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Biotech Stock Roundup: LOXO, CELG Gain, J.P. Morgan Healthcare Conference in Focus

Zacks Equity Research

The year 2019 took off on a flying note for the biotech sector. Shares of bigwig Celgene Corporation CELG surged on a takeover offer from Bristol-Myers Squibb Company, while Loxo Oncology LOXO surged on an acquisition offer from Eli Lilly. Meanwhile, the focus is also on the 37th annual J.P. Morgan healthcare conference where quite a few biotech companies provided a preliminary look at their results for 2018, and outlook for 2019.

Recap of the Week’s Top Stories:

Loxo Oncology Surges on Takeover Deal From Eli Lilly: Shares of Loxo Oncology surged after pharma giant Eli Lilly announced that it will acquire the former for approximately $8.0 billion. The offer represents a 68% premium to Loxo Oncology’s closing stock price on Jan 4, 2019. The transaction is expected to close by the first quarter of 2019. Loxo Oncology’s sole approved drug, Vitrakvi was recently approved by the FDA as the first treatment targeting a specific genetic abnormality in advanced solid tumors. The acquisition will add a pipeline of highly selective potential medicines for genomically-defined cancers, thereby expanding Lilly’s oncology portfolio into precision medicines or targeted therapies.

Key Takeaways from J.P. Morgan Healthcare Conference: Several biotech companies were present at the 37th annual J.P. Morgan healthcare conference. Most of these companies provided a preliminary look at fourth-quarter results and their outlook for 2019. Among the key updates, Celgene achieved its guidance for 2018 and financial guidance for 2019. The company also reaffirmed its expected 2020 financial targets. Shares of Celgene soared after the company announced a takeover offer of $74 billion from Bristol-Myers Squibb. Amgen expects its biosimilar business to contribute significantly in 2019 and provided updates on its deep pipeline. Regeneron REGN also provided updates on its 2018 results. Flagship drug, Eylea achieved $4.07 billion in sales in 2018. The FDA has set a target action date for Eylea’s label expansion in the indication of diabetic retinopathy. Atopic dermatitis drug, Dupixent, uptake continues to accelerate and the company expects to win FDA approval for a label expansion of the drug. Regeneron has also seen encouraging early uptake from the U.S. launch of Libtayo for advanced cutaneous squamous cell carcinoma (CSCC). Meanwhile, shares of Alnylam Pharmaceuticals, Inc. ALNY gained after the company announced its preliminary fourth-quarter 2018 product revenues for lead drug, Onpattro, and provided additional updates on the product’s commercial launch.

Celgene currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Biogen Enrols First Patient in MS Study: Biogen BIIB announced that it has enrolled the first patient in a phase IIIb study evaluating the efficacy and safety of extended interval dosing for Tyasbri compared to standard interval dosing (SID) in patients with relapsing multiple sclerosis (MS). The drug is currently approved for dosing every four weeks.

Biogen also announced a strategic collaboration with Skyhawk Therapeutics, Inc. whereby both companies will leverage Skyhawk’s SkySTAR technology platform to discover innovative small molecule treatments for patients with neurological diseases like multiple sclerosis (MS) and spinal muscular atrophy (SMA) among others. Biogen will have the option to license therapies resulting from the collaboration and will also be responsible for their development and subsequent commercialization.  Per the terms, Skyhawk received an upfront payment of $74 million from Biogen and is entitled to milestone payments.

The company also entered into a strategic collaboration to evaluate the use of C4T’s novel protein degradation platform to discover and develop potential new treatments for neurological conditions, such as Alzheimer’s disease and Parkinson’s disease. Biogen will pay C4T a total of $415 million in upfront fees along with potential milestone payments.

Regeneron and Sanofi Restructures Agreement: Regeneron and partner Sanofi announced that they have restructured their existing global Immuno-oncology Discovery and Development Agreement for new immuno-oncology cancer treatments. The original agreement, which was signed in 2015, is scheduled to end around mid-2020. Hence, the companies have revised the agreement and selected two clinical-stage bispecific antibody programs for further development. Per the revised agreement, Regeneron will retain all rights to its other immuno-oncology discovery and development programs. Sanofi can advance its early-stage immuno-oncology pipeline independently.

In exchange, Sanofi will pay Regeneron $462 million, representing the balance of payments due under the existing agreement. This payment will cover Sanofi’s share of the immuno-oncology discovery program costs for the last quarter of 2018 and up to $120 million in development costs for the two selected clinical-stage bispecific antibodies plus the termination fee for the other programs under the original immuno-oncology agreement. Moreover, the revised agreement gives Sanofi the right to opt-in to the BCMAxCD3 and MUC16xCD3 bispecific programs, when proof of concept is achieved or when the allocated funding is expended. On the other hand, Regeneron will commit up to $70 million to further develop the BCMAxCD3 bispecific antibody for multiple myeloma and up to $50 million to further develop the MUC16xCD3 bispecific for mucin-16 expressing cancers.

Gilead’s Drug Gets Approval In Japan:  Gilead Sciences, Iinc. GILD announced that Epclusa(sofosbuvir 400mg/velpatasvir 100mg), a once-daily treatment for adults with chronic hepatitis C virus (HCV) infection with decompensated cirrhosis, and for patients with chronic HCV infection without cirrhosis or with compensated cirrhosis was approved in Japan. The company also entered into a licensing and collaboration agreement with South Korea-based Yuhan Corporation. Both companies have entered into a licensing and collaboration agreement to co-develop novel therapeutic candidates for the treatment of patients suffering from advanced fibrosis due to non-alcoholic steatohepatitis (NASH). Gilead will pay Yuhan an upfront fee of $15 million. Yuhan is also entitled to receive milestone payments of $770 million.

Sage Surges on Study Results:  Shares of Sage Therapeutics SAGE surged after the company announced that a late-stage pipeline candidate SAGE-217, study met primary and secondary endpoints. The phase III study, ROBIN, evaluated the efficacy, safety and pharmacokinetics of SAGE-217 in 151 adult female patients diagnosed with severe postpartum depression (PPD). The primary endpoint of the multicenter, randomized, double-blind, parallel-group, placebo-controlled study was to determine if outpatient treatment with SAGE-217 reduces depressive symptoms in subjects with severe PPD compared to placebo as assessed by the change from baseline in the 17-item Hamilton Rating Scale for Depression (HAMD-17) total score at Day 15. The results showed a statistically significant reduction in depressive symptoms compared to placebo in women with PPD. SAGE-217 was generally well-tolerated with a safety profile consistent with that seen in earlier SAGE-217 trials.

Performance

Medical - Biomedical and Genetics Industry 5YR % Return

Medical - Biomedical and Genetics Industry 5YR % Return

The NASDAQ Biotechnology index lost 8.79% in the last four trading sessions. Among the major biotech stocks, Alexion lost 11.4%. Over the past six months, shares of Regeneron have rallied 4.14%, while Alexion has dropped 24.7%. (See the last biotech stock roundup here: Biotech Stock Roundup: ALXN, ACOR Drugs’ Get FDA Nod, AGEN up on GILD Deal)

 

What's Next in Biotech?

Stay tuned for more regulatory and pipeline updates.

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