The third-quarter earnings season came to an end this week for large drugmakers, with AstraZeneca AZN and Bayer BAYRY announcing their results. AbbVie’s ABBV schizophrenia candidate, added from a recent acquisition, failed in mid-stage studies. The FDA granted Breakthrough Therapy Designation (“BTD”) to J&J’s JNJ nipocalimab for Sjögren’s disease. Merck MRK acquired rights to a novel cancer therapy from a China-based private biotech.
Here's a recap of the week’s most important stories.
AZN Tops Q3 Earnings and Sales Estimates, Guides Higher
AstraZeneca’s third-quarter results were better than expected, as it beat estimates for earnings as well as sales. Core earnings of $2.08 per share rose 27% year over year at constant exchange rates (CER), while revenues rose 21%. Revenues increased across all segments, with sales of most of the key drugs, including Tagrisso, Fasenra, Farxiga, Lynparza and Symbicort, beating estimates. AstraZeneca raised its sales and earnings growth expectations for the year. It expects total revenues and core earnings per share to increase by a high teens percentage compared with the previous guidance of an increase in the mid-teens percentage at CER.
Recently, there have been rising concerns about the ongoing investigations at AstraZeneca China. With respect to the investigations, chief executive officer, Pascal Soriot, said that the company is aware that Chinese authorities are investigating some current and former AstraZeneca employees for medical insurance fraud, illegal drug importation and personal information breaches. The company went on to say that it has not received any notification about investigations on AstraZeneca China.
AstraZeneca announced plans to invest $3.5 billion by 2026 to expand its R&D and manufacturing footprint in the United States. This includes a new capital investment of $2 billion that will create more than 1,000 jobs.
AstraZeneca and partner Merck announced positive data from the phase III KOMET study evaluating Koselugo in adults with neurofibromatosis type 1 (NF1) who have symptomatic, inoperable plexiform neurofibromas (PN). Data from the study showed that Koselugo reduced the size of plexiform neurofibromas, benign tumors that grow in the tissue surrounding nerves, in adults with NF1. Koselugo is presently approved in some countries, including the United States and EU, for the treatment of certain pediatric patients with NF1 who have symptomatic, inoperable PN. The KOMET study looks to expand the use of Koselugo beyond pediatric patients to also treat adult patients for whom there are no approved targeted therapies.
BAYRY Q3 Earnings Decline, Sales Rise Y/Y
Bayer’s third-quarter core earnings of €0.24 per share declined 36.8% year over year. Sales of €10.9 billion rose 0.6% on a currency and portfolio-adjusted basis. Sales of new products, cancer drug, Nubeqa, and kidney drug, Kerendia, remained strong, offsetting the loss of exclusivity impact on sales of oral anticoagulant Xarelto. The Consumer Health business, too, posted growth, though the pace of growth slowed down. However, the Crop Science business was adversely impacted by significant declines in glyphosate-based herbicides.
Sales in the Crop Science segment decreased 3.6%. Pharmaceuticals segment sales increased 2.3%, while Consumer Health sales rose 5.7% on a currency and portfolio-adjusted basis. Bayer reiterated its previously provided currency-adjusted guidance for total sales for 2024.
ABBV’s Schizophrenia Treatment Added From Cerevel Deal Fails
AbbVie’s two phase II studies (EMPOWER-1 and EMPOWER-2) on emraclidine, its once-daily oral candidate for treating schizophrenia, failed to meet their primary endpoints. The studies’ primary endpoint was to show a statistically significant improvement in the change from baseline in the Positive and Negative Syndrome Scale (PANSS) total score compared to the placebo at week 6. PANSS is a scale used to measure the severity of schizophrenia symptoms. Emraclidine was added to AbbVie’s pipeline with this year’s $8.7 billion acquisition of Cerevel. Emraclidine, an M4-selective positive allosteric modulator, was a key reason for AbbVie to buy the company. AbbVie’s shares slumped on the news.
FDA’s Breakthrough Tag to J&J’s Nipocalimab for Sjögren’s Disease
The FDA granted Breakthrough Therapy Designation to J&J’s key pipeline candidate, nipocalimab, for treating moderate-to-severe Sjögren’s disease, a chronic autoantibody disease with no approved advanced therapies. The BTD was based on data from the phase II DAHLIAS study. Nipocalimab is in mid and late-stage development for several rare autoantibody-driven rare diseases.
Merck Buys Rights to PD-1/VEGF Inhibitor
Merck entered into a deal to in-license exclusive global rights to LM-299, an investigational anti-PD-1/VEGF bispecific antibody, from private Chinese biotech LaNova Medicines. To acquire the oncology candidate, MRK will make an upfront payment of $588 million to LaNova, with the latter also being entitled to up to $2.7 billion in milestone payments. LM-299 is presently being evaluated in a phase I study in China. The transaction is expected to close in the fourth quarter of 2024.
In September, Summit Therapeutics had announced that its Akeso partnered PD-1/VEGF Inhibitor, ivonescimab outperformed Merck’s blockbuster PD-L1 inhibitor, Keytruda in a head-to-head lung cancer study. LM-299 works by the same mechanism as Summit’s ivonescimab.
The NYSE ARCA Pharmaceutical Index declined 3.64% in the last five trading sessions.
Large Cap Pharmaceuticals Industry 5YR % Return
Large Cap Pharmaceuticals Industry 5YR % Return
Large Cap Pharmaceuticals Industry 5YR % Return
Here’s how the eight major stocks performed in the last five trading sessions.
Zacks Investment Research
Image Source: Zacks Investment Research
In the last five trading sessions, AbbVie declined the most (13.0%), while Lilly rose the most (4.4).
In the past six months, while AbbVie rose the most (3.3%), Merck declined the most (24.8%).
(See the last pharma stock roundup here: MRK, PFE, ABBV, NVS, LLY’s Q3 Earnings in Focus)
What's Next in the Pharma World?
Watch this space for regular pipeline and regulatory updates next week.
AstraZeneca, AbbVie, Bayer, Merck and J&J have a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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