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Pharma Stock Roundup: Is Sanofi Buying Flexion? Pfizer, Merck KGaA Drug Approved

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Shortly after the release of the Budget Blueprint for 2018, which could require companies to shell out higher fees for regulatory reviews as well as a reduction of $5.8 billion in the National Institutes of Health’s (NIH) spending, the President continued to focus on drug prices at a meeting with members of the Congressional Black Caucus. The President spoke about instituting a strong bidding process to bring down drug prices and make them the lowest anywhere in the world.  

Meanwhile, French pharma giant Sanofi (SNY - Free Report) is rumored to be close to buying Flexion.

Recap of the Week’s Most Important Stories

Sanofi Close to Buying Flexion: According to a FiercePharma article, Sanofi is close to buying specialty pharma company, Flexion for an offer price in the mid-$30s which would make the deal worth more than $1 billion. Flexion’s shares jumped 33.4% on the acquisition rumors. Flexion is known for its focus on musculoskeletal conditions -- its lead pipeline candidate, Zilretta is currently under FDA review for osteoarthritis (OA) of the knee, with a response from the agency expected by Oct 6, 2017. Sanofi already has a presence and expertise in this market with Synvisc. Sanofi has been on the lookout for an acquisition deal for quite a while now having failed in its efforts to acquire Medivation and Actelion earlier (Read more: Flexion Stock Soars 35% on $1 Billion Sanofi Buyout).

Meanwhile, Sanofi and partner Regeneron have filed a lawsuit against Amgen related to their eczema drug Dupixent, which could gain FDA approval later this month. The companies have filed a lawsuit seeking a court order that their drug does not infringe a patent held by Amgen. This is a proactive move by Sanofi and Regeneron to prevent Amgen from initiating a patent infringement lawsuit like it had related to Sanofi and Regeneron’s PCSK9 inhibitor Praluent.  

Accelerated Approval for Pfizer/Merck KGaA Drug: The FDA granted accelerated approval to Pfizer (PFE - Free Report) and partner Merck KGaA’s immunotherapy drug, Bavencio. The drug has been approved for metastatic Merkel cell carcinoma (mMCC), a rare and aggressive skin cancer. Bavencio is being studied for several other types of cancer and is currently under priority review in the U.S. for the treatment of metastatic urothelial carcinoma. A response from the FDA for this indication is expected on Aug 27, 2017.

Bristol-Myers Expands CytomX Deal: Bristol-Myers (BMY - Free Report) has expanded its 2014 agreement with CytomX related to the use of the latter’s proprietary Probody platform. While under the initial agreement, Bristol-Myers had selected four oncology targets, the company now gets exclusive global rights to develop and commercialize Probody therapeutics for up to six additional oncology targets and two non-oncology targets. CytomX will get an upfront payment of $200 million as well as research funding over the course of the research term. Moreover, CytomX could receive up to $448 million on the achievement of development, regulatory and sales milestones and tiered royalties on commercialized products (Read more: Bristol-Myers Squibb and CytomX Therapeutics Extend Deal).

Lilly Breast Cancer Drug Scores in Late-Stage Study: Lilly’s (LLY - Free Report) experimental treatment, abemaciclib, was found to be superior when used in combination with Faslodex (fulvestrant) compared to Faslodex plus placebo alone in advanced breast cancer patients.  

Lilly intends to seek FDA approval for the CDK 4/6 inhibitor in the second quarter of 2017. Abemaciclib is currently in several other studies as well and the company intends to submit another regulatory application in the third quarter based on results from a second study (Read more: Lilly's Breast Cancer Combo Drug Phase III Results Positive).

Meanwhile, Lilly and its partner Boehringer Ingelheim said that they have initiated an outcomes program on diabetes drug, Jardiance. The program consists of two phase III studies that will evaluate the drug in adults with chronic heart failure including patients who may or may not be diabetic. The studies are expected to complete in 2020. Lilly is a Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Novartis Heart Drug Fails in Study: Novartis’ (NVS - Free Report) experimental acute heart failure treatment, RLX030 (serelaxin), failed in a late-stage study. The drug missed the primary endpoints of reduced cardiovascular death or worsening heart failure in patients with acute heart failure. The company is analyzing the data further and will evaluate the next steps for the program. We note that RLX030 had received a complete response letter from the FDA in 2014 with the agency asking for further evidence on the drug’s efficacy (Read more: Novartis' Acute Heart Failure Drug Fails in Late-Stage Study). So far in 2017, Novartis has underperformed the Zacks categorized Large Cap Pharmaceuticals industry with the company’s shares gaining 2.2% compared to the industry gain of 6.6%.

Performance

Large Cap Pharmaceuticals Industry 5YR % Return

The NYSE ARCA Pharmaceutical Index slipped 1.2% over the last five trading sessions. Among major pharma stocks, AstraZeneca was up 2.6% this week while Bristol-Myers was down 2.7%. Over the last six months, Johnson & Johnson (JNJ - Free Report) gained 5.9% while AstraZeneca was down 7.9% (See the last pharma stock roundup here: AstraZeneca's Lynparza Impresses in Study, Merck Drug Label Expanded).

What's Next in the Pharma World?

Watch out for the usual pipeline and regulatory updates. Sanofi and partner Regeneron will get to know about the approval status of their eczema treatment, Dupixent, by Mar 29, 2017. Roche is also expected to get a response from the FDA for its multiple sclerosis drug, Ocrevus (ocrelizumab) -- the FDA action date for this candidate was extended by three months to Mar 28, 2017 in Dec 2016.

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