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Biotech Stock Roundup: ARIAD to be Acquired for $5.2B, Vertex Outlook Falls Short

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The big news in the biotech sector this week is the acquisition agreement under which Japanese firm Takeda will be acquiring cancer-focused ARIAD ARIA for a whopping $5.2 billion. Several other licensing deals and agreements were announced this week as well.

Recap of the Week’s Most Important Stories

ARIAD to be Acquired by Takeda: Japanese firm Takeda will be acquiring cancer-focused ARIAD for a whopping $5.2 billion. ARIAD, which has often been considered a potential acquisition target, saw its shares shoot up 72.8% on the acquisition announcement (Read more: ARIAD Pharma Stock Gains on Acquisition Deal with Takeda).

AbbVie Signs Deals in Oncology, Immunology and Genomics: AbbVie ABBV announced four new collaborations and investments focused on the advancement of early-stage research in key therapeutic areas such as oncology and immunology. While the cancer-focused deals were signed with Pure MHC (a privately-held target discovery company) and Dong-A-ST (a South Korean specialty healthcare company), AbbVie signed up with Zebra Biologics, a discovery stage biotechnology company, for inflammatory diseases. The fourth agreement was signed with Genomics Medicine Ireland, a life sciences startup company, to conduct population genomics research in Ireland.

Amgen’s PCSK9 Inhibitor in News: Amgen AMGN scored a big win with the United States District Court in Delaware granting its request for a permanent injunction prohibiting the sale of Praluent, Sanofi and Regeneron’s REGN PCSK9 inhibitor. The injunction relates to a patent infringement lawsuit filed by Amgen and follows a favorable jury verdict received by Amgen in Mar 2016. The injunction is a pretty big setback for Sanofi and Regeneron. Although sales of PCSK9 inhibitors have not picked up as expected, they are still expected to have blockbuster potential especially if positive data is generated from currently ongoing cardiovascular outcomes studies (Read more: Amgen's Repatha Wins Over Sanofi & Regeneron's Praluent).

Amgen also announced a cancer immunotherapy focused deal with Immatics Biotechnologies, which will see the company shelling out $30 million upfront and maybe more than $1 billion milestone payments plus royalties (Read more: Amgen Inks Multiple Deals, Offers Update on Repatha Lawsuit).

Meanwhile, at the recently held J.P. Morgan Healthcare conference, Amgen said that its key priorities in 2017 include focused execution of launches, improvement of patient access to its treatments, driving momentum of growth products, international growth, continued advancement of pipeline, delivering on transformation initiatives and defending legacy products from increasing competition. The company also said that it remains on track to meet its 2018 commitments which include double digit bottom-line growth, operating margin of approximately 52%-54%, annual transformation savings of more than $1.5 billion and about 60% return of non-GAAP net income.

Vertex’s Orkambi Outlook Disappoints, Celgene Ups 2017 Outlook: Vertex VRTX, which has a couple of cystic fibrosis (CF) treatments in its portfolio, provided preliminary results for 2016 as well as its financial outlook for 2017. The company said that it expects Orkambi sales to grow from about $979 million in 2016 to $1.1 – $1.3 billion in 2017 — however, guidance fell short of expectations. Kalydeco guidance also fell short of expectations with revenues expected in the range of $690 – $710 million (Read more: Vertex Pharma Issues Disappointing 2017 Orkambi Outlook).

Meanwhile, Celgene CELG was also at the conference where it provided preliminary results for 2016 and raised its outlook for 2017 (Read more: Celgene Issues Preliminary 2016 Results, Lifts 2017 View).

Ionis Signs Up with Novartis for Cardiovascular Drugs: Ionis has signed up with Novartis for the development and commercialization of a couple of cardiovascular disease treatments. The deal will see Ionis getting near-term payments of $225 million including an up-front option payment of $75 million and a $100 million equity investment. Additional payments include a license fee as well as development, regulatory and commercial milestone payments as each drug advances plus tiered royalties (Read more: Ionis, Novartis Ink Deal to Focus on Cardiovascular Treatments). Ionis is a Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance

Medical – Biomedical and Genetics Industry 5YR % Return

Medical – Biomedical and Genetics Industry 5YR % Return


The NASDAQ Biotechnology Index gained almost 6% over the last five trading days. Among major biotech stocks, Alexion was up 17.2% while Regeneron lost 1.8% reflecting the impact of the PCSK9 ruling. Over the last six months, Biogen BIIB was up 17.9% while Gilead lost 13%. Gilead has underperformed the Zacks-categorized Medical-Biomedical/Genetics industry over the past one year with shares declining 22.3% compared to the industry decline of 12.5% during this period (See the last biotech stock roundup here: Inotek Plunges on Pipeline Setback, Kite Files IND for Study Initiation).

What's Next in the Biotech World?

Watch out for the usual pipeline and regulatory updates in the coming days.

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