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Last week, several pharma majors reported second quarter results. Meanwhile, important study data was released by Merck (MRK - Free Report) and AstraZeneca (AZN - Free Report) .

Recap of the Week’s Most Important Stories

A Look at Q2 Earnings Results: Big pharma companies like Merck, Lilly (LLY - Free Report) , Glaxo, Roche, Bristol-Myers (BMY - Free Report) and AstraZeneca reported second quarter results last week. Bristol-Myers, Lilly and Merck all beat expectations. While Merck maintained its outlook for the year (Read more: Merck Beats on Q2 Earnings and Sales, Keeps 2017 View), Bristol-Myers updated the same (Read more: Bristol-Myers Beats on Q2 Earnings, Tweaks 2017 View). Lilly was hit by its baricitinib update despite reporting a “beat and raise” quarter (Read more: Key Takeaways from Lilly's Q2 Call: Baricitinib, Cancer Pipeline). Meanwhile, AstraZeneca’s results were over-shadowed by disappointing MYSTIC data on Imfinzi in treatment-naïve non-small cell lung cancer (NSCLC) patients with the company’s shares falling 14.9% (Read more: AstraZeneca Beats on Q2 Earnings, Falls on Failed Study).

British drugmaker Glaxo set out new priorities for the company with the company deciding to allocate 80% of capital to priority assets in two current (respiratory and HIV/infectious diseases) and two potential (oncology and immuno-inflammation) therapy areas. Glaxo also said that more than 30 pre-clinical and clinical programs will be stopped (Read more: GlaxoSmithKline Beats on Q2 Earnings, Lowers Guidance).

Lilly and Merck are both Zacks Rank #2 (Buy) stocks. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Merck’s Keytruda Misses Endpoint in HNSCC Study: There were a lot of updates from Merck last week in addition to the earnings results. The company was hit by disappointing results from a late-stage study evaluating its anti-PD-1 therapy, Keytruda, as a monotherapy in patients with previously treated recurrent or metastatic head and neck squamous cell carcinoma (HNSCC). The study failed to meet the pre-specified primary endpoint of overall survival (OS). This is the latest Keytruda-related setback for Merck. Earlier this month, the company had announced that the FDA has placed a clinical hold on three combination studies (KEYNOTE-183, KEYNOTE-185 and KEYNOTE-023) being conducted with Keytruda for multiple myeloma (MM).

Meanwhile, a look at Merck’s second quarter results shows that Keytruda remains strong in the lung cancer setting. Keytruda is currently in more than 550 studies including more than 300 combination studies.

Merck-AstraZeneca Sign Oncology Collaboration: Merck and AstraZeneca will be collaborating for the global development and commercialization of Merck’s Keytruda and AstraZeneca’s PARP inhibitor Lynparza for different types of cancer. Lynparza, currently approved for BRCA-mutated ovarian cancer in multiple lines of treatment, is in different studies for a range of tumor types including breast, prostate and pancreatic cancers. The deal will cover the evaluation of PARP and MEK inhibitors with PD-L1/PD-1 inhibitors. AstraZeneca stands to receive up to $8.5 billion including an upfront payment of $1.6 billion, $750 million for certain license options and up to an additional $6.15 billion on the achievement of regulatory and sales milestones.

Merck stock has gained 8.9% year to date (YTD), lagging the 10.5% rally of the industry it belongs to while AstraZeneca has gained 10.8% YTD.

J&J’s Janssen Inks Deal with Bavarian Nordic: Johnson & Johnson’s Janssen Pharmaceutical Companies and Denmark-based biotech company Bavarian Nordic entered into an additional worldwide exclusive license and collaboration agreement under which Janssen will get exclusive rights to Bavarian Nordic’s MVA-BN technology for two additional programs targeting vaccines against hepatitis B virus (HBV) and HIV-1.

J&J will make an upfront payment of $10 million and an equity investment worth $33 million. Bavarian Nordic will also be eligible to receive milestone payments worth up to $836 million plus tiered royalties on future sales.

With this deal, the companies are now collaborating for four programs combining Bavarian Nordic’s MVA-BN technology with Janssen’s AdVac technology platform.

Pfizer-Astellas’ Xtandi Breast Cancer Program Dropped: Astellas, which reported results last week, provided an update on its pipeline which showed that the company and its partner, Pfizer (PFE - Free Report) , have decided to drop the development of Xtandi for breast cancer. The development program included a phase III study for triple negative breast cancer and a phase II study for ER/PR positive, HER2 positive breast cancer. Astellas said that the decision was based on discussions with Pfizer, the change in the competitive landscape, need for further diagnostic development and new phase II data.

Ongoing programs for Xtandi include non-metastatic castration-resistant prostate cancer (phase III), prostate cancer in patients with non-metastatic biochemical recurrence (phase III), metastatic hormone-sensitive prostate cancer (phase III) and hepatocellular cancer (phase II).


Large Cap Pharmaceuticals Industry 5YR % Return

The NYSE ARCA Pharmaceutical Index declined 1.8% over the last five trading sessions. Among major stocks, Merck was up 2.4% while AstraZeneca lost 11.1%. Over the last six months, J&J was up 17.8% while Bristol-Myers gained 17.4% (See the last pharma stock roundup here: J&J, NVS' Q2 Earnings, Merck Drug Gets Tentative FDA Nod).

What's Next in the Pharma World?

Watch out for second quarter earnings results from companies like Pfizer, Shire (SHPG - Free Report) and Allergan (AGN - Free Report) among others. Moreover, the FDA’s Arthritis Advisory Committee will be meeting on Aug 2 to discuss J&J’s regulatory application for its investigational rheumatoid arthritis treatment, Plivensia (sirukumab).

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