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Pharma Stock Roundup: Roche to Buy ONCE, Lawmakers Grill CEOs Over High Drug Prices

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The drug price battle took center stage this week as executives from several big pharma companies including Pfizer PFE, Sanofi SNY, J&J JNJ, AbbVie ABBV and others were grilled by senators regarding high drug prices. Senators emphasized that the United States has some of the highest drug prices in the world and the companies need to make changes in drug pricing before the government imposes regulations. They blamed the American patent system for the high prices of drugs as it gives these companies a lot of monopoly protection. In other news, Roche RHHBY announced a definitive agreement to buy gene therapy company Spark Therapeutics, Inc. ONCE for approximately $4.3 billion while Bristol-Myers BMY -Celgene’s $74 billion merger deal ran into trouble.

Recap of the Week’s Most Important Headlines

Roche’s Acquisition of Spark Therapeutics for $4.3B: Roche announced a definitive merger agreement to buy Philadelphia, PA based gene therapy company Spark Therapeutics in an all-cash deal for $114.50 per share, at a significant premium of 122%. The total deal value stands at approximately $4.3 billion. Spark Therapeutics has one marketed gene therapy, Luxturna, approved for the treatment of a rare genetic retinal disease that causes blindness.

Spark Therapeutics is developing gene therapies for other genetic diseases, including SPK-8011, for haemophilia A, which is expected to enter late-stage development in 2019 and SPK-9001 for haemophilia B, which is already in later-stage development. The deal will build Roche’s haemophilia portfolio that includes Hemlibra, approved for haemophilia A.

Roche also gained FDA approval for Herceptin Hylecta – a subcutaneous formulation of Herceptin - for the treatment of certain HER2-positive breast cancers. Herceptin Hylecta is a combination of Roche’s Herceptin (trastuzumab) and Halozyme Therapeutics’ Enhanz drug delivery technology.

Bristol-Myers-Celgene Merger Deal Faces Shareholder Opposition: Activist investors, Starboard and Wellington Management voiced their opposition to Bristol-Myers’ proposed acquisition of Celgene for $74 billion. Starboard criticized Bristol-Myers management team as the company’s stock has performed poorly over the years. The activist investors feel the deal is too risky and expensive and Bristol-Myers should instead consider selling itself.  The transaction is expected to close in the third quarter of 2019.

AbbVie Signs Parkinson's Disease Deal with Voyager:  AbbVie announced expansion of its collaboration with Voyager Therapeutics to develop potential vectorized antibodies to target a protein called alpha-synuclein, which has been linked to Parkinson's disease (PD). Voyager is entitled to receive $65 million upfront from AbbVie and up to $245 million in preclinical and phase I option payments. Meanwhile, Voyager will also be entitled to potential development, regulatory, and commercial milestone payments of up to $728 million and royalties on future sales.

Novartis In-Licenses Rights to TQJ230: Novartis exercised its option to in-license development and commercialization rights to investigational, RNA-targeting candidate TQJ230 from Ionis Pharmaceuticals. TQJ230 is being developed to reduce risk of cardiovascular disease in people living with elevated levels of inherited lipoprotein(a) (Lp(a)) -  a lipoprotein that travels through the blood. Novartis is now solely responsible for the global development and commercialization of TQJ230, which was until now being co-developed with Ionis’ subsidiary, Akcea.

AstraZeneca/Merck’s Lynparza Meets Endpoint in Pancreatic Cancer Study: AstraZeneca and Merck’s PARP inhibitor, Lynparza significantly delayed disease progression in a late-stage study, evaluating it as first-line maintenance treatment in germline BRCA-mutated metastatic pancreatic cancer. Data from the POLO study showed that treatment with Lynparza led to a statistically-significant and clinically-meaningful improvement in the primary endpoint of progression-free survival. Lynparza is presently approved for multiple indications in advanced ovarian cancer and metastatic breast cancer. It became the first PARP inhibitor to show positive data in a study in germline BRCA-mutated metastatic pancreatic cancer.

AstraZeneca’s phase III THEMIS study on Brilinta met the primary endpoint showing that the blood thinner plus aspirin led to a statistically-significant reduction in cardiovascular events in patients with type II diabetes with coronary artery disease (CAD) who have not experienced any prior heart attack or stroke.

Meanwhile, FDA approved label expansions of AstraZeneca’s medicines, Farxiga and Xigduo XR (Farxiga+metformin HCl extended-release) for patients with type II diabetes and moderate renal impairment.

FDA Approves Expanded Label for Sanofi’s Soliqua:  The FDA also approved an expanded indication for Sanofi’s once-daily single pre-filled injection for type II diabetes, Soliqua. While Soliqua was previously approved as an add-on to diet and exercise in type II diabetes patients who are uncontrolled on long-acting insulin or lixisenatide, it is now approved for patients uncontrolled on oral antidiabetic medicines. Soliqua is a combination of Lantus (basal insulin glargine 100 Units/mL) and GLP-1 receptor agonist, Lyxumia.

Bayer Earnings Decline, Revenues Rise in Q4: Bayer AG’s fourth-quarter 2018 core earnings per share declined 20.9% year over year while revenues rose 28.7%% in euros. The Crop Science and Pharmaceuticals divisions registered higher sales year on year while sales of Consumer Health unit declined year over year. In 2019, Bayer expects sales to be more than €46 billion, corresponding to an increase of about 4% on a currency- and portfolio-adjusted basis. Core earnings per share are expected to rise to about €6.80 on a currency-adjusted basis.

The NYSE ARCA Pharmaceutical Index rose 1.4% in the last five 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 five trading sessions:

 

In the last five trading sessions, all the stocks were in the green except Glaxo, which declined 0.2%. AstraZeneca recorded the highest gain of 4.8%.

In the past six months, Lilly has been the biggest gainer (18.9%) while Bristol-Myers declined the most (15.9%).

(See the last pharma stock roundup here: MRK Buys IMDZ, FDA Grants Priority Review to Some Candidates)

What's Next in the Pharma World?

Watch out for pipeline and regulatory updates next week.

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Roche Holding AG (RHHBY) : Free Stock Analysis Report
 
Sanofi (SNY) : Free Stock Analysis Report
 
Pfizer Inc. (PFE) : Free Stock Analysis Report
 
Bristol-Myers Squibb Company (BMY) : Free Stock Analysis Report
 
Johnson & Johnson (JNJ) : Free Stock Analysis Report
 
AbbVie Inc. (ABBV) : Free Stock Analysis Report
 
Spark Therapeutics, Inc. (ONCE) : Free Stock Analysis Report
 
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