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J&J to Buy Actelion: After weeks of discussion, J&J has agreed to shell out $280 per share to acquire Actelion in a deal scheduled to close in the second quarter of the year. The transaction also involves the spin-off of Actelion’s R&D unit into a new standalone Switzerland-based company.
With this acquisition, J&J will gain access to Actelion’s specialty in-market medicines and late-stage products -- Actelion has a strong presence in the pulmonary arterial hypertension (PAH) market. The deal is expected to be immediately accretive with J&J expecting earnings to be boosted by 35-40 cents in the first full year. Meanwhile, the deal is expected to boost J&J’s long-term revenue growth rate by at least 1% and long-term earnings growth rate by 1.5% - 2% above current analyst consensus.
Bristol-Myers Misses on Earnings, Cuts View: Bristol-Myers’ fourth quarter results were disappointing with the company missing on earnings and lowering its adjusted earnings outlook as well (Read more: Bristol-Myers Misses on Q4 Earnings, Beats on Sales). Shares were under pressure on concerns regarding the future prospects for Opdivo growth as well as the Opdivo-Yervoy combination for first-line lung cancer -- last week, Bristol-Myers had announced that it would not seek an accelerated regulatory pathway for the combination (Read more: Bristol-Myers to Not Seek Accelerated Approval for Opdivo+Yervoy). Competition has also increased for the second-line lung business mainly due to the entry of Tecentriq. Bristol-Myers has underperformed the Zacks categorized Large Cap Pharmaceuticals industry over the last one year with shares declining 25.3% compared to the industry decline of 3.7%.
Pediatric Exclusivity for AstraZeneca Drug: AstraZeneca (AZN - Free Report) got a boost with the FDA granting six months of pediatric exclusivity to the company’s respiratory treatment, Symbicort (budesonide/formoterol) inhalation aerosol. Pediatric exclusivity means that the company will enjoy six additional months of Symbicort sales without facing competition from generics. Symbicort sales were $2.2 billion in the first nine months of 2016 with sales in the U.S. being impacted by a competitive environment.
Merck, BMY Settle Patent Litigation: Merck (MRK - Free Report) , Ono and Bristol-Myers settled a worldwide patent infringement lawsuit regarding the use of an anti-PD-1 antibody for the treatment of cancer. With the case being settled, Merck will make a one-time payment of $625 million to Bristol-Myers and will also give royalties on global sales of Keytruda (Read more: Bristol-Myers Settles Litigation with Merck for Keytruda).
The NYSE ARCA Pharmaceutical Index declined 1.6% over the last five trading days with almost all major pharma stocks losing ground. Merck was up 1.4% while Bristol-Myers declined 15.6%. Over the last six months, Merck gained 4.9% while Bristol-Myers declined 37.6%.
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Pharma Stock Roundup: J&J to Buy Actelion, Bristol-Myers' 4Q Results Disappoint
Healthcare giant Johnson & Johnson (JNJ - Free Report) and Swiss company Actelion finally announced an agreement under which J&J will acquire Actelion for about $30 billion. Meanwhile, companies like J&J (Read more: J&J Q4 Earnings Top; Seeks Options for Diabetes Unit), Novartis (Read more: Novartis Beats Q4 Earnings, Might Spin-Off Alcon) and Bristol-Myers (BMY - Free Report) reported fourth quarter results this week.
Recap of the Week’s Most Important Stories
J&J to Buy Actelion: After weeks of discussion, J&J has agreed to shell out $280 per share to acquire Actelion in a deal scheduled to close in the second quarter of the year. The transaction also involves the spin-off of Actelion’s R&D unit into a new standalone Switzerland-based company.
With this acquisition, J&J will gain access to Actelion’s specialty in-market medicines and late-stage products -- Actelion has a strong presence in the pulmonary arterial hypertension (PAH) market. The deal is expected to be immediately accretive with J&J expecting earnings to be boosted by 35-40 cents in the first full year. Meanwhile, the deal is expected to boost J&J’s long-term revenue growth rate by at least 1% and long-term earnings growth rate by 1.5% - 2% above current analyst consensus.
Bristol-Myers Misses on Earnings, Cuts View: Bristol-Myers’ fourth quarter results were disappointing with the company missing on earnings and lowering its adjusted earnings outlook as well (Read more: Bristol-Myers Misses on Q4 Earnings, Beats on Sales). Shares were under pressure on concerns regarding the future prospects for Opdivo growth as well as the Opdivo-Yervoy combination for first-line lung cancer -- last week, Bristol-Myers had announced that it would not seek an accelerated regulatory pathway for the combination (Read more: Bristol-Myers to Not Seek Accelerated Approval for Opdivo+Yervoy). Competition has also increased for the second-line lung business mainly due to the entry of Tecentriq. Bristol-Myers has underperformed the Zacks categorized Large Cap Pharmaceuticals industry over the last one year with shares declining 25.3% compared to the industry decline of 3.7%.
Pediatric Exclusivity for AstraZeneca Drug: AstraZeneca (AZN - Free Report) got a boost with the FDA granting six months of pediatric exclusivity to the company’s respiratory treatment, Symbicort (budesonide/formoterol) inhalation aerosol. Pediatric exclusivity means that the company will enjoy six additional months of Symbicort sales without facing competition from generics. Symbicort sales were $2.2 billion in the first nine months of 2016 with sales in the U.S. being impacted by a competitive environment.
Merck, BMY Settle Patent Litigation: Merck (MRK - Free Report) , Ono and Bristol-Myers settled a worldwide patent infringement lawsuit regarding the use of an anti-PD-1 antibody for the treatment of cancer. With the case being settled, Merck will make a one-time payment of $625 million to Bristol-Myers and will also give royalties on global sales of Keytruda (Read more: Bristol-Myers Settles Litigation with Merck for Keytruda).
Performance
Large Cap Pharmaceuticals Industry 5YR % Return
Large Cap Pharmaceuticals Industry 5YR % Return
The NYSE ARCA Pharmaceutical Index declined 1.6% over the last five trading days with almost all major pharma stocks losing ground. Merck was up 1.4% while Bristol-Myers declined 15.6%. Over the last six months, Merck gained 4.9% while Bristol-Myers declined 37.6%.
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What's Next in the Pharma World?
Watch out for earnings results from companies like Pfizer (PFE - Free Report) , Merck, Lilly (LLY - Free Report) , AstraZeneca and Glaxo (GSK - Free Report) which will be reporting next week. Both Lilly and Glaxo are Zacks Rank #2 (Buy) stocks. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>