Biopharma is a complex, rapidly evolving industry that is highly regulated and closely watched — and that means there is constant news. Here's a closer look at the clinical trials, M&A, cool science and regulations that are driving the industry this week.
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Special Earnings Edition
Editor's Note:Third quarter earnings are in full swing. Prescribed Reading is taking a break from its normal format to give you a closer look at what pharma and biotech CEOs have been saying during their quarterly calls. We'll be back next week with our usual updates on M&A, clinical trials and regulatory happenings.
The week has been turbulent for some of the major biopharmas, filled with some ups but mostly downs. The Nasdaq Biotechnology Index, which closed last week at just over 3,472, is down about 5.5% through mid-Friday morning this week.
On Thursday evening, Gilead Sciences warned investors that its hepatitis C business was going to continue to decline in the fourth quarter. While this has been a trend over the last several quarters, analysts had been hoping that the business had hit a bottom. Keep in mind though, the big biotech's slate of hep C drugs still brought in $2.2 billion for the quarter. Even if the franchise is on the downswing, Gilead is still bringing in a boat load of cash.
Novartis AG investors were similarly disappointed, with an eye on the flailing Alcon business and what the Swiss pharma intends to do with it. Novartis gave some hints on how that strategic review is going but indicated that it would need to see better performance from Alcon if it hopes to spin out the eye business or find a buyer. The company tried to shift investor focus to growth drivers like Cosentyx (secukinumab) and Entresto (sacubitril/valsartan), although the latter has struggled.
Investor displeasure was perhaps the most severe for Celgene Corp., as slower-than-expected growth of the inflammatory drug Otezla (apremilast) and other pressures led the big biotech to cut its guidance for 2020. Celgene execs pointed to promising pipeline product ozanimod and M&A as potential lifelines, but investors were seriously spooked — sending shares down more than 15% Thursday.
On the other side of the pond, GlaxoSmithKline plc's new CEO Emma Walmsley is slowly setting out to prove that a sweeping restructuring she announced earlier this year was a smart move. While little changed over the last three months at the British pharma, Walmsley tried to direct attention to the areas where it is already succeeding.
GSK has also benefited this year from rejections of generic competitors to its blockbuster respiratory med Advair (fluticasone furoate/salmeterol), but entry of a copycat is likely in 2018 and will bring with it some financial pain. The company talked a lot about its consumer products business, spurring speculation that it could be a buyer for Pfizer's consumer health unit that was recently put on the block.
One of the few bright spots this earnings season has been Vertex Pharmaceuticals. The biotech has solidified itself as the leader in cystic fibrosis and there is nothing but growth prospects in its future.
Restructurings continue
This year has seen quite a bit of restructuring throughout the industry. Quarterly updates this week continued that trend.
Eli Lilly & Co. announced along with its third quarter earnings that it is exploring strategic options for its Elanco animal health business. Lilly has built Elanco into a major player in the space and CEO Dave Ricks indicated the time to sell was right due to that strength.
On Friday morning, Merck & Co. talked up the strength of its own animal health business and its importance going forward. The New Jersey pharma is unlikely to pick up all of Elanco, but don't be surprised if Merck is interested in some of the pieces.
The Medicines Company is going through a restructuring as well, but this one isn't likely to have a happy ending. The company said it will trim back staff to below 60 people and continues its efforts to sell off its infectious disease business, all in favor of funding the development of its PCSK9 inhibitor inclisiran.
While inclisiran may turn out to be a strong drug candidate, offerings in the class from Amgen and Sanofi SA/Regeneron Pharmaceuticals have shown that these once-promising potential blockbusters lacked commercial viability. MedCo might be betting on the wrong horse.