Pharma Stock Roundup: Teva Announces Major Job Cuts, Lilly Provides 2018 Outlook

Key announcements this week were Teva Pharmaceutical Industries Ltd.'s TEVA restructuring plan and Eli Lilly and Company's LLY 2018 outlook. Focus also remained on data presentation at the annual conference of the American Society of Hematology ("ASH") where companies like J&J, Roche RHHBY , Bristol-Myers Squibb BMY and Merck MRK were present.

Recap of the Week's Most Important Stories

ASH Highlights: Several companies were at ASH with data on approved and pipeline drugs. Roche presented phase II data showing that polatuzumab vedotin plus bendamustine and MabThera/Rituxan ("BR") increased complete response rates compared to BR alone in previously treated aggressive lymphoma. Complete response rates increased from 15% to 40% on the addition of polatuzumab vedotin to BR and patients treated with this combination lived longer compared to patients on BR alone (11.8 months versus 4.7 months). Roche also presented data on a Tecentriq-Avastin combination in certain people with advanced kidney cancer (Read more: Roche Reports Positive Data from Tecentriq Combination Study ) and a Venclexta/Venclyxto - MabThera/Rituxan combination in previously treated chronic lymphocytic leukemia (Read more: Roche/AbbVie Report Positive Phase III Results on Venclexta ).

Bristol-Myers was also present at ASH with data on Sprycel (dasatinib), which when added to standard chemotherapy showed a three-year survival benefit in pediatric patients with newly diagnosed Ph+ acute lymphoblastic leukemia (Read more: Bristol-Myers Reports Positive Data on Leukemia Drug ).

The company and partner Seattle Genetics also presented interim results from a phase I/II study on a combination of Adcetris and Opdivo in relapsed or refractory Hodgkin lymphoma. Combination data showed an objective response rate of 83% and a complete response rate of 62%.

Lilly Provides 2018 Outlook: Lilly provided its outlook for 2018 saying that it expects recently launched products like Trulicity, Taltz, Basaglar, Jardiance, Verzenio, Cyramza, Olumiant and Lartruvo to drive low-single-digit revenue growth. The company expects 2018 earnings per share of $4.60 - $4.70 on revenues of $23 - $23.5 billion. However, challenges remain for the company in the form of loss of patent exclusivity for products like Cialis and the impact of generic competition for Strattera, Effient and Axiron. U.S. pricing access pressure will also remain a headwind in 2018.

Meanwhile, the company continues to expect 2017 earnings of $4.15 to $4.25 per share on revenues of $22.4 - $22.7 billion. Lilly raised its quarterly dividend by 8% as well. The company also reaffirmed its guidance of average annual revenue growth of at least 5% from 2015 to 2020 and said that it expects operating margin of at least 30% in 2020.

On the pipeline front, Lilly expects regulatory action in the United States for baricitinib (treatment of rheumatoid arthritis), galcanezumab (migraine treatment) and a new indication for Verzenio (breast cancer), and the launch of a new indication for Taltz in psoriatic arthritis in 2018 (Read more: Lilly Issues Guidance for 2018, New Drugs to Drive Top Line ). The stock has gained 17.6% year to date, compared to the 17.7% rally of the industry it belongs to.

Teva Shares Up on Restructuring Plan: After weeks of speculation that Teva will be cutting down its workforce, the company announced a restructuring plan that will see about 14,000 job cuts (more than 25% of the company's global workforce) over the next two years with the majority expected in 2018.

The new CEO's goal is to reduce the cost base, simplify the organization and improve business performance, profitability, cash flow generation and productivity. The company expects to cut $3 billion from its $16.1 billion cost base (estimated for 2017) by the end of 2019. The plan also calls for the optimization of the global generics portfolio, especially in the United States, through price adjustments and/or product discontinuation.

Several manufacturing plants in the United States, Europe, Israel and Growth Markets as well as R&D facilities, headquarters and other office locations across all geographies will be shut down or divested. As far as the pipeline is concerned, all R&D programs will be reviewed so that core projects can be identified while other projects are terminated immediately.

The company also suspended dividend payments and annual bonus and said it will continue to look for opportunities to divest non-core assets.

These steps come at a time when Teva is facing several challenges - the company has significant financial obligations in the coming four years while the environment remains challenging in the company's largest generic market (the United States). Teva also expects fewer generic product launches in the United States.

