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Biotech Stock Roundup: Amgen, Biogen Top Q2 Estimates, Update on Incyte RA Drug

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Key biotech stocks, Amgen (AMGN - Free Report) and Biogen (BIIB - Free Report) reported second quarter results yesterday -- both companies surpassed earnings and sales estimates. There were several other key updates as well from companies like Incyte (INCY - Free Report) and The Medicines Co. (MDCO - Free Report) .  

Recap of the Week’s Most Important Stories

Amgen, Biogen Q2 Earnings: Biogen’s results were strong with the company’s most recent offering, Spinraza (spinal muscular atrophy - SMA), doing better than expected. Meanwhile, the company’s multiple sclerosis (MS) franchise continued to grow. MS is Biogen’s key area of expertise. Biogen expects the early 2020s to be an inflection point for the company with its key pipeline candidates expected to launch during that period (Read more: Biogen Tops Q2 Earnings & Sales, Spinraza Sales Up).  

Amgen also topped estimates and updated its guidance. Recently launched products including Prolia (the second and fourth quarters are typically the strongest for this product), Repatha and Kyprolis recorded strong volume-driven growth. Amgen is working on improving Repatha patient access across the world. Meanwhile, mature products like Enbrel, Epogen, Neulasta and Neupogen declined with Neupogen being impacted by short-acting biosimilar competition that will continue affecting sales.

While Amgen stock has gained 23.7% year to date (YTD), outperforming the 11.5% rally of the industry it belongs to, Biogen has lagged with shares declining 0.2% YTD.

Incyte/Lilly RA Drug Faces At Least 18-Month Delay in Resubmission: Incyte and partner Lilly announced that there will be a delay of at least 18 months in the resubmission of the regulatory application for their investigational rheumatoid arthritis (RA) treatment, baricitinib. This means the resubmission will not take place this year. Incyte and Lilly will discuss the path forward with the FDA and evaluate options for resubmission including the possibility of conducting an additional study as required by the FDA.

The FDA had issued a complete response letter (CRL) for baricitinib earlier this year in April. At that time, the agency had told the companies that it is unable to approve baricitinib, a once-daily oral medication for the treatment of moderate-to-severe RA, in its current form. The FDA had asked for additional clinical data to determine the most appropriate doses as well as to further characterize safety concerns across treatment arms.

We note that baricitinib was approved in the EU under the trade name Olumiant in Feb 2017. The European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use (CHMP) recently agreed that the label should be updated to include a precaution for patients who have risk factors for deep venous thrombosis (DVT) and pulmonary embolism (PE). Incyte’s shares were down 3.4% on the baricitinib update.

Nektar Up on Lilly Deal: Nektar (NKTR - Free Report) entered into a deal with big pharma company Lilly which will see Nektar receiving $150 million upfront as well as up to $250 million in the form of milestone payments. The deal covers the co-development of an early stage asset, NKTR-358, in Nektar’s pipeline. NKTR-358, which has the potential to treat a number of autoimmune and other chronic inflammatory conditions, works by targeting the IL-2 receptor complex in the body. By activating regulatory T cells, NKTR-358 has the potential to bring the immune system back into balance.

Other deal terms include sharing of phase II development costs (Lilly: 75%; Nektar: 25%), an option for Nektar to participate in late-stage development on an indication-by-indication basis and double-digit royalties for Nektar. The deal is a major win for Nektar considering the early-stage nature of the candidate and the hefty upfront fee. Lilly will make a strong partner for the company. Nektar’s shares were up following the deal announcement.  

Ironwood Down on Heartburn Drug Data: Ironwood’s (IRWD - Free Report) shares were down even though the company reported positive data on IW-3718 from a mid-stage study conducted in patients with uncontrolled gastroesophageal reflux disease (GERD). The study met its primary endpoint but failed to impress investors with the efficacy results falling short of expectations. Ironwood intends to conduct end of phase II meetings with the FDA and move the candidate into phase III studies in the second half of 2018. According to the company, IW-3718 represents immense commercial potential with annual peak sales opportunity of more than $2 billion (Read more: Ironwood Reports Positive Data on Reflux Candidate).

CHMP Positive on Regeneron/Sanofi Eczema Drug: Regeneron and Sanofi are a step closer to gaining EU approval for their eczema treatment, Dupixent, with the CHMP adopting a positive opinion for the drug. The companies are seeking approval for use in adults with moderate-to-severe atopic dermatitis (AD) who are candidates for systemic therapy. A final decision regarding approval should be out in the coming months. Dupixent gained FDA approval earlier this year in March. Dupixent has blockbuster potential and is being investigated for other indications as well.

Detailed Data on Gilead HIV Regimen: Gilead (GILD - Free Report) announced detailed 48-week results from a couple of late-stage studies on a fixed-dose combination of bictegravir (a novel investigational INSTI) and emtricitabine/tenofovir alafenamide (FTC/TAF, a dual-NRTI backbone) for the treatment of HIV-1 infection in treatment-naïve adults. The bictegravir-containing regimen was found to be non-inferior to dolutegravir-containing regimens. Gilead holds a strong position in the HIV market and is working on strengthening its franchise. There is significant demand for a simple, convenient dosing regimen that can sustain virologic suppression with a safety profile that is appropriate for most HIV patients.

MDCO’s TANGO-2 Stopped Early on Superior Benefit-Risk: The Medicines Co. got some good news with an independent data safety and monitoring board stopping a late-stage study on its investigational antibiotic, Vabomere (previously referred to as Carbavance) based on an interim analysis. Interim results from the TANGO-2 study showed that Vabomere improved clinical cure rates across all infection types and reduced rate of renal adverse events compared to best available therapy.

Vabomere is currently under priority FDA review with a response expected in the third quarter. A marketing application was filed in the EU as well. The Medicines Co. is a Zacks Rank #3 (Hold) stock -- you can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


Medical - Biomedical and Genetics Industry 5YR % Return

Earnings season for the biotech sector is off to a strong start with big players like Amgen and Biogen reporting better than expected results. The NASDAQ Biotechnology Index climbed 2.7% over the last five trading sessions. All major biotech stocks recorded gains with Vertex soaring 22.6%. Over the last six months, Vertex was up 90.1% (See the last biotech stock roundup here: Vertex Boosted by CF Data, FDA Nod for Gilead, Puma Drugs).

What's Next in the Biotech World?

Watch out for earnings reports from companies like Vertex and Gilead.

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