Friday Five - The week in review

Pfizer’s buyback

Suggesting that a large proportion of corporate gains from the new US tax bill will return to shareholders at the expense of reinvestment, Pfizer announced a $10 billion share repurchase plan earlier this week, in addition to the $6.4 billion it has already authorised for share buybacks. This, despite that Pfizer shares are at their highest value in five years.

The programme will use a substantial portion of the cash that Pfizer is estimated to hold outside of the US. Some of what is left may be used for M&A; with the value of pharma consolidation at a five year low in 2017, it is hoped the flow of overseas funds back into the US – facilitated by President Trump’s repatriation holiday – will stimulate activity. Historical precedent suggests if there is an uptick in activity, Pfizer will be in the thick of it. ViewPoints: After a lacklustre year, what's on the horizon for M&A in 2018?

Shire on the block?

M&A will be a frequent topic of conversation at next month’s JP Morgan conference in San Francisco; pharma’s annual ‘scene setter’ for the year ahead.

Two years ago it was Shire driving the narrative at JPM with its acquisition of Baxalta, but according to reports the shoe may now be on the other foot. The Daily Telegraph reported Tuesday that a number of Big Pharma players from the US and EU are reportedly interested in acquiring Shire, which came close to being bought by AbbVie in 2014. Shire’s share price is at a 15 month low. ViewPoints: Whiff of blood may be drawing hungry sharks to Shire

Jefferies analyst Peter Welford notes that while US tax reform may accelerate broader M&A activity, any company interested in acquiring Shire would face a number of near term challenges. These include an ongoing review of its neuroscience business, with management said to be nearing a strategic decision, and the competitive threat posed to Shire’s haemophilia business from Roche’s recently approved Hemlibra franchise. KOL Views Results: Leading haematologist outlines expectations for Hemlibra's launch trajectory

Gene therapy approval moves FDA within sight of a record year

The US FDA looks set to exceed the 46 new drug approvals it cleared in 2015 (a 66-year record). In moving towards this target, the agency made a historic approval on Tuesday by green-lighting Spark Therapeutics’ Luxturna; the first bona-fide gene therapy and a treatment for a rare, inherited form of retinal dystrophy.

As a one-time treatment, what will Luxturna cost? – Spark plans to disclose its pricing strategy in early 2018. Analysts predict it could cost $1 million but Luxturna is not a cure; in some patients it has been shown to halt disease progression and restore some functional vision. Those patients who respond to therapy typically show signs of this within a month of treatment. ViewPoints: How do you solve a problem like market share in an ultra-rare orphan disease?

Earlier this week, the FDA also approved Aerie Pharmaceuticals’ glaucoma treatment Rhopressa and on Thursday approved Merck & Co.’s Steglujan, a combination of the SGLT-2 inhibitor ertugliflozin and the DPP-4 inhibitor Januvia. It will be co-marketed with Pfizer.

You can read our analysis of the key new drug approvals in 2017 here

The expert view on CAR-T competition dynamics

Luxturna represents but one historical approval made by the FDA in 2017. Earlier this year, the agency approved the first two CAR-T therapies; Novartis’ Kymriah – for acute lymphoblastic leukaemia – and Gilead Sciences’ Yescarta – for diffuse large B-cell lymphoma.

Both drugs featured prominently at the recent annual ASH meeting, where encouraging data showing sustained durability of responses was presented.

Despite the breakthrough science on show, however, the commercial opportunity for these drugs is under scrutiny and will intensify next year if, as expected, Kymriah is also approved in DLBCL.

We spoke to a leading KOL this week to ascertain how the competition may play out.

Teva defends deep cuts to retain independence

It has been a challenging year for Teva but recently installed CEO Kare Schultz will be hopeful a turnaround begins in 2018. To this end, Schultz announced his cost cutting programme at the end of last week, which was broader and deeper than analysts were expecting. ViewPoints: Schultz gets to the point at Teva

Further details will be released in early 2018 when Teva announces its fourth quarter results but in the meantime planned cost reductions have proven highly controversial in Israel; in Jerusalem 320 workers are expected to lose their jobs next year with an additional 500 job cuts planned in 2019 when Teva closes one of its manufacturing facilities. The company this week rejected a request by Israeli’s prime minister to keep the Jerusalem plant open. Schultz has argued the measures are necessary to prevent Teva from becoming a takeover target.

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