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Novartis, Boston Pharma Ink Deal for 3 Anti-Infective Drugs

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Novartis AG (NVS - Free Report) announced that it has entered into a licensing and equity agreement with Boston Pharmaceuticals for the development of three novel anti-infective drug candidates that are part of the Novartis Infectious Diseases portfolio.

Per the agreement, Boston Pharmaceuticals acquired worldwide rights to two complementary candidates — LYS228 and IID572 — targeting carbapenem-resistant enterobacteriaceae (CRE), and it also acquired candidate MAK181, targeting pseudomonas infections. These candidates are in their clinical or pre-clinical stages, and have the potential to address the need for new agents to treat antibiotic resistant Gram-negative infections.

Novartis will receive an upfront payment, and is entitled to royalties and milestone payments for successfully commercialized medicines. Further, Novartis will also receive an equity stake in two new companies formed together with Boston Pharmaceuticals to further develop and commercialize these programs.

The agreement is part of Novartis’s strategy to partner with like-minded innovators to further develop new medicines focused on addressing global health challenges. The company also continues research and development of new medicines to treat tropical diseases through the Novartis Institute for Tropical Diseases. Further, earlier in 2018, the company announced a five-year $100 million commitment to advance the Novartis malaria pipeline through 2023 and to complete a comprehensive global clinical trial program for two novel antimalarial drug candidates KAF156 and KAE609.

Shares of the company have increased 2.9% year to date compared with the industry’s growth of 7.8%.

Novartis decided to realign its portfolio. The company intends to spin-off its ophthalmology division, Alcon, into a separately-traded standalone company in order to grow as a medicines company solely. The Alcon business wasn’t performing as per management’s expectations. While it did revive in between, the company decided to spin- off the same in order to focus better on its legacy drug business.  

Last month, the company also announced that it has agreed to sell selected portions of its generic division, Sandoz in order to focus on high-growth areas. The company will sell Sandoz’s dermatology business in the United States and generic U.S. oral solids portfolio, to Aurobindo Pharma USA Inc., for $0.9 billion of cash and $0.1 billion of potential earn-outs. The aim of the divestiture is to focus better on core areas like complex generics and biosimilars to achieve sustainable and profitable growth in the United States in the long term.

 

Zacks Rank & Other Stocks to Consider

Novartis is currently a Zacks Rank #1 (Strong Buy) stock.

Some other top-ranked stocks in the same space are Roche Holding AG (RHHBY - Free Report) , Johnson and Johnson (JNJ - Free Report) and Pfizer Inc. (PFE - Free Report) . While Roche carries a Zacks Rank #1, Johnson and Johnson, and Pfizer carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Roche’s earnings per share estimates have increased from $2.17 to $2.24 for 2018 and from $2.21 to $2.28 for 2019 over the past 60 days. The stock has rallied 9.7% in the past three months.

Johnson and Johnson’s earnings per share estimates have increased from $8.13 to $8.14 for 2018 over the past 90 days. The company delivered a positive earnings surprise in all of the trailing four quarters with an average beat of 2.79%. The stock has rallied 14.5% in the past three months.

Pfizer’s earnings per share estimates have increased from $2.96 to $2.99 for 2018 and from $3.06 to $3.09 for 2019 over the past 90 days. The company delivered a positive earnings surprise in all of the trailing four quarters with an average beat of 6.46%. The stock has rallied 21.7% in the past three months.

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