After optimism at the J.P. Morgan Healthcare Conference was tempered by comments from the President-elect about drug pricing, the industry now looks to earnings bellwether Johnson & Johnson. The multi-national conglomerate always kicks off the earnings season and acts as a barometer for what we can expect from the rest of the big pharmas.
Comments on pricing and deal strategy will be top of mind for investors of every company as we enter a new political era. Here's a look at what to expect from the pharma and biotech companies presenting their full-year earnings this week:
Johnson & Johnson, January 24
Every January, biopharma executives and investors look to the J.P. Morgan Healthcare Conference in San Francisco to kick start dealmaking for the new year. While this year’s conference did deliver with several notable deals last week, there was little news on J&J’s potential takeover of some (or all) of Swiss biotech Actelion.
J&J confirmed it had entered exclusive talks with Actelion on December 21, only about a week after it had announced that talks had ended. The on-again off-again discussions reportedly revolve around a deal to acquire Actelion’s portfolio of marketed drugs, separate from the biotech’s pipeline.
While J&J executives likely won’t comment on the deal directly if talks haven’t reached their conclusion, the potential deal will be on everyone's minds as they sift through fourth-quarter results for J&J’s pharmaceutical unit.
Also look for any signs of slowing sales of Remicade (infliximab), which faces a new biosimilar threat in Pfizer and Celltrion’s Inflectra (infliximab-dyyb). While J&J has expressed confidence sales will hold up, Inflectra could begin to eat away at market share.
Elsewhere, continued growth from Xarelto (rivaroxaban) and Imbruvica (ibrutinib) will be important for boosting top-line revenue.
Novartis, January 25
Novartis’ performance improved slightly during the last quarter, but sales throughout 2016 were lower than in 2015. The company curtailed the Q3 loss down to 1% due in part to the solid growth of multiple sclerosis treatment Gilenya (fingolimod), anti-inflammatory drug Cosentyx (secukinumab) and heart failure medication Entresto (sacubitril/valsartan).
Of note, Entresto overcame a slow start to bring in $53 million for the quarter, which kept Novartis' annual sales goal of $200 million for the drug alive. The Swiss biopharma will surely reveal whether it hit that mark, and give updates on its strategy to offset lagging returns from its eye care business Alcon and the patent loss of blockbuster cancer drug Gleevec.
Also look for Novartis to discuss CTL019, its lead CAR-T therapy. The company plans to file the treatment for approval early this year, but recent moves from rival CAR-T drugmaker Kite — namely, locking in a rolling submission and international manufacturing deals for its own lead candidate — have investors eager to hear how Novartis plans to win the race to market.
Novartis has made moves to build up its cardiovascular pipeline, inking a deal with Akcea Therapeutics and launching a social media network aimed at patients with heart failure in the past few months. It also upped its stake in liver disease research, giving Conatus Pharmaceuticals $50 million upfront for an exclusive option to the biotech's investigational drug for nonalcoholic steatohepatitis (NASH). Expect to hear updates on both.
Vertex Pharmaceuticals, January 25
Vertex already shed some light on fourth quarter results at the J.P. Morgan Healthcare Conference in early January. The company's most lucrative product, cystic fibrosis drug Orkambi (lumacaftor/ivacaftor), did a little better than the industry expected, bringing in $276 million for the period. It garnered $234 million in the previous quarter.
Still, the Boston biotech gave modest guidance for Orkambi in 2017, projecting sales between $1.1 billion and $1.3 billion. Accounting for revenues in new locales and patient populations may push realized revenues to the higher end of that range, according to Jefferies analysts.
It also anticipates Kalydeco (ivacaftor), the company's other main cystic fibrosis product, to have similar annual revenue to the $703 million seen in 2016, and plans to submit a combination therapy pairing the drug with investigational candidate tezacaftor for approval later this year.
Investors can expect the company to flesh out those moves and its ramped-up focus on more combination therapies during the earnings call. It should also address sales strategies for Orkambi, given that the drug consistently makes up more than half of total revenues.
Biogen, January 26
As with any new company head, and particularly one promoted from within, Biogen's Michel Vounatsos should expect to field a range of questions about how he will steer the big biotech in a different direction than former CEO George Scangos, who frustrated investors by pursuing candidates in risky disease areas like Alzheimer's disease.
Vounatsos has already given a sneak peak of at least one of his priorities moving forward: neurological disorders. At the 35th annual J.P. Morgan Healthcare Conference, Vounatsos said his company will put greater attention on multiple sclerosis, spinal muscular atrophy (SMA) and other neurodegenerative disorders.
