Earnings Preview: Merck set to solidify I/O lead, Sanofi still looking for deals and more
The first week biopharma earnings had its ups and downs; Johnson & Johnson — the bellwether of the industry — reported disappointing earnings, but followed up with a $30 billion buyout of Actelion a few days later.
Meanwhile, Vertex made a shift to pain and Novartis confirmed that it’s exploring strategic options for Alcon, while also moving forward with its closely watched CAR-T program. Bristol-Myers Squibb also disappointed, setting the stage for competitors Merck and Roche to report in the coming days. Here’s a look at what the next round of full-year earnings will bring:
Eli Lilly & Co, Jan. 31
David Ricks took over as CEO on Jan. 1 and investors are eager to hear his priorities for the company. Eli Lilly & Co., unlike some of its big pharma brethren, is in a pretty good place at the moment.
The company’s diabetes franchise has been gaining ground — mostly through strategic deals with payers, and new indications for cardiovascular protection for Jardiance. If any company can claim dominance in diabetes right now, it would be Lilly. Former diabetes leaders Novo Nordisk and Sanofi are particularly struggling with pricing dynamics.
After a bit of a drought, Lilly also has several recently-launched products, including Taltz (ixekizumab) in psoriasis and baricitinib in rheumatoid arthritis, and more that are close.
Baricitinib, a JAK1/2 inhibitor, has bested Humira (adalimumab) in recent trials and the PDUFA date has been pushed back to April. Despite the delay, the drug is expected to perform better than Pfizer’s Xeljanz (tofacitinib), which has been delayed for safety reasons. Expect updates on both of these drugs.
Lilly is hoping to join the biosimilar game; it has launched its Lantus copycat, Basaglar, in both Europe and the U.S. Expect Lilly to talk about how the launch is going in the first few weeks of commercialization in the U.S.
Pfizer, Jan. 31
Pfizer has been under pressure due to declining sales of its maturing products and only a small number of launches. Under the new Presidential administration, Pfizer could be one of the major beneficiaries if corporate tax laws are changed and corporations are given a window to repatriate cash.
Due to the issues that Pfizer has been having, analysts are focused on the core performance issues of the company. Look out for details on how Ibrance (palbociclib) is doing in advanced breast cancer and the market opportunity for one of Pfizer’s best-selling drugs, Prevnar 13, in adults.
At the end of November, Pfizer, along with partner Celltrion, launched their biosimilar of Johnson & Johnson’s Remicade (infliximab). The company will likely give details on the launch so far that could be an indicator of how the biosimilar market as a whole is going to do — pay particular attention to any details on reimbursement and patient uptake.
Pfizer won the bid to acquire Medivation last year and is now trying to capitalize on its oncology program. Investors should look for more details about any bolt-on deals that Pfizer can make to bolster this last acquisition.
Roche, Feb. 1
Much of the attention around the Swiss pharma has centered on the launch of Tecentriq (atezolizumab), Roche’s answer to Merck and Bristol-Myers Squibb’s respective checkpoint inhibitors.
Launched initially in bladder cancer, Tecentriq accumulated sales of 77 million Swiss francs (about $77 million) in roughly a quarter and a half this year. The Food and Drug Administration approved Tecentriq for use as a second-line treatment of non-small lung cancer in October, though, substantially broadening its addressable market. Investors will be looking to see how much share it was able to steal away from Merck’s Keytruda and Bristol-Myers’ Opdivo.
While Tecentriq may steal the spotlight next week, Roche’s performance will still be largely determined by how well sales of its big three cancer drugs hold up. Together, Rituxan (rituximab), Herceptin (trastuzumab) and Avastin (bevacizumab) account for around half of Roche’s pharmaceutical revenue.
Sales of Avastin in the U.S. have slowed recently and all three will likely face biosimilar competition by the end of the decade. How Roche is managing the transition from the trio to its crop of maturing and newly launched drugs will be an area of focus.