Teva's shares were up 10.2% on the restructuring announcement as investors cheered the steps taken by the company though execution remains key.

Priority Review for Bristol-Myers's Opdivo-Yervoy Combination: The FDA has granted priority review to Bristol-Myers's supplemental Biologics License Application (sBLA) for the label expansion of Opdivo for use in combination with Yervoy for the treatment of intermediate- and poor-risk patients with advanced renal cell carcinoma ("RCC"). With the regulatory agency granting priority review, a response should be out on Apr 16, 2018.

R&D Updates from Sanofi: Sanofi SNY provided an update on its pipeline (71 R&D projects including 37 new molecular entities and novel vaccines) at an analyst meeting this week. The company said that it expects to start at least 10 late-stage studies in 2018. At least 10 pivotal phase III studies are expected to start over the next 12 months. During this period, Sanofi expects to file for regulatory approval of two investigational cancer drugs (cemiplimab and isatuximab), a type I diabetes treatment (sotagliflozin) and a potential treatment for uncontrolled, persistent asthma (dupilumab).

In fact, Sanofi and partner Regeneron announced positive topline results from a pivotal mid-stage study on cemiplimab in 82 patients with advanced cutaneous squamous cell carcinoma ("CSCC"), the second deadliest skin cancer after melanoma. Overall response rate ("ORR") of 46.3% was observed in the study. The companies have started submitting a rolling Biologics License Application ("BLA") for the PD-1 antibody with the submission expected to complete in the first quarter of 2018 (Read more: Regeneron, Sanofi Report Positive Top Line Skin Cancer Data ).

Meanwhile, Sanofi gained FDA approval for Admelog (insulin lispro injection), a rapid-acting insulin similar to Lilly's Humalog, for the management of blood sugar levels at mealtime. Admelog was approved in the EU earlier this year in July (Read more: Sanofi Wins FDA Approval for Biosimilar of Lilly's Humalog ).

Updates on Merck's Keytruda: Merck provided a couple of updates related to its anti-PD-1 therapy, Keytruda, this week. The company said that an sBLA seeking label expansion for the use of Keytruda for the treatment of relapsed or refractory primary mediastinal large B-cell lymphoma ("PMBCL") has been granted priority review by the FDA. The company also presented data at ASH which showed that the use of Keytruda resulted in an overall response rate of 41% in this difficult-to-treat patient population. With the FDA granting priority review, a response from the agency should be out by Apr 3, 2018. Approval would make this the second blood cancer indication for Keytruda with the earlier indication being for use in certain patients with classical Hodgkin lymphoma (Read more: Merck's Keytruda Gets FDA Priority Review for Rare Lymphoma ).

However, Keytruda failed to meet the primary endpoint of overall survival in a pivotal study for the second-line treatment of patients with advanced gastric or gastroesophageal junction ("GEJ") adenocarcinoma. Progression free survival in the PD-L1 positive population also failed to show statistical significance.

Merck is a Zacks Rank #3 (Hold) stock - you can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .


Large Cap Pharmaceuticals Industry 5YR % Return

Large Cap Pharmaceuticals Industry 5YR % Return

The NYSE ARCA Pharmaceutical Index declined 1.8% over the last five trading sessions. Among major stocks, AstraZeneca was up 3.3% while Merck gained 3.1%. Over the last six months, Bristol-Myers was up 15.4% while GlaxoSmithKline GSK declined 17.1% (See the last pharma stock roundup here: FDA Nod for NVO's Ozempic, Second Indication for Lilly's Taltz ).

What's Next in the Pharma World?

Watch out for regulatory and pipeline news from pharma stocks.

Investor Alert: Breakthroughs Pending

A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.

Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.

Click here to see them >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Roche Holding AG (RHHBY): Free Stock Analysis Report

Sanofi (SNY): Free Stock Analysis Report

Bristol-Myers Squibb Company (BMY): Free Stock Analysis Report

Eli Lilly and Company (LLY): Free Stock Analysis Report

GlaxoSmithKline PLC (GSK): Free Stock Analysis Report

Merck & Company, Inc. (MRK): Free Stock Analysis Report

Teva Pharmaceutical Industries Limited (TEVA): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

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.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.