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Novartis (NVS) Reports Positive Data on Biosimilar Humira

Zacks Equity Research

Novartis AG NVS announced encouraging data for its proposed biosimilar verison of AbbVie’s ABBV Humira (adalimumab) namely GP2017 from a phase III study.

A look at Novartis’ share price movement over the past one year shows that the stock has underperformed the Zacks classified Large Cap Pharma industry. Specifically, Novartis’ stock gained 4.7% during this period, while the industry gained 7.2%.

The confirmatory efficacy, safety and immunogenicity study met its primary endpoint as the results show that GP2017 has an equivalent efficacy to the reference drug, Humira.

We remind investors that Humira is approved for rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis, adult Crohn’s disease, ulcerative colitis among others.

The results from the study revealed equivalent efficacy by demonstrating Psoriasis Area and Severity Index (PASI) 75 response rates of 67% for GP2017 and 65% for the reference drug in patients with moderate to severe, chronic plaque psoriasis.

We note that Sandoz, Novartis’s generic arm, has a leading biosimilar pipeline. The division plans to file GP2017 with the EMA and the FDA in 2017.

The company also plans to launch five biosimilars of major oncology and immunology biologics across key geographies by 2020.

Sandoz currently markets three biosimilars – Omnitrope, a human growth hormone; Binocrit, an erythropoiesis-stimulating agent and Zarxio – in the U.S. In addition, Sandoz has a strong pipeline of biosimilars. In 2016, the Sandoz Division generated net sales of $10.1 billion, accounting for 21% of the total net sales.

The FDA also approved a biosimilar version of Amgen’s AMGN Enbrel (etanercept-szzs) to treat multiple inflammatory diseases. However, the launch is pending due to ongoing litigation with Amgen.

Hence, a potential approval of a biosimilar of Humira will further boost Sandoz’s portfolio.

Novartis has a strong oncology portfolio of drugs like Afinitor, Exjade, Jakavi, Zykadia, Tasigna, Jadenu. Novartis is currently mulling strategic options for ophthalmic division Alcon which includes retaining the business or separation via a capital markets transaction such as a spin-off or an initial public offering.

Novartis AG Price and Consensus

Novartis AG Price and Consensus | Novartis AG Quote

Zacks Rank & Key Picks

Novartis currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in the healthcare sector is GlaxoSmithKline plc GSK which currently carries a Zacks Rank #2 (Buy).

GlaxoSmithKline’s earnings estimates increased from $2.66 to $2.76 for 2017 and from $2.80 to $2.85 for 2018 over the last 30 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 11.03%.

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