Look also for any updates or additional information on launch plans for the multiple sclerosis drug Ocrevus (ocrelizumab), which had its review by the FDA extended three months.
Merck & Co, Feb. 2
With the company now well-positioned in the immuno-oncology space, Merck & Co. has been receiving a lot of gratitude from investors. Yet, analysts are still interested in hearing more about how the big pharma is going to capitalize on its opportunities (as Roche, Bristol-Myers Squibb and AstraZeneca close in), as well as how the launch is going in the first-line non-small cell lung cancer (NSCLC) space.
Expect Merck to give more details on the types of patients responding best to its PD-1 inhibitor Keytruda (pembrolizumab) and whether the patients receiving the drug are high PD-L1 expressers.
Beyond its strength in cancer, look at how Merck intends to maximize its Januvia franchise. The DPP-4 inhibitor got a cardiovascular protective benefit added to its label that should help boost sales of the franchise (which typically brings in around $6 billion annually).
Although Januvia is still a blockbuster, it has been facing increased competition in the diabetes space as the market gets flooded with GLP-1 antagonists and SGLT-2 inhibitors, causing sales to slip over the last several quarters. Analysts will be looking for clarity on the pricing dynamics in the diabetes market.
Beyond that, expect Merck to detail their plans in M&A; the company previously expressed that bolt-on deals will be a priority.
AstraZeneca, Feb. 2
Generic competition has hit AstraZeneca badly, with slumping sales of Crestor (rosuvastatin) and Nexium (esomeprazole) dragging down total sales in 2016.
Respiratory mainstay Symbicort has also fared poorly, leaving AstraZeneca in search of revenues to offset the bleeding while newer drugs mature. The British pharma has turned to externalization deals and shed a number of non-core assets during the fourth quarter.
Investors will be looking for growth from the cancer meds Tagrisso (osimertinib) and Lynparza (olaparib), as well as the diabetes drug Farxiga (dapagliflozin).
AstraZeneca’s bid to rejuvenate revenues, however, rests on its bet on combination therapies in immuno-oncology. The checkpoint inhibitor durvalumab is the linchpin of those efforts. A readout from the Phase 3 MYSTIC trial, which pairs durvalumab and tremelimumab, had been expected in early 2017. But AstraZeneca pushed the timeline back in an effort to deliver more competitive data.
Executives could comment more on the rationale behind that move and shed some light on their view of the evolving immuno-oncology field.
Novo Nordisk, Feb. 2
The Danish drugmaker has been struggling for the last several months, revealing late last year that it would be replacing its CEO earlier than expected and that it was laying off staff due to pricing pressures impacting its base diabetes business.
Novo Nordisk, which has only worked in injectables, was hoping to make the jump to oral treatments, but nixed those plans in light of the greater pressures on the pipeline. Analysts will look for any word that the drugmaker might still have plans to develop oral therapeutics.
The spotlight though will be on the pricing dynamics of the diabetes market. Novo Nordisk has been notorious for being unwilling to play the negotiating game with pharmacy benefit managers (PBMs) and the company has had problems getting its market-leading GLP-1 Victoza as a preferred medication on formularies.
Meanwhile, Novo Nordisk is one of several companies that has spoken out about pricing previously and agreed to limit price hikes to single digit percentage increases.
Beyond pricing, the focus will be on diabetes combo strategy. The company got approval for its insulin/GLP-1 combo in late-November — the same day as rival Sanofi got the OK for its combo. Analysts and investors will be looking for details on launch dynamics.
Gilead, Feb. 7
Industry and analysts alike have been waiting not-so-patiently for Gilead to use some of the large piles of cash it has on hand to make some deals, but the big biotech has said it's in no rush to pick up anything. Gilead is looking for the right asset and it will likely be in the oncology space, an area that the company has really been trying to emphasize.
Expect Gilead to talk about both its beefed up corporate development, as well as its plans to be a player in oncology.
