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Pharma Stock Roundup: ABBV to Buy AGN, BMY to Sell CELG's Otezla to Close Merger

Kinjel Shah

This week AbbVie ABBV announced a definitive deal to buy Allergan plc AGN in the hope of finding a replacement for Humira, which is nearing patent expiration. Bristol-Myers BMY said it will sell Celgene’s blockbuster psoriasis drug, Otezla, to complete the impending merger. In other news, Pfizer’s PFE orally-available PARP inhibitor, Talzenna gained approval in EU. Meanwhile, the FDA granted approval to Allergan’s blockbuster product Botox for another therapeutic indication and J&J’s JNJ blockbuster multiple myeloma drug, Darzalex in newly diagnosed patients who are transplant ineligible.

Recap of the Week’s Most Important Stories

AbbVie to Buy Allergan for $63B: In a surprising move, AbbVie announced a definitive deal to buy Botox maker Allergan in a cash and stock deal for $63 billion. AbbVie will pay Allergan a price of $120.30 in cash and 0.8660 ABBV shares (worth $67.94) per AGN share, bringing the total valuation to $188.24, a 45% premium from Allergan’s closing price on Monday. AbbVie’s rationale behind the deal is to add a new blockbuster product to its portfolio, Allergan’s Botox, as its own blockbuster drug, Humira faces patent expiration. Humira generics are already denting revenues in Europe are expected to be launched in the United States in 2023. AbbVie is heavily dependent on Humira and is looking to diversify its portfolio. Approved for therapeutic and aesthetic use, Botox is a key top-line driver for Allergan and looks fit to be the next revenue driver for AbbVie after Humira loses exclusivity. The acquisition is expected to close by early 2020.

With imminent generic competition for Allergan’s Restasis, fears of new competition to Botox and some recent pipeline setbacks, the merger with AbbVie could prove to be the best way out.

Investors have their doubts as far as necessary approvals are concerned although the lack of overlapping products abates anticompetitive concerns. Some investors expressed concerns that AbbVie has overpaid for Botox as new competitive pressure looms large.

Bristol-Myers to Divest Celgene’s Otezla to Gain FTC Approval for Merger: Bristol-Myers said that it will divest Celgene’s psoriasis drug Otezla to gain approval from U.S. Federal Trade Commission (FTC) for its pending merger with Celgene on a timely basis. Bristol-Myers had announced the buyout of Celgene in January, in a cash-and-stock deal, for a whopping sum of $74 billion. The divestiture is subject to further review by the FTC and requires Bristol-Myers to enter a consent decree with the commission. The deal is now expected to be closed by the end of 2019 or the beginning of 2020, delayed from the earlier timeline of the third quarter of 2019.

The deal faced strong criticism from Bristol-Myers’ activist investors who found it to be overpriced and also questioned the company’s growth prospects following the merger. However, eventually, the shareholders gave green signal to the merger in April.

Separately, Bristol-Myers’ phase III study (CheckMate -459) evaluating Opdivo (nivolumab) as a first-line treatment for patients with unresectable hepatocellular carcinoma did not achieve statistical significance for its primary endpoint of overall survival (OS).

Pfizer’s Talzenna Gets Approval in EU: The European Commission granted approval to Talzenna for the treatment of patients with inherited (germline) BRCA-mutated locally advanced or metastatic breast cancer. It was approved in the United States in October last year.

FDA Nod to Allergan’s and J&J’s sBLA: Allergan’s (AGN) Botox gets FDA approval for the 10th therapeutic indication, upper limb spasticity in pediatric patients in the age group of 2 to 17 years. Botox is approved for the indication in adults. Another sBLA looking for approval of Botox for pediatric lower limb spasticity indication is also under FDA’s review with a decision expected in the fourth quarter.

The FDA also approved J&J’s sBLA seeking approval for Darzalex in combination with Revlimid (lenalidomide) and dexamethasone in newly-diagnosed, transplant ineligible multiple myeloma patient population. The filing was based on data from a phase III MAIA study. This marked Darzalex’s sixth FDA approved indication in multiple myeloma and the second for newly diagnosed patients

FDA Lifts Partial Hold on AbbVie’s Venclexta Multiple Myeloma Study: The FDA lifted partial clinical hold placed on CANOVA phase III study. The study evaluated AbbVie’s leukemia drug, Venclexta (venetoclax) for relapsed/refractory multiple myeloma positive for the translocation abnormality, the most common genetic abnormalities in patients with multiple myeloma. The hold was lifted and the study was allowed to resume upon agreement on revisions of the study protocol.

The clinical hold on CANOVA and on al lmultiple myeloma studies on Venclexta was placed in March this year. The decision was taken after, in the ongoing phase III BELLINI study, a higher proportion of deaths were observed in the Venclexta arm compared to the control arm of the study. All multiple myeloma studies on Venclexta, other than CANOVA, remain on partial clinical hold 

FDA’s Priority Review for Glaxo’s Zejula sNDA: Glaxo’s GSK supplemental new drug application (sNDA) looking for label expansion of its once-daily PARP inhibitor, Zejula was granted priority review by the FDA. The sNDA is looking for approval of Zejula for ovarian cancer patients who have been treated with three or more previous chemotherapy regimens. The FDA is expected to announce its decision on Oct 24, 2019.

Meanwhile, the FDA also accepted for review Sanofi’s BLA for MenQuadfi, a meningococcal vaccine candidate, currently being developed for the prevention of meningococcal meningitis. The FDA’s decision on this product is expected on Apr 25, 2020.

Lilly’s Trulicity Higher Dose Study Succeeds: Lilly’s LLY phase III study evaluating higher doses of its GLP-1 receptor agonist, Trulicity met the primary and secondary efficacy endpoints. Data from AWARD-11 phase III study showed that the higher doses of Trulicity(3.0 mg and 4.5 mg) led to superior reduction in A1C (a measure of blood glucose) compared to Trulicity doses already available.

AstraZeneca’s Imfinzi Improves OS in SCLC Study: AstraZeneca announced that a phase III study CASPIAN study on Imfinzi in first-line extensive-stage small cell lung cancer (SCLC) – the most aggressive type of lung cancer - met the primary endpoint. Data from an interim analysis conducted by an Independent Data Monitoring Committee showed that treatment with Imfinzi plus platinum-based chemotherapy led to a statistically-significant and clinically-meaningful improvement in OS versus chemotherapy alone

The NYSE ARCA Pharmaceutical Index declined 1.3% in the last five trading sessions.

Large Cap Pharmaceuticals Industry 5YR % Return

 

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:

Last week, all the stocks declined with Bristol Myers recording the highest decline (7.7%) and Pfizer decreasing the least (0.4%)

In the past six months, Merck has been the biggest gainer (9.7%) while Bristol-Myers (BMY) has declined the most (13.3%).

(See the last pharma stock roundup here: PFE to Buy ARRY, RHHBY, MRK, AZN Drugs Get Regulatory Nod)

What's Next in the Pharma World?

Watch out for regular pipeline and regulatory updates next week.

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Allergan plc (AGN) : Free Stock Analysis Report
 
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