Pharma Stock Roundup: Roche, MNK Announce Acquisition Agreements, Regulatory Updates From Novartis

Key announcements this week include a couple of acquisition announcements and regulatory updates from Novartis (NYSE:NVS) .

Recap of the Week’s Most Important Stories

Roche to Buy Cancer-Focused Ignyta for $1.7 Billion: Roche (OTC:RHHBY) , which has a strong presence in the cancer market, announced its intention to acquire Ignyta in a deal valued at $1.7 billion ($27 per share). Ignyta is focused on the development of precisely targeted therapeutics guided by diagnostic tests for cancer patients. This acquisition will add entrectinib, a selective CNS-active tyrosine-kinase inhibitor (“TKI”) to Roche’s pipeline. Entrectinib, which is being developed for tumors that harbor ROS1 or NTRK fusions, is currently in a pivotal phase II study that could support dual NDA submissions if successful. Entrectinib has Breakthrough Therapy Designation in the United States and PRIME designation in the EU. The deal is expected to close in the first half of 2018 (Read more: Roche Clinches $1.7-Billion Deal to Acquire Ignyta). Roche is a Zacks Rank #3 (Hold) stock - you can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Mallinckrodt to Boost Rare Disease Portfolio with $1.2 Billion Sucampo Acquisition: Another acquisition deal was announced this week with specialty pharma company, Mallinckrodt plc (NYSE:MNK) , saying that it will acquire Sucampo for approximately $1.2 billion ($18 per share). The deal, if it closes in the first quarter of 2018, is expected to boost Mallinckrodt’s 2018 earnings by at least 30 cents per share and 2019 earnings by at least 60 cents per share. The deal will add marketed products, Amitiza and Rescula, to Mallinckrodt’s portfolio and a couple of phase III assets, VTS-270 (Niemann-Pick type C - NPC) and CPP-1X/sulindac (familial adenomatous polyposis - FAP), to its pipeline.

The peak net sales potential of VTS-270 is estimated to be more than $150 million while that of CPP-1X/sulindac is estimated to be more than $300 million. The target is to file for VTS-270 in 2018 (potential approval in 2019) and CPP-1X/sulindac in early 2019 followed by potential approval later in the year.

The acquisition, in addition to boosting Mallinckrodt’s rare disease portfolio, shows the company’s efforts to diversify its marketed products portfolio (Read more: Mallinckrodt to Buy Sucampo for $1.2B to Diversify Portfolio).

Regulatory Updates from Novartis: The FDA has expanded the label of Novartis’s Tasigna so that treatment-free remission (“TFR”) data is now part of the label. The inclusion of this data provides an additional and novel option in the management of Philadelphia chromosome-positive chronic myeloid leukemia in the chronic phase (Ph+ CML-CP).

Novartis also announced that its Tafinlar + Mekinist combination therapy has been granted priority review by the FDA for the adjuvant treatment of stage III BRAF V600 mutation-positive melanoma. Approval would make Tafinlar + Mekinist the first adjuvant targeted therapy combination to demonstrate a significant clinical benefit in patients with a BRAF V600 mutation. With the FDA granting priority review, the agency is expected to respond within six months from the date of submission of the application instead of the usual ten months.

Novartis has gained 15.7% year to date, compared to the 16.7% rally of the industry it belongs to.

Allergan Announces Combigan Ruling: Allergan (NYSE:AGN) suffered a setback with the United States Court of Appeals for the Federal Circuit ruling that certain Combigan patents are valid but not infringed. The court said that Sandoz's proposed generic version of Combigan does not infringe the '149 and '976 patents covering Combigan and reversed an earlier district court decision that the generic product infringes the '425 patent. Allergan intends to file petitions within 30 days. Combigan is a part of Allergan’s eye care portfolio.

Performance

Large Cap Pharmaceuticals Industry 5YR % Return

The NYSE ARCA Pharmaceutical Index was up slightly (0.2%) over the last four trading sessions. Among major stocks, AstraZeneca (NYSE:AZN) was up 2% while Lilly declined 0.7%. Over the last six months, Bristol-Myers Squibb (NYSE:BMY) was up 12% while GlaxoSmithKline (NYSE:GSK) declined 16.6% (See the last pharma stock roundup here: Aerie's Rhopressa Approved, Label Expansion for BMY, Pfizer (NYSE:PFE) Drugs).

What's Next in the Pharma World?

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