The company has been beyond successful in the Hepatitis C space — most companies can’t claim to cure anything. But that success has pushed the company to explore other things. Gilead is shifting its focus to the next big liver disease: nonalcoholic steatohepatitis (NASH). Gilead gave an update on its NASH program at the recent J.P. Morgan Healthcare Conference, but don’t think that means the subject is off limits. Investors will be itching to hear more.
The elephant in the room will, of course, be drug pricing. Gilead has been the target of a lot of ire over the years because of its high-priced hepatitis C drugs. There will be talk of the price concessions the company has been forced to make in 2017 as competition gets greater in the space and patient dynamics change.
Allergan, Feb. 8
Under CEO Brent Saunders, Allergan has continued its “stepping-stone” approach to dealmaking, adding complementary companies in smaller bolt-on acquisitions and partnerships.
A $2.9 billion deal for the regenerative medicine company Actelity, L.P. was the biggest splash of the past quarter. Allergan expects the deal to be immediately accretive, adding business lines which generate just under half a billion in annual sales.
But attention may focus on broader industry-wide themes. Saunders has been at the forefront of the industry’s response to pricing scrutiny, staking Allergan to “responsible pricing” and swearing off double-digit price hikes.
Expect questions on how the pledge will affect growth for key brands like Botox (onabotulinum toxin A), Restasis (cyclosporine ophthalmic emulsion) and Linzess (linaclotide) in 2017.
GlaxoSmithKline, Feb. 8
GlaxoSmithKline's bread and butter has been vaccines and HIV drugs, and that didn't change during the last quarter. Vaccine revenues were £1.6 billion ($2 billion), up from the roughly $1.5 billion seen in the same period in 2015, while worldwide sales of the company's HIV drugs were about $1.2 billion.
Fourth quarter earnings will likely offer more good news for the respective businesses. In December, the company opened a new facility in Maryland for vaccine R&D, and plans to fill it with 450 employees. Tivicay and Triumeq, meanwhile, were responsible for more than 75% of the HIV revenues in the third quarter, and should deliver strong performances again to round out the year.
GlaxoSmithKline also began filing shingles vaccine Shingrix in Europe and the U.S. during the fourth quarter. Updates on that process and potential marketing and manufacturing preparations wouldn't be too left field, nor would they be for asthma drug Nucala, which the company plans to file for approval sometime this year.
While the company hasn't given a ton of information about a change in leadership announced back in September — with head of consumer healthcare Emma Walmsley replacing current CEO Andrew Witty on April 1 — more details about strategy and GlaxoSmithKline's trajectory may emerge with that date coming nearer.
More likely, the company will spend a good amount of time answering questions about sirukumab, a late-stage anti-inflammatory candidate that looks to steal some of blockbuster Humira's revenues. Phase 3 results disclosed in November were mixed, though, so the future of the drug is likely on the top of investors' minds.
Sanofi, Feb. 8
After losing out to Pfizer and J&J, respectively, in attempts to acquire Medivation and Actelion, Sanofi could face some tough questions about future growth.
In December, Eli Lilly launched its follow-on copy of Sanofi’s main breadwinner Lantus (glargine). While that competitive threat won’t likely have had a material effect on Lantus sales yet, Sanofi’s diabetes portfolio is already in trouble.
Sales from the franchise fell 1.5% in the third quarter compared to a year prior, and the French pharma has forecast sales will fall between 4% and 8% each year through 2018. More competition, tighter pricing and payer pushback have affected all three major diabetes drugmakers, dampening the outlook for the market.
While Sanofi is banking on growth from its successor insulin Toujeo (glargine), the company has already made moves to reduce diabetes staff in the U.S. by about 20%.
Sealing a deal for Medivation or Actelion would have given Sanofi a linchpin to grow either its oncology or rare disease offerings and distracted from troubles in diabetes. Losing out on both only intensifies the scrutiny.
Analysts will also be looking to hear about Sanofi’s appeal of a surprising district court ruling banning its PCSK9 drug Praluent (alirocumab) from the U.S. market. If the verdict stands without a settlement, Sanofi would lose out on a growth opportunity.