To that end, Biogen will likely give further details about the marketing and manufacturing efforts for its recently-approved SMA drug Spinraza (Nusinersen), as well as the progression of Phase 3 enrollment for its lead Alzheimer's disease drug aducanumab.
Don't expect the company to spend much, if any, time talking about takeover speculation, though. Spurred by Scangos' departure, rumors of a potential buyout by Allergan or Merck injected a jolt of adrenaline into investors last summer. Allergan and Merck quickly silenced the rumblings, but some industry followers believe Biogen's portfolio and pipeline still makes it an attractive target.
Bristol-Myers Squibb, January 26
The surprising setback for Bristol-Myers’ Opdivo (nivolumab) in first-line lung cancer over the summer upended the early hierarchy in the immuno-oncology market, giving Merck & Co. and Roche a chance to catch up.
Merck’s Keytruda (pembrolizumab) has since won approval in first-line non-small cell lung cancer (NSCLC) for patients who express high levels of PD-L1. How much market share Keytruda is able to wrest away from Opdivo based on the momentum from this approval will be a key area to watch.
Bristol-Myers expects sales of Opdivo to hold up as it is approved for a broader patient population than Keytruda in second-line NSCLC, but any sign of slowing sales growth may cause concern among investors.
Opdivo will still benefit from its broader portfolio of approved indications, and Bristol-Myers is investing in combination studies which pair Opdivo with its other immunotherapy, Yervoy (ipilimumab). Yet hopes for an early approval of that combo in NSCLC were dashed yesterday when the company announced it would not pursue an accelerated approval filing.
Bristol-Myers is also in the midst of an operational shake-up, aiming to focus investment, improve R&D competitiveness and bolster biologic manufacturing. Company executives could offer more details on the direction of this evolution in their earnings call with analysts on the 26th.
Celgene, January 26
Celgene inked several deals during the fourth quarter, and investors expect details on how it plans to strengthen its pipeline and portfolio with them. Currently, the company is dependent on its cancer drug Revlimid, which brought in $1.9 billion worth of sales in Q3 — or 63% of total revenue.
In early December, Celgene acquired Acetylon for access to the target company's gene-regulating cancer treatments. Later that month, it teamed up with Evotec on neurological drug development. And in January, the big biotech forged an agreement giving it exclusive rights to acquire Anokion. Exercising that option would give Celgene its second autoimmune bolt-on in two years; the company picked up Receptos in July 2015 for $7.2 billion.
Celgene managed to pull off a strong third quarter performance for its plaque psoriasis drug Otezla (apremilast) despite issues with direct-to-consumer marketing and analyst worries. The medication brought in $275 million during the period and, paired with another period of strong gains for multiple myeloma treatment Revlimid (lenalidomide), helped offset lower revenues from Abraxane (protein-bound paclitaxel).
Analysts expected the tougher road for Abraxane, though. The treatment for various cancers, including NSCLC, faces increasing competition from the immuno-oncology field, which has put an intense focus on the cancer. Celgene may also talk tactics for carving out a better market position for the drug.
AbbVie, January 27
Analysts expect AbbVie to record about $25 billion in revenues for the full year 2016 when it reports on Jan. 27. Despite a strong stock performance in 2016, investors remain skeptical of AbbVie due to its reliance on the blockbuster rheumatoid arthritis drug Humira (adalimumab), which brought in more than 60% of revenues over the last several quarters.
While AbbVie is defending Humira fiercely through a complex patent litigation strategy, biosimilars of the drug are rapidly approaching the U.S. market. Amgen gained approval for its biosimilar version of the drug, dubbed Amjevita, in September, and Boehringer Ingelheim announced in mid-January that both the FDA and EMA have accepted its Humira biosimilar application for review. Yet, analysts think AbbVie can fend off these copycat biologics for a few more years. The big question will be how payers react to biosimilars entering this market.
The spinout has several drugs to watch in its late-stage oncology and immunology pipelines, including Rova-T and risankizumab, as well as the PARP inhibitor veliparib. Several trials of the drugs will read out over the next 12-18 months. Rova-T, in particular, is expected to be a multi-billion drug once it hits in the market in 2018.
AbbVie has said previously that it doesn’t expect to do any major M&A in 2017 as it tries to de-lever its balance sheet, but expect announcements about bolt-on acquisitions in the oncology, hematology and immunology spaces.