Lilly (LLY Quick QuoteLLY - Free Report) provided better-than-expected guidance for 2017 leaving investors happy with the numbers. Merck (MRK Quick QuoteMRK - Free Report) also had some good news with a jury awarding the company $2.54 billion in its patent infringement case against Gilead.

Meanwhile, drug pricing remains in the news with 20 states suing several generic drugmakers including big names like Mylan and Teva. The lawsuit comes just a day after the first charges were filed by the U.S. Department of Justice (DoJ) Antitrust Division in an investigation related to generic drug pricing (Read more: 20 States Sue Teva, Mylan & Other Drug Companies for Price Fixing).

Recap of the Week’s Most Important Stories

Lilly Soars on Guidance: Lilly’s shares are on an upswing ever since the company provided better-than-expected guidance for 2017. The company, which saw its shares being punished last month following the failure of its experimental Alzheimer’s disease treatment, said that it expects revenues to be driven by animal health products, a number of established pharmaceutical products including Trajenta, Forteo and Humalog, as well as higher revenues from new products including Trulicity, Taltz, Basaglar, Cyramza, Jardiance and Lartruvo. Lilly and partner Boehringer Ingelheim also announced the U.S. launch of Basaglar, their follow-on insulin to Sanofi’s blockbuster drug, Lantus. Meanwhile, diabetes drug, Jardiance, should benefit from a new recommendation in the   updated American Diabetes Association's 2017 Standards regarding the use of Jardiance in type II diabetes patients with established cardiovascular disease so as to reduce the risk of cardiovascular death (Read more: Lilly Stock Surges on Robust 2017 View; Launches Basaglar). Lilly is a Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Merck Awarded $2.54 Billion in HCV Case: Merck scored a huge win last week when a jury in the U.S. District Court for the District of Delaware ordered Gilead to pay $2.54 billion in damages for infringing upon a patent for methods used to develop sofosbuvir-based medicines for the treatment of patients with hepatitis C virus (HCV) infection, including Gilead’s blockbuster drugs Sovaldi and Harvoni. With the jury also concluding that Gilead willfully infringed upon the patent, the judge may increase the damages award up to a multiple of three times (Read more: Gilead to Pay Merck $2.5B in HCV Patent Dispute, Stock Falls).

CHMP Positive on Novartis, Merck & Lilly Drugs: Quite a few companies gained positive recommendations from the Committee for Medicinal Products for Human Use (CHMP) for their drugs last week. Swiss pharma giant, Novartis (NVS Quick QuoteNVS - Free Report) , got positive CHMP opinions for a couple of its treatments -- Ilaris for the treatment of three periodic fever syndromes (tumor necrosis factor-receptor associated periodic syndrome - TRAPS, hyperimmunoglobulin D syndrome - HIDS/mevalonate kinase deficiency – MKD and familial Mediterranean fever - FMF). Approval would make Ilaris the first and only biologic to be approved in Europe for these rare diseases in adults and children. Novartis’ Votubia also got a positive recommendation from the CHMP for the treatment of refractory partial-onset seizures in patients with tuberous sclerosis complex.

Merck also got a positive CHMP opinion for its anti PD-1 therapy, Keytruda, for treatment-naïve patients with metastatic non-small cell lung cancer (NSCLC) whose tumors have high PD-L1 expression with no EGFR or ALK+ tumor mutations. A final decision is expected in the first quarter of 2017. Approval for the first-line patient population would provide a major boost to Keytruda sales.

Another drug that got a positive CHMP opinion last week is Lilly’s experimental rheumatoid arthritis treatment Olumiant (baricitinib – partnered with Incyte).

Novartis to Boost Dermatology Portfolio with Acquisition: Novartis is looking to boost its dermatology portfolio with the acquisition of Ziarco Group Limited, a privately held company. The acquisition will add ZPL389, a once-daily oral H4 receptor antagonist in development for atopic dermatitis (AD), commonly known as eczema. Meanwhile, Novartis’ pegpleranib (Fovista, partnered with Ophthotech) failed in phase III studies when evaluated in in combination with Lucentis in patients with neovascular age-related macular degeneration (Read more: Ophthotech Hits 52-Week Low on Unfavorable Fovista Data).

Will Sanofi Announce a Deal with Actelion This Week? While Johnson & Johnson (JNJ Quick QuoteJNJ - Free Report) announced that it is no longer in talks with Actelion regarding a possible strategic deal, French pharma giant Sanofi (SNY Quick QuoteSNY - Free Report) is rumored to be close to announcing a deal. According to rumors, Sanofi could pay as much as $30 billion for Actelion.

We note that Actelion has often been considered an attractive takeover target mainly due to its rare disease portfolio. In addition to holding a strong position in the pulmonary arterial hypertension (PAH) market, Actelion’s portfolio also has treatments approved in certain countries for specialist diseases like type I Gaucher disease, Niemann-Pick type C disease, digital ulcers in patients suffering from systemic sclerosis, and mycosis fungoides type cutaneous T-cell lymphoma.

Mylan Launches EpiPen Generic, Lilly Offers Discounts on Insulin: Mylan, which had found itself mired in the drug pricing controversy due to hikes taken for EpiPen, announced that it has launched an authorized generic version of the life-saving combination drug. Mylan said that the generic version of EpiPen is available at a more than 50% discount to the wholesale acquisition cost of the product. Meanwhile, Lilly said that it will provide insulin at discounted prices starting Jan 1 (Read more: Eli Lilly to Offer Discount on Insulin from January).

Pfizer Eczema Drug Gets FDA Nod, Chantix Black Box Warning Removed: Pfizer (PFE Quick QuotePFE - Free Report) had a couple of positive updates with the company gaining FDA approval for its eczema drug, Eucrisa, making it the first prescription treatment for eczema to be approved in more than a decade. The FDA also removed the boxed warning from the label of Pfizer’s smoking cessation drug, Chantix. The removal of the boxed warning should help boost Chantix sales.

However, Pfizer did receive some disappointing news as well with its prostate cancer drug, Xtandi (partnered with Astellas), failing in a key study. Results from the phase IV PLATO study showed that Xtandi plus Zytiga and prednisone failed to meet the primary endpoint compared to Zytiga and prednisone in patients with chemotherapy-naïve metastatic castration-resistant prostate cancer (CRPC) whose PSA has previously progressed on Xtandi (Read more: Pfizer: FDA Approves Eczema Ointment; Xtandi Fails Study).

Performance

Large Cap Pharmaceuticals Industry 5YR % Return

Large Cap Pharmaceuticals Industry 5YR % Return

The NYSE ARCA Pharmaceutical Index gained 1.9% over the last five trading days with Lilly gaining the most (8.1%) among major pharma stocks. Although Lilly has underperformed the Zacks categorized Large Cap Pharmaceuticals industry year to date, the company’s upbeat guidance and pipeline should help the stock regain lost ground. Over the last six months, Merck gained 8.6% while Bristol-Myers declined 18.3% (See the last pharma stock roundup here: Drug Pricing Heat Back on Sector, Endo, Mylan, AZN to Cut Jobs).

What's Next in the Pharma World?

Watch out for the usual pipeline and regulatory updates as well as deals and collaborations.

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