Pharma Stock Roundup: LLY To Buy Cancer Biotech, J&J, AZN, Roche Announce Updates

This week Eli Lilly (NYSE:LLY) announced an all-cash deal tobuy immuno-oncology biotech, ARMO Biosciences, Inc. (NASDAQ:ARMO) . J&J’s (NYSE:JNJ) multiple myeloma drug Darzalex gained FDA approval for combination use in first-line setting while Roche (OTC:RHHBY) announced a couple of regulatory/pipeline updates on its PD-L1 inhibitor, Tecentriq. AstraZeneca (NYSE:AZN) sold rights to a schizophrenia product and its PARP inhibitor, Lynparza gained marketing approval in the EU.

Recap of the Week’s Most Important Stories

Lilly to Expand Immunotherapy Pipeline with ARMO: Eli Lilly announced a definitive agreement to buy California-based immuno-oncology biotech ARMO BioSciences for $50 per share or approximately $1.6 billion in an all-cash deal. The acquisition will add ARMO's lead product candidate, pegilodecakin to Lilly’s cancer pipeline. Pegilodecakin, a PEGylated IL-10, is being studied in a late-stage study in pancreatic cancer as well as early-stage studies in lung and renal cell cancer, melanoma and other solid tumor types. ARMO BioSciences went public in January this year.

Lilly has a well laid out oncology strategy, which involves building on key cancer treatments like Cyramza, Lartruvo and Verzenio as foundational agents while focusing on developing new standard-of-care changing therapies and combination regimens, including immuno-therapies. The ARMO BioSciences acquisition, which adds a promising next generation immunotherapy pipeline asset to Lilly’s portfolio, is in line with this strategy. The transaction is expected to close by the end of the second quarter of 2018

J&J Darzalex Gets FDA Nod in First Line Setting: J&J’s multiple myeloma drug, Darzalexgained FDA approval in first-line setting. With the latest approval, Darzalex can now be prescribed in combination with bortezomib, melphalan and prednisone (VMP) for the treatment ofpatients with newly diagnosed multiple myeloma who are ineligible for autologous stem cell transplantation. With theapproval in first-line setting expected this year, it is expected that Darzalex saleswill improve further,going forward.

J&J also announced data from two phase III studies evaluating its investigational compound esketamine nasal spray in combination with newly initiated oral antidepressant (“NIOD”) in patients with treatment-resistant depression compared to placebo nasal spray and the NIOD. The combination demonstrated a statistically significant, clinically meaningful rapid reduction of depressive symptoms on treatment with flexibly dosed esketamine nasal spray plus NIOD compared to placebo plus NIOD in the study in adults. However, in the study conducted on elderly patients aged 65 and older, though the esketamine arm witnessed clinically meaningful effects compared to the placebo arm, the study narrowly missed statistical significance for its primary efficacy endpoint. The results were presented at the annual meeting of the American Psychiatric Association.

AstraZeneca Sells Seroquel Rights to Luye Pharma: AstraZeneca announced an agreement to sell Seroquel and Seroquel XR, a treatment for schizophrenia and bipolar disease, rights in the UK, China and other international markets to Luye Pharma Group. The total consideration is $538 million, which includes upfront payment of $260 million as well as certain future payments to AstraZeneca. The transaction, expected to close in the second quarter, is part of the company’s efforts to focus on its three main therapy areas of Oncology, Cardiovascular, Renal & Metabolism and Respiratory.

Sales of Seroquel/Seroquel XR have been declining as the drug is facing generic competition since November 2016. In 2017, Seroquel XR recorded sales of $332 million, representing a year-over year decline of 55%.

AstraZeneca& Merck’s PARP inhibitor, Lynparza(tablets) gained EUapproval for use as a maintenance therapy in platinum-sensitive relapsed ovarian cancer, regardless of patients’ BRCA mutation status. The approval thus expands the eligible patient population for Lynparza. Approval for the same indication in the United States was received in August last year.

Roche’s Tecentriq in Focus: Roche’s supplemental Biologics License Application (sBLA) for label expansion of its PD-L1 inhibitor Tecentriq was granted priority review by the FDA. With the latest application, Roche is looking to get Tecentriq approved in combination with Avastin (bevacizumab) plus carboplatin and paclitaxel for first-line treatment of advanced non-squamous non-small cell lung cancer (NSCLC). The FDA’s decision is expected on Sep 5, 2018.

Tecentriq is presently marketed for the treatment of second-line metastatic NSCLC. Label expansion in first-line setting should boost the drug’s sales further. Tecentriq is also approved for the treatment of patients suffering from locally advanced or metastatic urothelial carcinoma (mUC) who are not eligible for cisplatin chemotherapy. The drug recorded sales of CHF457 million in 2017.

In another news on Tecentriq, Roche announced that a late-stage study evaluating the drug in combination with Cotellic in heavily pre-treated patients with advanced or metastatic colorectal cancer (CRC) did not meet its primary endpoint of overall survival (OS) compared to regorafenib.

The NYSE ARCA Pharmaceutical Index rose 1.6% in the last five trading sessions.

Large Cap Pharmaceuticals Industry 5YR % Return

Large Cap Pharmaceuticals Industry 5YR % Return

Here is how the seven major stocks performed in the last five trading sessions:

All stocks were in the green last week except Bristol Myers (NYSE:BMY) , which declined 0.6%. Lilly rose the most (3.6%).

In the past six months, Glaxo (NYSE:GSK) has been the biggest gainer (13.7%), while Bristol Myers declined the most (16.2%).

(See the last pharma stock roundup here: Pharma Stock Roundup:Mixed Q1 for MRK, PFE (NYSE:PFE), FDA Nod for Kymriah’s 2nd Indication)

What's Next in the Pharma World?

Watch out for FDA decisions on many pipeline drugs and line extensions of marketed products this month.

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