Q1 Earnings Preview: Novartis, Lilly, Biogen, GSK, Amgen
Johnson & Johnson kicked off the first quarter earnings season last week as it always does, standing as an indicator of what is to come for the rest of its pharma brethren. But this might spell a rough few weeks for the industry.
J&J came in below analysts' sales expectations, and its pharma unit in particular was of concern. The company's executives emphasized drug pricing during their quarterly call, and noted that primary care sectors including cardio and metabolic were being hit hardest by pricing controls.
Some recent reports from analysts suggest that a rollback in price increases could have a bigger impact on earnings for pharma than previously anticipated. Pharma companies of all sizes have been pledging to keep price increases below 10% annually; previously, companies often hiked prices by more than 100% even for older medications and price increases often made up for a lag in volume.
There are plenty of earnings reports coming up in the next couple weeks, but here's a look at the big pharmas and big biotechs reporting in the next two days:
Biogen (April 25)
Rare disease drugs should take center stage during Biogen's earnings report. Chief on investor minds is the spinal muscular atrophy (SMA) drug Spinraza (nusinersen), which gained approval in late December.
During a fourth quarter call, newly minted CEO Michel Vounatsos warned educating clinicians, patients and doctors about the medication would slow the medication's uptake. Pushback from payers and pharmacy benefit managers for the drug's high price tag — $125,000 per vial — has also caused some concern. Vounatsos will want to ease those fears by explaining how Biogen has rolled the drug out thus far and its future sales force strategies.
Biogen has also worked to flesh out its rare disease offerings further. The big biotech recently agreed to license an anti-tau candidate from Bristol-Myers Squibb for $300 million upfront. If anti-tau sounds familiar, that's because it's one of the fastest growing and highly anticipated areas of Alzheimer's drug research. Biogen has another Alzheimer's drug named aducanumab in the works, so expect updates on that.
Eli Lilly & Co. (April 25)
The failure of baricitinib, Lilly’s closely watched arthritis hopeful, to secure U.S. approval this month will likely cast a long shadow over the Indianapolis drugmaker’s first quarter earnings. Indications from the company suggest a speedy resubmission will be difficult.
Baricitinib, which had been forecast by many to quickly become a blockbuster, is a key component to Lilly’s pledge to hit 5% annual growth through 2020.
New drugs are particularly critical for Lilly, which faces a pricing crunch for its best-selling insulin Humalog (lispro) and looming patent expiry for Cialis (tadalafil), another top earner.
Lilly has had some success in winning new approvals over the past several years and expects to submit its breast cancer drug abemaciclib for approval later this year. But baricitinib’s setback will be likely be a major headache for newly minted CEO David Ricks, who took over from John Lechleiter January 1.
Novartis (April 25)
The Swiss pharma has put cancer at the core of its plans for future growth, splitting off its oncology division into a separate business unit last year to reflect that focus.
A March approval of Kisqali (ribociclib) puts Novartis in competition with Pfizer’s fast-growing Ibrance (palbociclib), while progress on its CAR-T therapy has the company neck and neck with Kite Pharma to be first to market in the emerging field.
Further success on both fronts would help to offset lost momentum due to genericization of Gleevec (imatinib) in the U.S. and position Novartis well in key growth areas in oncology.
Elsewhere, fast sales of Cosentyx (secukinumab) have taken some of the sting off a disappointing start for Novartis’ heart med Entresto (valsartan/sacubitril), which has so far failed to gain traction.
Even so, continued struggles from eye-care division Alcon could weigh on top-line numbers. The company said it is reviewing options for the unit. Bloomberg reported last week that the company has tapped Bank of America to help with the sale process, so expect an update on that.
Amgen (April 26)
While biosimilars have not taken a strong hold in the U.S. just yet, they threaten to put pressure on Amgen’s legacy portfolio – the company was one of the first makers of biologics and faces the biggest threat from the copycat large molecule drugs.
At the same time, Amgen’s own biosimilars portfolio has been caught up in court battles and has yet to deliver for the company. Expect updates on the biosimilar landscape from management.
Meanwhile, Amgen has been putting a lot of commercial power behind its flailing cholesterol drug Repatha (evolocumab). It also has the cardiovascular outcomes data the FOURIER trial to tout – even if the positives of it were minimal. While it’s unlikely to have gained much ground in the most recent quarter, analysts believe there could be some positive news for the PCSK9 inhibitor.
Amgen, which is often joked to be a law firm with a few scientists, has been going back and forth in court with Sanofi and Regeneron over the PCSK9 class —now the companies are battling over the pair's recently approved eczema offering. Expect Amgen to talk about the strength of its patent portfolio.
GlaxoSmithKline (April 26)
GlaxoSmithKline caught a break a few weeks back when the Food and Drug Administration rejected Mylan's generic version of Advair (fluticasone propionate).
But investors know it's only a matter of time before a copycat begins to syphon off large amounts of the blockbuster drug's sales.
Hikma Pharmaceuticals and Vectura group are scheduled to get an FDA approval decision on their medication next month. And in January, Teva locked down approval of two inhalers with the same active ingredients as Advair. GSK argued, though, that Teva's products wouldn't have a drastic effect on bottom lines because they aren't substitutable for Advair, nor do they treat the same broader set of indications.
Like Biogen last quarter, GSK has a new face at its helm. Emma Walmsley took over at the beginning of April when Andrew Witty retired. Investors will be watching to see how she handles her first earnings call.