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Pharma Stock Roundup: Trump Targets Pharma Again, Merck Up on Keytruda News


The sector was once again slammed by president-elect Donald Trump’s comments this week regarding drug pricing and other issues (Read more: Deja Vu for Drug Stocks as Trump Slams Drug Pricing Again). The drug pricing issue, in fact, overshadowed guidance updates and pipeline news presented at the recently held 35th annual J.P. Morgan Healthcare Conference. However, companies like Merck MRK were able to buck the trend on promising pipeline/regulatory updates.

Recap of the Week’s Most Important Stories

Merck Gets Priority Review for Keytruda Label Expansion: Merck’s shares were up on news that the FDA has granted priority review to the company’s regulatory application seeking label expansion for Keytruda for use for the first line treatment of a specific type of lung cancer. With the FDA reviewing the application under its Accelerated Approval program, a response is expected by May 10, 2017. Approval for this patient population would be a major boost for Merck given the commercial potential as well as head start in this market (Read more: Merck: Keytruda+Chemo Gets Priority Review for Lung Cancer).

Merck also announced that it will be advancing the clinical development program evaluating Keytruda in combination with Incyte’s investigational oral selective IDO1 inhibitor, epacadostat. Moreover, Merck and Lilly LLY have expanded their existing immuno-oncology collaboration and will conduct a new study evaluating Keytruda in combination with Lilly’s Lartruvo in patients with previously treated advanced or metastatic soft tissue sarcoma, a rare and difficult-to-treat cancer with limited treatment options (Read more: Lilly, Merck Expand Tie-Up to Study Lartruvo-Keytruda Combo). Merck is a Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lilly Wins Appeal in Alimta Lawsuit: Lilly scored a major win in an important patent infringement case versus Teva TEVA with the U.S. Court of Appeals for the Federal Circuit upholding the validity and infringement of the vitamin regimen patent for its cancer treatment, Alimta. A favorable outcome in all remaining challenges will ensure that Alimta does not face generic competition before May 2022. The compound patent is valid through Jan 24, 2017. Alimta is a key revenue generator in Lilly’s portfolio with sales coming in at $1.7 billion in the first nine months of 2016.

TEVA 2017 Guidance Disappoints: Teva presented a disappointing outlook for 2017 which fell short of expectations. While the company does not expect generic competition for multiple sclerosis drug, Copaxone 40 mg, in 2017 it said that the entry of a couple of AB-rated generic competitors in Feb 2017 could cut revenues by $1 – $1.2 billion and earnings by 65-80 cents per share (Read more: Teva Falls on Disappointing 2017 Sales & Earnings Guidance).

Valeant Divesting Non-Core Assets: In an effort to reshape its portfolio and cut down debt, Valeant VRX is selling off some of its assets and announced a couple of agreements regarding the same. The company has agreed to sell its CeraVe, AcneFree and AMBI skincare brands to L'Oréal for $1.3 billion in cash. These three product lines have annualized revenue of about $168 million (Read more: Valeant Streamlines Portfolio with Skincare Brands Sale).

The other agreement will see Valeant selling off the outstanding equity interests in Dendreon Pharmaceuticals to the Sanpower Group Co., Ltd., one of the largest privately owned conglomerates in China, for a cash consideration of $819.9 million at completion. This sale will lead to Valeant’s exit from the urological cancer business, one of its non-core areas (Read more: Valeant to Sell Dendreon Unit to Sanpower for $820 Million).

Mylan’s Biosimilar under FDA Review: Mylan MYL and Biocon’s biosimilar version of Roche’s RHHBY Herceptin (trastuzumab) has been accepted for review by the FDA. Herceptin is approved for the treatment of certain HER2-positive breast cancers. The FDA is expected to respond on Mylan’s product by Sep 3, 2017 — chances are that Mylan’s product could be the first Herceptin biosimilar in the U.S. market (Read more: Mylan/Biocon's Herceptin Biosimilar under Review in the U.S.) .


Large Cap Pharmaceuticals Industry 5YR % Return

The NYSE ARCA Pharmaceutical Index declined 2.2% over the last five trading sessions with the sector reflecting weakness on President-elect Trump’s comments. Almost all major pharma stocks were down except Lilly and Merck which recorded gains on positive news updates. Over the last five days, Bristol-Myers BMY declined 5.9% while Merck was up 3.5%. Over the last one year, Merck has outperformed the Zacks categorized Large Cap Pharmaceuticals industry with shares gaining 22.8% compared to the industry gain of 1.8%. Over the last six months, Merck gained 4.4% while Bristol-Myers declined 25.8% (See the last pharma stock roundup here: PCSK9 Inhibitor Praluent in News, Allergan's Preliminary 2017 View).

What's Next in the Pharma World?

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

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