Q1 Earnings Preview: AbbVie, AstraZeneca, BMS, Celgene, Roche, Sanofi
One byproduct of the roiling debate on drug prices is that big pharma and biotech companies are finding it harder than ever to hide behind steady price hikes to deliver new growth.
Across the top of the industry, investors and analysts are valuing prescription growth from new drugs and expanded indications as an offset to the tighter markets seen in some sectors, such as in cardiovascular and metabolic diseases.
Companies such as Roche, scheduled to announce first quarter earnings April 26, will likely place heavy emphasis on growth prospects for newly approved drugs. The Swiss pharma's Ocrevus, for instance, is forecast for blockbuster sales.
At the same time, inbound generic and biosimilar competition to many top drugs threatens to upset carefully planned transitions to account for those aging mainstays.
AbbVie, AstraZeneca and Sanofi, which all present this week, will likely face questions on how they plan to cushion those forthcoming blows to bottom lines.
Earnings season is already in full swing for big pharma and big biotech. The next two days will reveal new details and commentary helpful in unpacking how the industry plans to weather its many storms.
AbbVie (April 26)
Humira (adalimumab) is expected to continue to be a sales juggernaut with nearly 20% growth forecast for the first quarter year-over-year, despite biosimilar competition creeping in on all sides. Amgen has already garnered approval for a Humira biosimilar in both the U.S. and Europe, and key patents on the bestseller could be invalidated in mid-May. Yet some analysts suggest that AbbVie might stave off competition until 2022 – although others say that could happen as early as 2018.
Expect AbbVie to highlight the strength of its pipeline, particularly its next-gen hepatitis C asset, which has a user fee action date coming up this year, and its rheumatoid arthritis drug that will have late-stage data in mid-2017 as well.
Yet, with Humira still making up 60% of revenues, expect investors to be skeptical about how much these new treatments can contribute to the top line.
AstraZeneca (April 26)
CEO Pascal Soriot said last quarter that 2017 might be an "inflection point" for his business. Investors will want assurances AstraZeneca's trajectory is upwards, but don't expect that to come this quarter — revenues are expected to be hard hit.
The latter half of 2016 saw AstraZeneca, like many of its big pharma peers, whittling down its portfolio to only its most core assets. While the selling spree did extend into the new year, AstraZeneca's main focus now is strengthening its foothold in the cancer drug market.
The British drugmaker has put the pedal to the metal in immuno-oncology, but has ground to make up if it wants to catch leaders in the space, including Bristol-Myers Squibb and Merck. Key to that goal are combination therapies, with multiple late-stage studies underway pairing two of AstraZeneca's most promising cancer drugs: the PD-L1 inhibitor durvalumab and the anti-CTLA4 compound tremelimumab.
The two drugs are being studied together in the MYSTIC trial. AstraZeneca reshaped its strategy for the study, so look for any clues on how that is progressing. Also look for more info on Tagrisso (osimertinib) and Lynparza (olaparib) sales, which have been a welcome source of income as generic competition pummels AstraZeneca's bottom line.
Bristol-Myers Squibb (April 26)
Despite major setbacks in the non-small cell lung cancer space, Bristol-Myers Squibb’s Opdivo (nivolumab) continues to be the market-leading immunotherapy. While there are now several competing PD-1/L1 inhibitors on the market, Opdivo is still expected to bring in nearly $1 billion this quarter. But expect Bristol-Myers to talk up the combination with Yervoy (ipilimumab) and the progress being made in other indications, including renal cell, hepatocellular, and head and neck cancers.
The big pharma could also talk up its interest in fibrotic diseases. The company has been buying up assets to fill out its pipeline in the space — in November it spent $100 million to get access to Nitto Denko’s lead candidate and more recently it formed a partnership with Danish biotech Nordic Bioscience in NASH.
But expect Bristol-Myers’ management to keep mum about any rumors that the pharma is now a takeout target.
Celgene (April 26)
Celgene's mission by the end of 2016 was to dive deeper into oncology and autoimmune treatments as a means of building a sales stream bigger than just Revlimid (lenalidomide) — which consistently makes up about 60% of revenues.
To that end, the company has a well-established late stage pipeline with nearly 20 Phase 3 trials planned over the next two years. Some of the more highly anticipated drugs in that pipeline include the blood cancer medication enasidenib, the application for which the FDA accepted in early March, and the multiple sclerosis treatment ozanimod. Celgene expects to file ozanimod for approval later this year.
The Summit, N.J.-based biotech was active in dealmaking throughout December and January to expand its pipeline and portfolio. While that trend seems to have tapered off more recently, it has used M&A to push into new markets. In April, the company entered a licensing agreement that gave rights to the oncology candidate CC-223 to Chinese biotech Antengene.
Roche (April 26)
A good quarter is not anticipated for Roche, which is facing increased competition for several of its main revenue drivers.
While Avastin has long been a force amongst cancer therapies, the advent of checkpoint inhibitors like Bristol-Myers’ Opdivo (nivolumab) and Merck & Co.’s Keytruda (pembrolizumab) are pushing out Avastin and you can expect sales of the drug to decline in the first quarter.
Lucentis (ranibizumab) is also facing increased pressure from an uptick in sales for Regeneron’s Eylea (aflibercept), and Tamiflu is now facing generic competition.
In an effort to focus on the positive, investors will look for details on the launch of Ocrevus, the multiple sclerosis treatment that was approved last month for two types of the debilitating neurodegenerative disease. Also look for updates on the hemophilia A treatment emicizumab, which Roche is likely to file in the near-term after the Food and Drug Administration said that pediatric data could be included in the filing.
Sanofi (April 27)
Long reliant on sales from its diabetes franchise, Sanofi is feeling the pinch of a tightening U.S. market and stiffer competition on price.
No wonder then that the French drugmaker has been emphasizing its specialty care offerings and immunology portfolio. Approval of Dupixent (dupilimab) for atopic dermatitis last month was a major win on that front.
Analysts have pegged peak annual sales for the drug, which was co-developed with Regeneron, at as high as $3 billion.
Given the financial opportunity, Sanofi has lined up a sales force to target 7,000 U.S. dermatologists in hopes of accelerating uptake. And, together with Regeneron, the two drugmakers even launched a preventative patent strike against rival Amgen to protect against any legal headaches.
Another immunology drug, Kevzara (sarilumab), is also slated to be reviewed for U.S. approval later this year.
Look for further details on how Dupixent’s launch has advanced, as well as any communication on Kevzara. Good news for both will reinforce Sanofi’s emphasis on its Genzyme unit, even as diabetes headwinds continue to be a factor.