod in 1 st Line Maintenance Setting: AstraZeneca & Merck's advanced ovarian cancer drug Lynparza gained FDA approval for label expansion in the first-line maintenance setting. With the approval, Lynparza becomes the first PARP inhibitor approved as a first-line maintenance therapy for BRCA-mutated advanced ovarian cancer. With approvalfor expanded use in the first-line setting, sales of Lynparza can improve in the future quarters.This approval was based on positive data from the phase III SOLO-1 study.

Meanwhile, Lynparza met the primary endpoint of objective response rate (ORR) in a phase III study (SOLO-3), which evaluated the drug for the treatment of relapsed BRCA-mutated advanced ovarian cancer who had two or more prior lines of chemotherapy. Data from the study demonstrated that treatment with Lynparza led to a statistically-significant and clinically-meaningful improvement in ORR as well as the key secondary endpoint of progression-free survival (PFS) compared to chemotherapy in such patients.

AstraZeneca's two other late-stage studies - OLYMPUS and ROCKIES - evaluating pipeline candidate, roxadustat in chronic kidney disease patients with anaemia, met their primary endpoints. Roxadustat was approved in China - its first regulatory approval - for the treatment of anemia in chronic kidney disease patients on dialysis.

AbbVie Files for Upadacitinibin U.S. and EU: AbbVie submitted regulatory applications forits investigational JAK1 inhibitor, upadacitiniblooking for approval of the candidate for thetreatment of adults with moderate-to-severe rheumatoid arthritis (RA). The regulatory filings are based on the SELECT phase III program, which evaluated more than 4,000 patients with RA. Meanwhile, upadacitinib is alsobeing evaluated in late-stage studies for Crohn's disease, psoriatic arthritis, ulcerative colitis and atopic dermatitis.

Approval and successful commercialization of upadacitinib is critical for long-term growth at AbbVie, especially as biosimilar competition looms on its blockbuster RA drug, Humira.

Novartis Offers to Buy French CAR-T Therapy Manufacturer: Novartis announced an offer to acquire CellforCure, a French contract development and manufacturing organizations (CDMO) producing cell and gene therapies in Europe. Financial details of the offer were not disclosed.

Novartis already has an agreement with CellforCure for contract manufacturing of Novartis leading CAR-T cell therapy, Kymriah. If the acquisition gets through, it will expand Novartis' cell and gene manufacturing capacity.

Pfizer Provides Updates on Some Vaccine & Cancer Products: Pfizer announced that it is discontinuing a mid-stage study on its staphylococcus aureus vaccine on recommendation of the Independent Data Monitoring Committee, following a planned interim analysis. The committee said that there was low statistical probability for the study to meet the pre-defined primary efficacy objective.

Pfizer and partner Astellas announced positive top-line data from a late-stage ARCHES study, which evaluated Xtandi in men with metastatic hormone-sensitive prostate cancer (mHSPC). The results demonstrate a statistically significant improvement in a key marker of disease progression - radiographic progression-free survival in such patients. Xtandi is already approved to treat both metastatic and non-metastatic castration-resistant prostate cancer (CRPC). If data from ARCHES is approved to be included in the label of Xtandi, it can treat a broader prostate cancer patient population.

Pfizer gained positive opinion from the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) for its biosimilar version of Roche's cancer drug Avastin. Pfizer will market the biosimilar by the trade name of Zirabev.

Pfizer also announced the initiation of a phase III study for its 20-Valent pneumococcal conjugate vaccine candidate, PF-06482077, for the prevention of invasive disease and pneumonia caused by Streptococcus pneumoniae serotypes in adults aged 18 years and older.

Bristol-Myers to Sell Consumer Health Unit for $1.6B: Bristol-Myers received an offer from Japan's OTC drugmaker Taisho Pharmaceutical Holdings to purchase its UPSA consumer health business for $1.6 billion. The UPSA business no longer fits in Bristol-Myers' core focus area of drugs, and hence the company has decided to divest the same. The company has been looking for potential sale options for the business since June 2018.

Bristol-Myers gained CHMP nod for use of its drug, Sprycel, in combination with chemotherapy, in pediatric patients with newly diagnosed Philadelphia chromosome-positive acute lymphob, lastic leukemia. The positive recommendation is for both the tablet form of Sprycel as well as the powder for oral suspension formulation, which were approved for adult patients in July this year.

Bristol-Myers announced a multi-year research collaboration with Japan's Eisai and U.S.-based precision medicine research & development subsidiary H3 Biomedicine to develop novel immune therapies leveraging H3's RNA Splicing platform.

The NYSE ARCA Pharmaceutical Index declined 6.7% in the last five trading sessions.

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:

All the stocks were in the red in the last five trading sessions. While J&J declined the most (13.2%), Glaxo recorded minimum decline (0.1%).

In the past six months, Lilly has been the biggest gainer (27.2%) while Bristol-Myers declined the most (9.1%).

(See the last pharma stock roundup here: AZN, RHHBY Cancer Drugs, LLY, BMY New Deals in Focus )

What's Next in the Pharma World?

Watch out for pipeline and regulatory updates next week.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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