Even though biotech companies struggled in 2022, with the stock values of many of them declining significantly, big pharma fared relatively better. Shares of Eli Lilly, Merck & Co. and Bristol Myers Squibb are at or near 5-year highs, while companies like Pfizer continue to benefit from their COVID-19 work.
Interest rates, federal drug pricing legislation and a militant Federal Trade Commission could all play a major role in how the top ranks of the pharmaceutical industry perform for the rest of this year.
But second-quarter reports, which begin this week, will likely also raise questions about a potential $40 billion acquisition by Merck & Co., GSK’s new lean structure, Biogen’s leadership and major drug launches. ‘Eli Lilly and Bristol Myers Squibb. Here are five stories to watch:
A $40 billion deal on cancer drugs?
Pharmaceutical deals have picked up as the value of many biotech companies remains depressed after a month of market downturn. Since April, there have been four takeovers worth more than $1 billion, including Pfizer’s acquisition of Biohaven Pharmaceuticals for $11.6 billion.
An even bigger deal could be on the horizon. A series of reports from the Wall Street Journal indicate that Merck is in negotiations to buy cancer drug maker Seagen for around $40 billion – possibly rivaling Merck’s 2009 takeover of Schering-Plough.
The companies are already partners on two of Seagen’s cancer drugs and are collaborating on research involving Keytruda, Merck’s top-selling immunotherapy. An acquisition could help Merck cushion the drop in revenue expected when Keytruda loses patent protection later this decade and expand its portfolio of antibody-drug conjugates, a type of treatment pioneered by Seagen that has recently shown great promise. for several types of cancer.
Still, while talks over the deal are still ongoing, a deal is unlikely to be finalized by the time the companies report earnings, according to the Journal’s latest reports. A court ruling on potential royalties from Daiichi Sankyo, as well as pending results from a key trial of Seagen’s bladder cancer drug, Padcev, hang on the potential deal.
Both drugmakers are expected to release their second-quarter results on July 28.
The future of GSK after the consumer spin-off
GSK’s earnings on July 27 will quickly follow the spin-out of its consumer healthcare unit Haleon, which closed on Monday as the biggest listing on the London Stock Exchange in a decade.
Freed from running over-the-counter brands like Advil and Polident, the British drugmaker can better focus on developing prescription drugs, executives argued. Investors will likely be looking for signs that GSK’s new look can hit the £33 billion, or $40 billion, sales target for 2031 that CEO Emma Walmsley set a year ago. The plan also included shareholder dividend cuts.
Shortly after, activist investors went public with a call for a reshuffle of the board and management team, saying GSK’s growth had lagged behind competitors in part because of a bureaucratic research and development division.
In the past, GSK’s R&D was strong in respiratory and infectious diseases, rather than the currently fast-growing areas of cancer and autoimmune diseases.
However, big opportunities await GSK, especially in the race to launch the first preventive vaccine against respiratory syncytial virus. The company recently became the first to provide positive Phase 3 trial data.
GSK is also looking to expand the use of its cancer drugs Blenrep and Jemperli, and will report late-stage data from two pipeline candidates later this year, one in rheumatoid arthritis and the other a new antibiotic.
Finding answers at Biogen
Michel Vounatsos’ tenure as CEO of Biogen is coming to an end. In May, the company revealed that Vounatsos, Biogen’s boss since 2017, would step down once a successor was found. His departure was announced alongside plans to drop marketing of Biogen’s controversial Alzheimer’s drug, Aduhelm, which has achieved minimal sales since its approval last summer.
The unsuccessful launch of Aduhelm – the first drug cleared by the Food and Drug Administration to treat the underlying cause of Alzheimer’s – significantly damaged Biogen and likely played a significant role in Vounatsos’ next release. The two are likely to be at the center of analyst questions during the company’s next earnings call, scheduled for July 20.
“The search for a new chief continues, so we expect an update on progress in the next earnings release,” Baird analyst Brian Skorney wrote in a recent note to clients. He added that he expects questions about the research, as well as another experimental Alzheimer’s drug called lecanemab, “will largely go unanswered.”
Lecanemab, which Biogen is developing with partner Eisai, is the company’s next hope and vital clinical trial data is expected later this year.
First signs of Lilly’s new diabetes drug
In May, Lilly launched the first new diabetes drug in years. Called Mounjaro, it will compete with three similarly acting Novo Nordisk products. While it may be too early to know the companies’ sales figures, investors will likely still want to know more about insurance coverage and the use of free samples.
Additionally, the company’s Aug. 4 earnings call could also be an opportunity for Lilly executives to outline their plans to seek FDA approval for Mounjaro as an obesity drug. The Indiana-based drugmaker reported strong weight reduction data in April, which could speed up filing for approval. Previously, the company said it wanted the results of additional tests before submitting an application.
Lilly’s plans for an experimental Alzheimer’s drug, meanwhile, were initially stalled. The experimental treatment donanemab was fast-tracked for submission after Aduhelm’s controversial FDA approval, but the company pulled out after government and private payers largely refused to cover Biogen’s drug.
However, the recent FDA agreement to quickly review Biogen and Eisai’s lecanemab could once again sway Lilly executives.
A slow launch for a new cardiac drug Bristol Myers
Nearly two years ago, Bristol Myers spent $13 billion to buy biotech company MyoKardia and its drug mavacamten, which won Food and Drug Administration approval in April for an inherited heart condition called hypertrophic cardiomyopathy. obstructive.
Called Camzyos, the drug is important to Bristol Myers, which is facing impending patent expiration in the United States for its blood thinner Eliquis, among other blockbuster products. The company expects annual Camzyos sales to reach at least $4 billion by 2029.
But early prescription data suggests a slow launch, according to Salim Syed, analyst at Mizuho Securities. In a recent note to customers, Syed noted that prescriptions under Trade Assurance have not increased even more than a month since Camzyos became available. The analyst suggested that FDA restrictions on the drug’s cardiac risks could slow its adoption.
Bristol Myers executives may face questions about the deployment during their earnings call, scheduled for July 27. Other experimental drugs that are expected to become top sellers, such as an immune drug called deucravacitinib, could also be the focus of investors and analysts.