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Pharma Stock Roundup: Drug Pricing Heat Back on Sector, Endo, Mylan, AZN to Cut Jobs

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Drug pricing is back in focus with President-elect Donald Trump making it clear that he does not like price increases. In an interview with TIME magazine, which has named him “2016 Person of the Year”, Trump said that his intentions may have been misread by some stock analysts and that his goal has not wavered -- he does not like what happened to drug prices and he will bring down drug prices.

The other major news this week was the wave of job cuts announced by companies like AstraZeneca (AZN - Free Report) , Mylan and Endo .

Recap of the Week’s Most Important Stories

Is Sanofi Contemplating a Counterbid for Actelion?  According to a Bloomberg article, Actelion, which had confirmed that it is in discussions with Johnson & Johnson, could well receive an offer from French pharma giant, Sanofi (SNY - Free Report) . Per sources, Sanofi is apparently considering a counterbid for Actelion and is weighing its options. The company is yet to decide whether it will approach Actelion with a formal offer.

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.

Meanwhile, Sanofi continues to work on bringing new products to market. The company and its partner, Regeneron said that their Dupixent regulatory application has been accepted for review by the European Medicines Agency (EMA) for the treatment of adults with moderate-to-severe atopic dermatitis (AD) who are candidates for systemic therapy. Dupixent is currently under priority review in the U.S. where a response is expected by Mar 29, 2017.  

AstraZeneca, Mylan & Endo Announce Job Cuts: AstraZeneca and Mylan have announced job cuts as part of their restructuring programs. AstraZeneca said that it is looking to transform its U.S. Commercial business as part of its return to growth strategy. The company will be eliminating 700 positions across the U.S. organization, including the North America Commercial headquarters and some field-based sales and field-based non-sales roles and will be cutting discretionary spend as well to lower costs. AstraZeneca’s U.S. sales have been under pressure due to the loss of exclusivity of key drugs like Crestor and Nexium with new product sales not being enough to bridge the gap.

Meanwhile, Mylan, which made quite a few significant acquisitions since 2015, is looking to streamline its global operations. As part of the integration of these deals, the company said that it expects up to 10% of its global workforce to be impacted (Read more: Mylan Stock Falls on Restructuring Plans, Layoffs).  

Specialty pharma company Endo also announced job cuts this week. The company said that with the return of Belbuca rights to BioDelivery Sciences, it no longer needs field sales promotion for its established pain products portfolio. As a result, the company will be letting go of its 375-person U.S. Branded pain sales field force. Endo has had a dismal run so far this year with the stock underperforming the Zacks categorized Medical-Drugs industry with the company declining 75.3% year-to-date compared to the industry decline of 26.2%.

Data Presentations and Updates: Several companies were present at the annual meeting of the American Society of Hematology (ASH), the San Antonio Breast Cancer Symposium (SABCS) with data on their approved drugs and pipeline candidates. Merck presented updated results on its anti-PD-1 therapy, Keytruda, for relapsed or refractory classical Hodgkin lymphoma (cHL). Results showed an overall response rate (ORR) of 69% and a complete remission rate (CRR) of 22.4%. Updated data was also presented on patients with relapsed or refractory primary mediastinal large B-cell lymphoma (PMBCL), a type of non-Hodgkin lymphoma, who were ineligible for or failed to respond to autologous stem-cell transplantation (ASCT).

Bristol-Myers (BMY - Free Report) was also present at ASH with partner Seattle Genetics with data from an ongoing phase I/II study evaluating Adcetris plus Opdivo in relapsed or refractory classical Hodgkin lymphoma (HL) -- data support the continued evaluation of the combination. Bristol-Myers also presented data on Opdivo at the International Association for the Study of Lung Cancer 17th World Conference on Lung Cancer (Read more: Bristol-Myers Reports Data from Opdivo Combination Studies). AstraZeneca was also present at this conference with data on Tagrisso (Read more: AstraZeneca Presents Tagrisso Data at Medical Meeting).

Lilly (LLY - Free Report) presented data on its experimental cancer treatment, abemaciclib, at SABCS for early-stage breast cancer. The company presented positive data from a mid-stage study and said that it continues to look into the use of the candidate as both a single-agent therapy or in combination with aromatase inhibitors, such as Arimidex (anastrozole), in the early-stage setting.

Pfizer Fined in the UK for Price Hike: Pfizer (PFE - Free Report) got stuck with a record £84.2 million fine this week for charging excessive and unfair prices in the UK for phenytoin sodium capsules, an anti-epilepsy drug. The Competition and Markets Authority (CMA) also fined distributor Flynn Pharma £5.2 million and said that the fines follow price increases of up to 2,600% overnight after the drug was deliberately de-branded in Sep 2012. The companies have been ordered to reduce their prices. Pfizer issued a statement refuting the findings and will be appealing all aspects of the CMA’s decision (Read more: Pfizer Fined for Price Hike of Anti-Epilepsy Drug in UK). Pfizer is a Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lilly-AZN in Alzheimer’s Deal: Although Lilly suffered a setback in its efforts to develop a treatment (solanezumab) for Alzheimer’s disease, the company continues with its efforts in this therapeutic area and is collaborating with AstraZeneca for the development of MEDI1814. MEDI1814, an antibody selective for amyloid-beta 42 (Aβ42), is currently in early-stage studies. AstraZeneca and Lilly already have an agreement for another investigational Alzheimer’s treatment, AZD3293, a BACE inhibitor currently in two pivotal studies.

Lilly also got a boost with the FDA expanding the label of its diabetes drug, Jardiance, which is partnered with Boehringer Ingelheim. The drug is now indicated for the reduction of the risk of cardiovascular death in adults with type II diabetes and established cardiovascular disease. Jardiance sales should receive a significant boost being the only diabetes treatment to be approved by the FDA for this indication (Read more: Lilly: Jardiance Label to Add Cardiovascular Indication).

Performance

Large Cap Pharmaceuticals Industry Price Index

The NYSE ARCA Pharmaceutical Index remained almost flat over the last five trading days with Pfizer declining 1.7% reflecting concerns regarding the price hike fine in the UK. Lilly’s shares were up 1.9% during this period. Over the last six months, Merck gained 4.3% while Bristol-Myers declined 24.8% (See the last pharma stock roundup here: Nivalis Falls on Study Data, Priority Reviews for Merck's Keytruda).

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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