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Drug Roundup – October 18, 2013
There have been several noteworthy developments in the drug space recently, which will likely have a material impact on the companies in this sector and the markets they serve. Companies mentioned in this review include Bristol-Myers Squibb (BMY), Eli Lilly & Co. (LLY), Merck & Co. (MRK - Free Merck Stock Report), Pfizer Inc. (PFE - Free Pfizer Stock Report), Valeant Pharmaceuticals International (VRX), Regeneron Pharmaceuticals Inc. (REGN), Sanofi (SNY), and AstraZeneca PLC (AZN).
Third-Quarter Earnings Season
With the majority of “Large Pharma” scheduled to release third-quarter results in the coming weeks, investors ought to hone in on the impacts of recent patent losses, emerging generic competition, pipeline activity, and integration progress for the numerous companies that completed acquisitions during the period. Some noteworthy upcoming release dates include: Bristol-Myers Squibb (October 23rd), Eli Lilly & Co. (October 23rd), Merck & Co. (October 28th), Pfizer Inc. (October 29th), and Valeant Pharmaceuticals International (October 31st).
AstraZeneca Strengthens Oncology Portfolio with Acquisition
On October 15th, AstraZeneca announced that MedImmune, its global biologics research and development arm, had acquired Spirogen, a privately-held biotech company focused on conjugate technology for use in oncology. Under the terms of the deal, AstraZeneca will pay $200 million in cash for Spirogen, plus up to $240 million more if pre-determined development milestones are met. Existing out-licensing agreements and associated revenue streams will be excluded. In our view, the move represents a step in the right direction for the London-based drugmaker that has struggled to restock its product portfolio in the wake of several big-name patent losses. We anticipate management will pursue similar acquisitions and/or business development deals in the year ahead.
New Cholesterol Drug Shows Promise in Late-Stage Studies
On October 16th, Sanofi and Regeneron Pharmaceuticals announced the Phase III trial with Alirocumab met its primary efficacy endpoint. When used by itself, the experimental drug cut levels of “bad” LDL cholesterol almost in half in the first of a dozen late-stage trials. Alirocumab is part of a promising new class of injectable cholesterol fighters that work by blocking a naturally occurring problem called PCSK9. With analysts estimating that an approved version could garner annual sales of $3 billion or more, the drug represents a significant growth opportunity for both companies.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.