The Friday Five – The week in pharma

Pipelines dominate Q1 earnings | Merck & Co. delivers TECOS upside | PCSK-9s get AdCom Date | FDA biosimilar guidance published | M&A gets ugly

Focus extends beyond pharma's Q1 financials

With first-quarter earnings season now in full swing, a succession of pharma and biotech companies reported financials this week.

Few analysts appeared to hold much interest in the numbers reported by Bristol-Myers Squibb and Merck & Co., with focus squarely on the progression of late-stage immuno-oncology assets to the market (Spotlight On: First-quarter earnings showcase emerging head-to-head battle between Bristol-Myers Squibb, Merck & Co. in immuno-oncology).

AstraZeneca's financials were overshadowed by two immuno-oncology deals that were announced simultaneously; a collaboration to study the PD-L1 inhibitor MEDI4736 in combination with products in Celgene's haematological cancer portfolio (which netted the UK drugmaker an important upfront payment of $450 million) and an in-licensing deal for Innate Pharma's anti-NKG2A antibody IPH-2201.

See Spotlight On: Celgene/AstraZeneca collaboration to usher in new phase of immuno-oncology alliances? and ViewPoints: Does deal with AstraZeneca take Innate Pharma off the M&A radar?).

Pfizer's results provided another platform for analysts to question CEO Ian Read on the future structure of the company (ViewPoints: Pfizer sets a timetable for its own potential – albeit planned and coordinated – demise), while focus at both Biogen and Eli Lilly remains squarely on pipeline development.

For Biogen, a weaker than expected quarter – shaped by a sizeable revenue miss for the multiple sclerosis treatment Tecfidera – may exert increased pressure on a number of high-risk/reward pipeline assets in Alzheimer's disease and MS. Eli Lilly investors will be looking for new launches in the diabetes market to deliver strong launch growth over the remainder of the year.

See Physician Views Poll Results: Tecfidera safety concerns appear to have grown, while neurologists remain cautious towards Copaxone generics and ViewPoints: Biogen’s maturing MS franchise ups the ante on pipeline programmes.

There was a greater focus on financials at Novartis, where cost-cutting initiatives could enhance increased growth opportunities over the next few years, despite loss of exclusivity for Gleevec from 2016 onwards. Much attention is focused on the heart failure treatment LCZ696, which should be approved by the FDA by August at the latest (ViewPoints: Novartis holds its cards close to its chest).

AbbVie's results once again confirmed the company's high level of dependency on the Humira franchise, which nevertheless delivered an impressive 18 percent year-on-year increase in sales. Management reiterated bullish expectations for hepatitis C treatment Viekira Pak and the recently announced $21 billion acquisition of Pharmacyclics, both of which are expected to reduce AbbVie's lead product dependency on Humira (ViewPoints: AbbVie acknowledges hoping for the best and planning for the worst).

See also FirstWord Lists: Lead product dependency among the top 15 pharma players.

TECOS delivers Januvia upside for Merck

In addition to a confident launch for the IO asset Keytruda, and bullish management commentary towards its anticipated approval in lung cancer, Merck's share price was bolstered this week by positive top-line data from the TECOS cardiovascular outcomes trial. The study demonstrated that versus placebo, Merck's diabetes treatment Januvia does not increase the risk of hospitalisation for heart failure (hHF).

The positive data both eliminates a "psychological overhang" and the threat of revenue downside, noted Bernstein analyst Tim Anderson, while simultaneously enhancing Januvia's clinical status versus other DPP-4 inhibitors. Endocrinologists recently polled by FirstWord suggested their usage of the drug would increase if it did not demonstrate an increased risk of hHF (ViewPoints: Rich getting richer – Merck & Co. is off and running after Januvia passes TECOS test).

PCSK9s nearing regulatory D-day

In a move that is widely expected to pre-empt two of the largest anticipated new drug launches this year, the FDA has confirmed that Sanofi and Regeneron Pharmaceuticals' Praluent and Amgen's Repatha will face FDA advisory committee panels on June 9 and 10, respectively. The two PCSK9 inhibitors have PDUFA dates of July 24 and August 27, respectively, with this regulatory timetable illustrating Regeneron and Sanofi's earlier use of a priority review voucher to potentially leapfrog Amgen as the first-to-market player.

Analysts at Goldman Sachs note that the AdCom reviews for both drugs come as little surprise despite the "robust and sustained" cholesterol lowering effect that both Praluent and Repatha have demonstrated in Phase III studies, given that this represents a new drug class against a novel target.

As a result, key focus during the AdCom panels will likely be labelling for the two products – either broad or narrow – rather than benefit/risk profile. Achieving a broad label prior to data from outcomes studies (expected in 2017/18) represents a best-case scenario and is supported not only by robust Phase III data, but results from Merck's IMPROVE-IT study, noted analysts at Goldman.

Beyond regulatory protocols, launch of the PCSK9 inhibitors should provide further evidence as to whether US payers – specifically pharmacy benefit managers – can exert further downward pressure on specialty drug pricing (Spotlight On: How are PBMs preparing for the impending anti-PCSK9 bonanza?).

Drug pricing in the US remains not far from mainstream headlines, with articles published this week focused on both the cost of multiple sclerosis treatments and the level of price increases routinely implemented for specialty products following acquisitions. Concern that such pricing elasticity is likely to decline over time may have played some role in weak performance for biotech stocks in mid-week (ViewPoints: Biopharma – and several niches in particular – feel the burn from jumpy investors).

FDA provides more clarity on biosimilars

The FDA has certainty stepped up to the plate with regard to biosimilars in 2015; following approval of Novartis' Zarxio earlier this year (Physician Views: Oncologists react to approval of Zarxio – the first US biosimilar), the administration published three final guidance documents this week (focused on biosimilarity and implementation of the Biologics Price Competition and Innovation Act) – see HERE.

With little change from draft guidance that was published in 2012, the biggest surprise is that the FDA has provided finalised guidance "with little fanfare," remarked Duncan Emerton, author of FirstWord's Biosimilar Index.

Andrew Bourgoin, senior manager of competitive intelligence and analytics at Therapeutic Proteins International, told FirstWord that the new guidance not only demonstrates that "regulators are confident in the expectations set for demonstrating similarity," between biosimilars and branded originators, but that "finalisation of these guidance documents also validates the hard work developers have been doing to comply with the rigorous standards put forth by the FDA for high quality biosimilars."

FirstWord's Insight, Analysis & Views (IAV) editorial team will be publishing a more in-depth analysis of the new guidance and its impact on the biosimilar market next week.

M&A gets ugly

The three-way acquisition tussle between Teva, Mylan and Perrigo has been characterised by multiple rejections over the past week.

Perrigo rejected Mylan's second bid – which it argued was of a lower value than Mylan's earlier, opening offer – before Mylan turned down Teva's $40.1-billion offer in a letter to CEO Erez Vigodman that engage constructively" by Vigodman. A decision that Mylan investors may now force upon management given that in the meantime Perrigo rejected a third revised offer from Mylan.

A Perrigo deal is now looking increasingly stretched for Mylan shareholders, argued Bernstein analyst Ronny Gal in a note to investors, making a Teva/Mylan combination the more likely of either transaction, added the analyst.

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