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Novartis Gets Approval for Psoriasis Drug Cosentyx in China

Zacks Equity Research

Novartis AG NVS announced today that the China Health Authority NMPA approved its blockbuster psoriasis drug, Cosentyx.

Cosentyx, a first-in-class interleukin-17A (IL-17A) inhibitor, is the first biologic approved in China for moderate-to-severe plaque psoriasis in adult patients, who are candidates for systemic therapy or phototherapy.

A phase III study conducted in China showed that nine out of 10 patients, who received Cosentyx (300mg on an every four-week dosing regimen after loading), achieved clear or almost clear skin after 16 weeks.

More than 6 million patients are living with mild, moderate or severe forms of psoriasis in China. Hence, there is huge scope for growth.

Approval of the drug in additional geographies should further boost sales. Sales of the drug came in at $2.8 billion in 2018, up 37% from 2017.

Concurrently, AveXis, a Novartis company, announced that it signed an agreement to purchase an advanced biologics therapy manufacturing campus in Longmont, CO.

The agreement will enhance AveXis' production capacity, as it prepares to launch Zolgensma, an investigational gene therapy awaiting global regulatory approvals for the treatment of spinal muscular atrophy (SMA) Type 1 and future gene-therapy treatments in development.

In December 2018, the FDA accepted the company's Biologics License Application for Zolgensma in SMA Type 1 patients. The drug was earlier granted Breakthrough Therapy designation and Priority Review status by the FDA, with regulatory action anticipated in May 2019. Additionally, the drug is anticipated to receive approval in Japan and the European Union later this year.

Shares of the company have gained 11.7% in the past six months compared with the industry's 3.3% growth.

 

Last year was a transformative one for Novartis, as it restructured business to become a core drug-focused company, powered by data and digital technologies. Novartis acquired AveXis, Inc, a U.S.-based clinical-stage gene-therapy company, in 2018. The company also acquired Endocyte to expand expertise in radiopharmaceuticals. We expect more acquisitions in the coming months, as the company looks to further restructure its business.

Approval of new drugs and label expansion of existing drugs bode well for Novartis, as it looks to streamline its business.

In September 2018, Novartis agreed to sell selected portions of its Sandoz U.S. portfolio, specifically the Sandoz U.S. dermatology business and the U.S. oral solids portfolio. The divestiture is in accordance with Sandoz’s strategy of focusing on complex generics, value-added medicines and biosimilars to achieve sustainable and profitable growth in the United States in the long run. The transaction will be completed in 2019. Novartis also sold its stake in consumer healthcare joint venture to GlaxoSmithKline GSK for $13 billion.

Zacks Rank & Stocks to Consider

Novartis currently carries a Zacks Rank #4 (Sell). 

A couple of better-ranked stocks in the same space are Johnson & Johnson JNJ and Roche RHHBY. Both stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Johnson & Johnson’s earnings per share estimates have increased from $9.20 to $9.21 for 2020 in the past 60 days. The company delivered a positive earnings surprise in all the trailing four quarters at an average of 1.61%.

Roche’s earnings per share estimates have increased from $2.32 to $2.35 for 2019 in the past 60 days.

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