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Arpita Dutt

Pharma Stock Roundup: Pfizer, Allergan Q3 Results Fall Short, Insulin Drugmakers under Pricing Pressure

AZN BMY PFE LLY AGN NVS MRK

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This week, key earnings updates came from companies like Pfizer (PFE - Free Report) and Allergan (AGN - Free Report) while pharma stocks remained under drug pricing pressure with lawmakers questioning the prices of insulin drugs.

Recap of the Week’s Most Important Stories

Pfizer, Allergan Disappoint in Q3: Pfizer’s third quarter results were disappointing with the company missing on both earnings and revenues. The company also announced that it will be dropping the development of its late-stage PCSK9 inhibitor, bococizumab -- this decision was based on the emerging clinical profile as well as the market landscape (Read more: Pfizer Q3 Earnings Lag; Cuts View, Sheds Bococizumab).

Meanwhile, Allergan’s third quarter results were also disappointing -- the company, which had surpassed expectations in each of the first two quarters of 2016, missed earnings as well as revenue expectations in the third quarter (Read more: Allergan Lags Q3 Earnings, Cuts View, Ups Buyback).  

Generic Stocks in Trouble?: Last week, several companies with a presence in the generic segment saw their share prices slide following a Bloomberg article that the Department of Justice (DoJ) could file price collusion charges against these companies by year end. According to the article, the DoJ investigation started a couple of years back and covers more than 12 companies and about 24 drugs. A grand jury is examining whether some of the executives colluded with each other to raise prices. Companies like Lannett, Impax and Endo were among stocks that were hit hard by the news. Other companies with a presence in the generics market also saw their shares slide.

Insulin Drugmakers Feel the Pricing Pressure: Insulin drugmakers like Lilly (LLY - Free Report) and Novo Nordisk are also under attack with Senator Bernie Sanders posting a series of tweets questioning the prices of their insulin drugs. Moreover, Sen. Sanders and Rep. Cummings have asked the Justice Department and the Federal Trade Commission (FTC) to investigate potential collusion among pharmaceutical companies that manufacture diabetes products.

According to the lawmakers, insulin medication prices have tripled between 2002 and 2013, from $231 to $736 per year per patient. As per information provided in the letter to the DoJ and the FTC, the price of Sanofi’s Lantus shot up 168% from 2010 to 2014 while that of Lilly’s Humalog shot up 103% and that of Merck’s (MRK - Free Report) Januvia and Janumet by 75% each. Merck is a Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Novartis Breast Cancer Treatment Gets Priority Review: Novartis’ (NVS - Free Report) experimental breast cancer treatment, LEE011 (ribociclib) was granted Priority Review by the FDA for the first-line treatment of postmenopausal women with HR+/HER2- advanced or metastatic breast cancer in combination with Femara (letrozole). LEE011 plus Femara was shown to reduce the risk of progression or death by 44% compared to Femara alone. The candidate is also being reviewed by the European Medicines Agency (EMA).

Astellas to Acquire Ganymed, Strengthen Cancer Pipeline: Astellas Pharma announced that it will be acquiring Germany based Ganymed Pharmaceuticals AG, a biopharmaceutical company focused on the development of a new class of immunotherapeutic cancer drugs called ideal monoclonal antibodies (IMABs).

The acquisition could see Astellas shelling out up to €1.282 billion including €422 million for 100% of the equity in Ganymed. The balance would be payable on the achievement of milestones related to the development of IMAB362, which is being evaluated for cancer, a key focus areas as well as growth driver for Astellas. IMAB362 has orphan drug status in the U.S. and Europe for gastric and pancreatic cancer.

Performance

Large Cap Pharmaceuticals Industry Price Index

Pfizer’s shares declined 6.0% reflecting the disappointing earnings report. The NYSE ARCA Pharmaceutical Index declined 2.3% over the last five trading days. Over the last six months, Bristol-Myers (BMY - Free Report) declined 27.9% while Merck was up 7.3% (See the last pharma stock roundup here: Bristol-Myers, Merck Top Estimates, Merck Wins Key FDA Nod).

What's Next in the Pharma World?

Companies like Mylan, Endo and AstraZeneca (AZN - Free Report) will be reporting earnings results in the coming days. Moreover, a decision from the FDA regarding Bristol-Myers’ Opdivo for head and neck cancer should be out by Nov 11.

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