Novartis Migraine Drug Accepted, AMD Positive In Phase III

Novartis AG (NYSE:NVS) announced that the European Medicines Agency (EMA) accepted its Marketing Authorization Application (MAA) for migraine candidate AMG 334 (erenumab).

Erenumab, an anti-CGRP monoclonal antibody, is being developed for the prevention of migraine.

The MAA includes data from four phase II and phase III studies involving more than 2,600 patients experiencing four or more migraine days per month.

The data from the study showed erenumab demonstrated clinically meaningful, statistically significant and sustained efficacy compared with placebo in reducing the number of migraine days per month. The candidate also showed significant improvements on the impact migraine had on patients' disability and quality of life compared with placebo.

The safety profile of erenumab was comparable with placebo. Additionally, an extension trial is ongoing which is evaluating its long-term safety in migraine patients for up to five years.

We remind that Novartis will co-commercialize erenumab in the U.S. with Amgen, Inc. (NASDAQ:AMGN) .

Both the companies entered into a global collaboration in Aug 2015 whereby they jointly agreed to develop and commercialize pioneering treatments in the field of migraine and Alzheimer's disease. The collaboration includes experimental candidates erenumab and AMG 301 (currently in phase I development). We remind investors that the Biologics License Application (BLA) for erenumab has been submitted both in the U.S. and EMA in May 2017.

The companies expanded the agreement to include co-commercialization of erenumab in the U.S.

While Amgen retains the sole commercialization rights in Japan for the candidate, Novartis has commercialization rights in Europe, Canada and the rest of world.

2017 is also expected to be a challenging year for the company. Novartis has outperformed the Zacks classified industry in the last six months. The stock has rallied 13.7% compared with the Large Cap Pharma industry’s gain of 12.8%.

Going forward, we expect that the approval of new drugs and label expansion of existing ones will bode well for Novartis given the stiff existing generic competition for key drugs like Gleevec.

Meanwhile, Novartis also reported that ophthalmology candidate RTH258 (brolucizumab) 6 mg met the primary and key secondary endpoints in two phase III studies, HAWK and HARRIER. The studies enrolled more than 1,800 patients with neovascular age-related macular degeneration (nAMD) in the trials. The primary and key secondary efficacy endpoints were non-inferiority of RTH258 to Regeneron Pharmaceuticals’s (NASDAQ:REGN) Eylea in mean change in best-corrected visual acuity (BCVA) from baseline to week 48, and average mean change over the period of week 36-48, respectively.

The candidate demonstrated long-lasting efficacy compared with Eylea dosed every eight weeks. The successful development and commercialization of the candidate will significantly boost Novartis position in the ophthalmology market.

The performance of its eye care business, Alcon, has been quite disappointing due to lower surgical equipments sales. Hence, Novartis is mulling strategic options for Alcon which includes retaining the business to separation via a capital markets transaction such as a spin-off or an initial public offering. The company will throw light on its plans for Alcon later in 2017.

Zacks Rank & Key Pick

Novartis currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in the healthcare sector worth considering is VIVUS, Inc. (NASDAQ:VVUS) which currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. VIVUS’ loss per share estimates narrowed from 50 cents to 39 cents for 2017 over the last 30 days. The company posted positive earnings surprises in each of the trailing four quarters, with an average beat of 233.69%.

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