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Pharma Stock Roundup: Allergan Announces Job Cuts, Pfizer Inks Deals

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The week has been pretty slow with key announcements including Allergan’s AGN job cut announcement and Pfizer’s PFE collaboration agreements with companies like Sangamo and Arvinas.

Recap of the Week’s Most Important Stories

Allergan Announces Job Cuts: At the time of announcing third quarter results in November, Allergan had said that it would have to look at cost reduction in order to deal with the impact of loss of exclusivity (“LOE”) on key products including Restasis. This week, the company announced a cost cutting and restructuring program which will lead to the elimination of more than 1,000 currently filled positions, primarily in commercial and other functions. About 400 open positions will also be eliminated. Restructuring costs of about $125 million, primarily due to severance, will be recorded mostly in the fourth quarter of 2017 with overall operating expense savings expected in the range of $300 to $400 million compared to 2017. The company expects to achieve additional cost reductions through non-headcount spending rationalization (Read more: Allergan to Cut Jobs Amid Loss of Exclusivity for Key Drugs).

Pfizer in Protein Degradation Deal with Arvinas: Pfizer has agreed to shell out up to $830 million to private biotech company, Arvinas, which is focused on creating a new class of drugs based on protein degradation. The companies announced a research collaboration and license agreement for the discovery and development of drug candidates using Arvinas’ proprietary PROTAC (PROteolysis TArgeting Chimeras) platform, a novel technology that is used for the creation of small molecule therapeutics aimed at degrading disease-causing cellular proteins.

The multi-year agreement, which covers different therapeutic areas, will see Arvinas drive discovery efforts, while Pfizer will be responsible for the clinical development and commercialization of any products resulting from this collaboration.

The $830 million covers upfront and milestone payments that depend on the achievement of specified preclinical, clinical and commercial milestones. The deal terms include tiered royalties as well.

Protein degradation is an area that has been attracting the interest of large cap companies – Arvinas has an agreement with Roche RHHBY as well.

Pfizer-Sangamo Sign Another Collaboration Agreement: Pfizer has signed another collaboration agreement with Sangamo for the development of a potential gene therapy using zinc finger protein transcription factors (ZFP-TFs) for the treatment of amyotrophic lateral sclerosis (“ALS”) and frontotemporal lobar degeneration (“FTLD”) linked to mutations of the C9ORF72 gene. The agreement will see Pfizer shelling out an upfront payment of $12 million as well as milestone payments worth up to $150 million plus tiered royalties on net sales.

While Sangamo will be responsible for the development of ZFP-TF candidates, Pfizer will be operationally and financially responsible for subsequent research, development, manufacturing and commercialization for the C9ORF72 ZFP-TF program and other resulting products.

Sangamo and Pfizer already have a collaboration agreement that was announced last year for the development and commercialization of gene therapy products for hemophilia A, including SB-525 (Read more: Pfizer Collaborates With Sangamo for Gene Therapy).

Pfizer is a Zacks Rank #3 (Hold) stock – you can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The company’s stock is up 9.5% over the last one year, compared to the 15% rally of the industry it belongs to.

Roche-MacroGenics Ink Deal: Roche and clinical-stage biopharma company, MacroGenics, are collaborating on the discovery and development of innovative monoclonal antibody-based therapeutics for the treatment of cancer, as well as several autoimmune disorders and infectious diseases. The companies’ respective platforms, including MacroGenics' DART platform and Roche's CrossMAb and DutaFab technologies, will be used for the selection of a bispecific format and lead pipeline candidate. Roche will be responsible for further development and commercialization of any such pipeline candidate.

The deal will see Roche making an upfront payment of $10 million plus up to $370 million on the achievement of milestones and royalties on future sales.

Mylan & Partner to Start Eylea Biosimilar Study in 1H18: Mylan MYL and partner Momenta announced that they intend to start a pivotal study for M710, a proposed biosimilar to Regeneron’s blockbuster eye drug, Eylea (aflibercept). A vascular endothelial growth factor (“VEGF”) inhibitor, Eylea is indicated for the treatment of neovascular (wet) age-related macular degeneration, macular edema following retinal vein occlusion, diabetic macular edema and diabetic retinopathy in patients with diabetic macular edema. The study is scheduled to commence in the first half of 2018 in patients with diabetic macular edema. Eylea is the flagship product at Regeneron with global sales coming in at $4.3 billion in the first nine months of 2017 (Read more: Momenta & Mylan to Initiate Trial on Biosimilar of Eylea).

Performance

Large Cap Pharmaceuticals Industry 5YR % Return

The NYSE ARCA Pharmaceutical Index was up 1.4% over the last four trading sessions. Among major stocks, AstraZeneca AZN was up 4.1%. Over the last six months, Pfizer was up 11.5% while GlaxoSmithKline GSK declined 11.3% (See the last pharma stock roundup here: Roche, MNK Announce Acquisition Agreements, Regulatory Updates from Novartis).


What's Next in the Pharma World?

Watch out for updates and outlooks that will be provided by several companies next week at the 36th Annual J.P. Morgan Healthcare Conference.

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