Friday Five – The pharma week in review (30 January 2020)

All signs point to bolt-on deals at Pfizer

It's probably not what Pfizer CEO Albert Bourla was expecting.

Having finally pulled the trigger on a strategy to streamline the company and shed its older off-patent drugs (one that his predecessor dangled enticingly in front of investors for more than a decade), Bourla needs to convince shareholders that Pfizer can succeed as a pure-play innovative drug developer.

Shares dropped more than 5% in response to the company's fourth-quarter/full-year results, which were announced on Tuesday, indicating that the CEO's message is not being well received.

Pfizer can rely on a trio of key sales growth drivers in the short to mid-term, though the fact that these products (Ibrance, Eliquis and Xeljanz) all face patent expiration over a 12- to 18-month period approximately six years from now ratchets up pressure on the pipeline to deliver notable advancements.

An experimental atopic dermatitis drug (abrocitinib) and a number of gene therapies (for haemophilia A and Duchene muscular dystrophy) were touted this week, ahead of a more comprehensive pipeline overview that will be provided in late March.

In the meantime, analysts have yet to see enough evidence of progress to attach more than nominal value to Pfizer's pipeline in their forecasts. Bourla says that the company's legacy of mega-mergers is behind it and that bolt-on deals are the future. Share buy backs have been cancelled in 2020 in favour of bulking out the pipeline – will M&A get investors onside?


Novartis' Zolgensma lives up to expectations – for now at least

By comparison, Novartis can reasonably claim to be one of the most innovative Big Pharma players. Presenting the company's fourth-quarter/full-year results on Wednesday, CEO Vas Narasimhan described the US approval of five potential blockbusters from Novartis' pipeline last year as an unprecedented industry achievement.

More to the point, the most closely watched of these new launches – Novartis' spinal muscular atrophy (SMA) gene therapy Zolgensma – looks well on its way to becoming a billion-dollar product based on sales in the US market during the second half of 2019.

Whether Zolgensma can meet Wall Street expectations in 2020 will largely depend, however, on successful adoption of the gene therapy in Europe, where its status as the world's most expensive treatment (it is priced at $2.1 billion as a 'one and done' infusion in the US) will be heavily scrutinised, regardless of any regional discount that Novartis offers.


Skyrizi gets a head-to-head boost, says leading dermatologist

Recently announced head-to-head data showing superiority for AbbVie's Skyrizi over Novartis' Cosentyx for the treatment of moderate-to-severe psoriasis will likely verify the former's status as a go-to therapy and resonate among the prescriber community, a leading dermatologist told FirstWord this week. This supports feedback from our recently fielded Physician Views snap poll.

Novartis reiterated this week that Cosentyx remains well positioned in the US market with formularies keen to include at least one IL-17 inhibitor (Skyrizi utilises a different mechanism of action by targeting IL-23). Analysts expect Cosentyx sales to grow from $3.5 billion to in excess of $5 billion by 2024.

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Biosimilar competition intensifies, but Roche rides it out

Roche reported its fourth-quarter/annual results on Thursday, revealing the biggest annual hit to one of its core legacy oncology franchises from biosimilar competition to date.

Global sales of its breast cancer treatment Herceptin fell by $943 million between 2018 and 2019, eclipsing the $636 million decline suffered by its Rituxan franchise between 2017 and 2018. Some of the contraction in Herceptin revenue was attributable to patient switching to Kadcyla, although Roche conceded that fourth-quarter sales of Herceptin in the US had been eroded by the impact of biosimilar competition, with this trend set to accelerate in 2020.

Roche models approximately $4 billion in biosimilar-related revenue losses this year, including $2.8 billion in the US. It refused to confirm whether biosimilar pressure will ease beyond 2020.

Good job then that Roche continues to deliver impressive growth from newer products, led by billion dollar plus contributions (for 2019 versus 2018) from Ocrevus (multiple sclerosis; +$1.4 billion), Hemlibra (haemophilia A; +$1.2 billion) and Tecentriq (cancer; +$1.1 billion). Roche's total pharma revenues grew $4.5 billion year-on-year to reach $50 billion in 2019. On a conference call to discuss its results, management said it anticipates significant ex-US growth for Ocrevus in 2020 and would not be surprised to see Hemlibra growth accelerate as share of voice for the brand continues.


Eli Lilly kills pegilodecakin

Eli Lilly also unveiled its fourth-quarter/full-year results on Thursday, which included a "healthy beat" on both revenues and earnings, wrote analysts at Wolfe Research.

With this performance perhaps softening the blow, Eli Lilly also conceded that its experimental immuno-oncology drug pegilodecakin is now on the scrapheap. The company confirmed that combination studies of pegilodecakin (with Keytruda and Opdivo, respectively) in first- and second-line non-small-cell lung cancer (NSCLC) had failed to show a benefit over current standard of care and that no further studies with the drug are planned.

This concession casts understandable shade on Eli Lilly's 2018 acquisition of ARMO Biosciences for $1.6 billion; a deal that in hindsight looks to have been conceived during a notably short period of industry enthusiasm around cytokines. The company had previously indicated that more carefully designed studies could potentially open up a route to market for pegilodecakin, though it is unclear if that outlook shifted in light of Loxo Oncology's management team taking control of oncology R&D at Eli Lilly. 

See also ViewPoints: Could outlook for Eli Lilly, Ipsen deals further deflate M&A momentum?

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