U.S. Markets close in 5 hrs 53 mins

Pharma Stock Roundup: BMY to Buy CELG for $74B, MRK Gets Rights to NASH Candidate

Zacks Equity Research

The pharma sector was relatively lying low this week with some news grabbing attention only towards the end. Top stories this week were Bristol-Myers’ BMY offer to buy cancer giant Celgene Corporation CELG in a cash and stock deal worth $74 billion and Merck’s MRK decision to exercise the option to in-license a NASH candidate from partner NGM Biopharmaceuticals.

Recap of the Week’s Most Important Headlines

Bristol-Myers to Acquire Celgene for $74B: Bristol-Myers began the year announcing one of the largest merger deals in the biotech/pharma sector. The company is acquiring cancer drug specialist Celgene in a cash-stock deal valued at $74 billion. Per the transaction, each Celgene shareholder will receive a consideration of $102.43, comprising one share of Bristol-Myers (valued at $52.43 on Jan 2, 2019) and $50 per share in cash. The deal makes strategic sense as the combination will create a premier innovative biopharma giant with leading franchises in oncology, immunology and inflammation and cardiovascular disease. The combined entity with have nine products generating more than $1 billion in sales and is expected to launch six products in the near term. Moreover, the consolidated company will have a deep and diverse early and late-stage pipeline. Following the transaction, Bristol-Myers is expected to realize cost synergies of approximately $2.5 billion by 2022. The company also separately issued adjusted earnings guidance for 2019 in the range of $4.10-$4.20. While shares of Bristol-Myers decline, that of Celgene were up on announcement of the news.

Meanwhile, Bristol-Myers tyrosine kinase inhibitor, Sprycel, gained an FDA nod for its use in pediatric patients in combination with chemotherapy for newly diagnosed Philadelphia chromosome-positive acute lymphoblastic leukemia. Sprycel is also approved for Ph+ chronic myeloid leukemia in chronic phase in pediatric patients.

Merck In-Licenses NASH Candidate, Keytruda Gets 5 Approvals in Japan: Merck exercised its option to in-license a NASH and type II diabetes candidate, NGM313, now renamed as MK-3655 from NGM Biopharmaceuticals, Inc. for $20 million. With this deal, Merck gets exclusive global rights to develop, manufacture and commercialize NGM313, a once-monthly insulin sensitizer. Merck’s one-time option was triggered as NGM completed a phase Ib proof-of-concept study on the candidate. Data from the study presented last November showed that a single dose of the medicine led to a statistically significant reduction in liver fat content (LFC) and improvements in multiple metabolic parameters after five weeks of treatment. Merck plans to initiate a phase IIb study on the candidate while NGM Biopharmaceuticals retains the option to take a 50% cost and profit-sharing partnership for NGM313 once the candidate enters late-stage development.

Meanwhile, the company’s PD-1 inhibitor Keytruda clinched five new label expansion approvals in Japan. These included three approvals as a first-line treatment option for advanced non-small cell lung cancer (NSCLC) and the other two as an adjuvant therapy for melanoma and in advanced microsatellite instability-high (MSI-H) tumors.

Pfizer Starts Pivotal Study on Alopecia Areata Candidate: Pfizer PFE initiated a global pivotal phase IIb/III study on its oral JAK3 inhibitor candidate, PF-06651600, for the treatment of moderate to severe alopecia areata.  Alopecia areata is a chronic autoimmune skin disease causing hair loss — often patchy — on the scalp, face or body. Top-line data from a phase IIa study on PF-06651600 was presented in September 2018. The study met the primary endpoint of improving hair re-growth on the scalp as compared to baseline over 24 weeks’ regimen.

AbbVie Inks New Immunotherapy Deal: AbbVie ABBV signed a strategic collaboration with private cancer biotech, Tizona Therapeutics, to develop and commercialize immunotherapies targeting the CD39-enzyme including pre-clinical candidate TTX-030. AbbVie plans to begin clinical studies on TTX-030 in the first quarter of 2019. The company made an upfront payment of $105 million to Tizona for the license to its CD39 program while also buying an equity stake in the company.

The NYSE ARCA Pharmaceutical Index declined 1.4% in the last four trading sessions.

 

Large Cap Pharmaceuticals Industry 5YR % Return

 

 

Large Cap Pharmaceuticals Industry 5YR % Return

 

Here is how the seven major stocks performed in the last four trading sessions:

 

 

All the stocks except AstraZeneca AZN were in the red in the last four trading sessions with Bristol-Myers declining the most (10.5%). AstraZeneca rose 2.8% in the same period.

In the past six months, Lilly LLY has been the biggest gainer (28.5%) while Bristol-Myers declined the most (19.2%).

(See the last pharma stock roundup here: GSK, PFE Ink Consumer Health JV, JNJ Hit by Talc Allegations)

What's Next in the Pharma World?

Watch out for pipeline and regulatory updates next week.

The Hottest Tech Mega-Trend of All                

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>      


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
 
Bristol-Myers Squibb Company (BMY) : Free Stock Analysis Report
 
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
 
Eli Lilly and Company (LLY) : Free Stock Analysis Report
 
AbbVie Inc. (ABBV) : Free Stock Analysis Report
 
Pfizer Inc. (PFE) : Free Stock Analysis Report
 
AstraZeneca PLC (AZN) : Free Stock Analysis Report
 
Celgene Corporation (CELG) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research