GlaxoSmithKline, Merck & Co. prepare to slim down
GlaxoSmithKline and Merck & Co. both announced plans to become leaner, innovation-focused companies this week.
GlaxoSmithKline had previously announced an intention to separate its consumer healthcare business and confirmed this will now take place in 2022. A two-year countdown arguably increases onus on the company to show R&D progress. Fourth-quarter sales were weaker than expected, with a stronger performance from the vaccine business unable to cover for a shortfall in pharma sales. 2020 should be a pivotal year for GlaxoSmithKline's aspirations to re-enter the oncology market.
Merck caught investors by surprise by announcing plans to spin out its women's health, biosimilar and other legacy products into a new company during the first half of next year. The as-yet unnamed company is projected to generate sales in 2021 of between $6 billion and $6.5 billion.
Merck's innovative pharma business should benefit from better growth prospects, meaningful improvement in its operating margin and the ability to prioritise business development and pipeline investments, the company says. It will also receive up to $9 billion as a tax free dividend when the transaction closes.
However, spinning out a new company further increases Merck's dependency on sales from its cancer drug Keytruda, which grew to $11.1 billion in 2019 (up from $7.2 billion the prior year). Keytruda now accounts for 25% of total revenue and is forecast to account for more than 30% when the spin-out occurs next year. Merck says it is mindful of this risk, but suggested the move is designed to maximise the impact that Keytruda's current growth will have on the company in the long term.
While the wait for Gilead to fatten up continues
Gilead Sciences announced its fourth-quarter 2019 results this week and projected sluggish growth for the year ahead. Against this backdrop, management said that the company's early-stage pipeline is undervalued by Wall Street analysts, but confirmed that it remains on the lookout for deals to enhance its R&D prospects.
With investors' expectant, given in part Gilead's strong record at delivering impressive returns on M&A, CEO Daniel O'Day faces an intriguing set of decisions around the company's aspirations in immuno-oncology, particularly where cell therapy is concerned; an area Gilead entered into with some fanfare through the $11.9-billion acquisition of Kite Pharma three years ago.
Full-year sales of the CAR-T treatment Yescarta were slightly below consensus estimates at $456 million, with revenues having flat-lined for the past three quarters. Acquisition of Kite is not only looking like an increasingly generous deal on Gilead's part, but one at odds with the cautious view towards cell therapy that O'Day projected in his previous role as CEO of Roche's pharmaceutical division.
Pharma responds to coronavirus pandemic
Elsewhere, Gilead saw its share price rise sharply (if temporarily) earlier in the week on the back of news that a US patient with 2019-nCoV had responded to treatment with the company's experimental antiviral drug remdesivir, which was initialy developed for the treatment of Ebola. Gilead touted potential use of the agent last month and confirmed this week it has supplied doses of remdesivir for the emergency treatment of a small number of patients with the coronavirus.
GlaxoSmithKline also announced that as part of a collaboration with the Coalition for Epidemic Preparedness Innovations (CEPI), it will make its pandemic vaccine adjuvant platform technology available to speed the development of an effective immunisation against 2019-nCoV. Richard Hatchett, chief executive of CEPI, noted that gaining access to the adjuvant technology is a "huge step forward" in developing a vaccine against the virus.
Johnson & Johnson said late last month that it is launching a "multi-pronged" response to the outbreak, including developing a vaccine candidate against 2019-nCoV and "broadly" collaborating with others to screen a library of compounds with potential to fight the infection. It has also donated its HIV drug Prezcobix at the request of Chinese health authorities who are evaluating its potential in fighting the virus.
Moderna and Inovio Pharma have confirmed they will also start work on developing potential vaccines against the new coronavirus, while AbbVie said it has donated its HIV drug Kaletra as an "experimental option" in response to a request by Chinese health authorities.
Having announced an expanded collaboration with the US Department of Health and Human Services (HHS) to develop new treatments combating 2019-nCoV earlier in the week, Regeneron Pharmaceuticals said on Thursday that a set of potential antibody treatments could be ready for testing in patients within a few months.
More volatile trading for Biogen
Biogen shares gained as much as 32% on Wednesday after the US Patent Trial and Appeal Board (PTAB) sided with the company by agreeing to uphold a patent covering its multiple sclerosis drug Tecfidera. There is now a much higher chance that Biogen will be able to market Tecfidera exclusively, without facing generic competition, until the patent in question expires in 2028, said analysts. Tecfidera generated global sales of $4.4 billion last year, accounting for approximately 30% of Biogen's total sales.
With this overhang removed, investors have piled into Biogen on the assumption that the biotech can win US approval for the experimental Alzheimer's disease treatment aducanumab later in 2020.
Aimmune looks to retain momentum following breakthrough drug approval
Late last week, the FDA cleared Aimmune Therapeutics' Palforzia, making it the first approved treatment for patients with peanut allergy. The decision follows a 7-2 vote last September by an FDA advisory panel backing approval of the oral immunotherapy to mitigate allergic reactions, including anaphylaxis that may occur with accidental exposure to peanuts.
CEO Jayson Dallas told FirstWord recently that the company has been working diligently behind the scenes to lay a foundation for the commercial success of Palforzia, which it hopes to leverage to confound those doubting its ability to successfully launch the drug.
Furthermore, on Thursday, Aimmune announced that it has received additional investment worth $200 million from Nestle Health Science and confirmed it has in-licensed exclusive rights from Xencor to AIMab7195, an anti-IgE mAb, which it plans to evaluate as a treatment for various food allergies.
Chief financial officer Eric Bjerkholt told FirstWord that while not directly related the tie that binds the two news events together is that they both represent important stepping stones along Aimmune's path to pre-eminence in food allergy. In fact, one could make an argument that the company is just about there already thanks to the approval of Palforzia, which analysts are pegging as a potential blockbuster.
"The additional financing puts us in a good position not just for the launch, but to fully fund the commercialisation of Palforzia in the US and EU, while also advancing our growing pipeline," Bjerkholt remarked.
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