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Pharma Stock Roundup: Lilly Alzheimer’s Drug Fails, J&J in Acquisition Talks with ALIOF


The big news last week was the high-profile failure of Lilly’s LLY investigational Alzheimer’s disease drug, solanezumab. While the news dented Lilly’s shares with the stock touching a 52-week low, other companies involved in developing Alzheimer’s disease treatments were also not spared. The development setback just goes to show how a single company’s R&D setback can impact the entire sector.

Meanwhile, does Johnson & Johnson’s JNJ interest in acquiring Actelion ALIOF imply the beginning of increased merger and acquisition (M&A) activity in the pharma and biotech sector?

Recap of the Week’s Most Important Stories

Lilly Stumbles in Phase III for Alzheimer’s Drug: Lilly’s shares tumbled following the release of highly-awaited data on its experimental Alzheimer’s disease (AD) treatment, solanezumab, from a late-stage study. The candidate was being investigated to see whether it can slow the progression of memory problems associated with amyloid, a protein that forms plaques in the brains of people with Alzheimer’s. Solanezumab failed to meet the primary endpoint in the study that was conducted in patients with mild dementia due to AD. Lilly said that while results directionally favored solanezumab, the magnitudes of treatment differences were small. With this latest failure, Lilly has decided to drop the development of solanezumab and will be taking a charge of about 9 cents per share in the fourth quarter (Read more: Eli Lilly Hits 52-Week Low on Poor Data on Alzheimer's Drug).

Allergan Boosts Alzheimer’s Disease Efforts with Chase Pharma Acquisition: Even though Lilly and other companies have faced setbacks in their development efforts for Alzheimer’s disease treatments, pharma and biotech stocks remain committed to this therapeutic area. In fact, last week, Allergan AGN acquired Chase Pharmaceuticals, a clinical-stage biopharma company whose lead pipeline candidate is being evaluated for Alzheimer’s disease. CPC-201 is slated to move into a pivotal study next year (Read more: Allergan Acquires Chase Pharma, Expands CNS Portfolio).

J&J Eyes Actelion, Companies in Preliminary Talks: Shortly after rumors surfaced about acquisition talks, Johnson & Johnson and Actelion both confirmed the same and said that they are in preliminary talks regarding a potential deal. Switzerland-based Actelion, which saw its shares surging 19.8% to a market cap of more than $19 billion, is focused on the discovery, development and commercialization of drugs for diseases with significant unmet medical needs. The company has a strong presence in the pulmonary arterial hypertension (PAH) market though Tracleer could start facing generic competition in the U.S. from the first quarter of 2017. However, Actelion has been working on extending its core PAH franchise and has also been diversifying its pipeline into new therapeutic areas like multiple sclerosis, lupus, insomnia, Fabry’s disease, specialty cardiovascular disorders and Clostridium difficile associated diarrhea among others.

AstraZeneca’s Durvalumab Partial Clinical Hold Lifted: The FDA lifted the partial clinical hold on AstraZeneca’s AZN durvalumab for head and neck squamous cell carcinoma (HNSCC) less than a month after it was placed. With the lifting of the hold, new patients can be enrolled in the studies evaluating durvalumab as monotherapy and in combination with tremelimumab or other potential medicines.

The FDA had placed the hold based on AstraZeneca’s decision to pause enrolment of new HNSCC patients while a detailed analysis of adverse events related to bleeding observed in a couple of phase III studies was being conducted (Read more: AstraZeneca: AstraZeneca: FDA Lifts Hold on Head & Neck Cancer Trials).

Opdivo Label Expanded in the EU: Bristol-Myers’ BMY immuno-oncology drug, Opdivo, got a new indication added to its label with the European Commission approving the drug for the treatment of adults with relapsed or refractory classical Hodgkin lymphoma (cHL) after autologous stem cell transplant and treatment with Adcetris. This is the sixth EU approval for Opdivo in four distinct cancer types in less than two years. According to Bristol-Myers, about 12,200 new cases and 2,600 deaths occurred in 2012 due to Hodgkin lymphoma (Read more: Bristol-Myers' Opdivo Gets EU Approval for Label Expansion). Bristol-Myers is a Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


Large Cap Pharmaceuticals Industry Price Index

The NYSE ARCA Pharmaceutical Index declined 0.7% over the last four trading days with Lilly falling 9.9% on the solanezumab setback. We note that Lilly has underperformed the Zacks categorized Large Cap Pharmaceuticals industry year-to-date. Meanwhile, Glaxo’s shares were up almost 2% over the last four trading days.

Over the last six months, Merck MRK gained almost 10% while Bristol-Myers declined 19.4% (See the last pharma stock roundup here: Data Presented at ACR, Bristol-Myers Inks Immuno-Oncology Deal).

What's Next in the Pharma World?

Watch out for the usual pipeline and regulatory news as well as an update on the J&J-Actelion acquisition talks. Moreover, several companies including J&J will be present at the annual meeting of the American Society of Hematology (ASH) with data.

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