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Pipeline Prospector April 2022: Pharma stocks plummet due to inflation, rising interest rates
We had closed the Pipeline Prospector for March with the view that volatility in the stock markets is likely to continue through 2022. Little did we know that we would be proved right the very next month — after posting gains in March, the Nasdaq Composite Index posted its worst month since 2008 due to pressure from rising interest rates and rampant inflation.
The biotechnology stocks faced the grimmest April on record. In March, the S&P Biotechnology Select Industry Index (SPSIBI) had risen by 1 percent to US$ 6,996. In April, SPSIBI sank by 18 percent to US$ 5,738. The SPDR S&P Biotech ETF (XBI) fell by over 20 percent in April. Similarly, the Nasdaq Biotechnology Index (NBI) plunged by 10 percent to US$ 3,760. In March, it had soared by 4.83 percent to US$ 4,166.
The month also saw announcements of first quarter (Q1) 2022 results. Even though several mega and large cap companies posted healthy Q1 profits, the results failed to cheer the market. Along with the interest rate hikes and rising inflation, supply chain worries due to the lockdowns in China also bore an impact on the stock markets.
Access the Pipeline Prospector Dashboard for April 2022 Newsmakers
A big month for Merck, GSK, BMS
Several pharma companies came out with their Q1 numbers, and there was good news from players like Merck, GlaxoSmithKline (GSK), Bristol Myers Squibb (BMS) and Eli Lilly. Merck posted a revenue growth of 50 percent in Q1, beating Wall Street estimates for both its top line and bottom line. Out of its Q1 revenues of US$ 15.9 billion, US$ 3.2 billion came from Lagevrio (molnupiravir), its oral antiviral treatment for Covid. Its cancer drug Keytruda and human papillomavirus vaccine Gardasil also helped rake up the numbers.
Moreover, the FDA granted Merck’s investigational pneumococcal conjugate vaccine – V116 – a breakthrough therapy designation for the prevention of invasive pneumococcal disease (IPD) and pneumococcal pneumonia in people 18 years and older.
GSK posted Q1 revenue of £9.8 billion (US$ 12.3 billion), up 32 percent from Q1 of 2021. Shingrix – GSK’s vaccine to prevent shingles (herpes zoster) – more than doubled sales year-on-year to £698 million (US$ 877 million) and topped Wall Street expectations by 32 percent. The vaccine had bagged the agency’s nod in July, 2021.
BMS’ Camzyos (mavacamten) became the first-ever cardiac myosin inhibitor to treat obstructive hypertrophic cardiomyopathy (HCM) – an inherited disorder where the heart muscle thickens and obstructs blood flow, leading to heart failure. Moreover, its oncology drug Opdivo showed reduction in the risk of recurrence, progression or death across randomized patients with resectable non-small cell lung cancer (NSCLC) when administered before surgery along with chemotherapy.
BMS’ Q1 revenue rose by 5 percent to US$ 11.65 billion. Sales of Opdivo grew by 12 percent (to US$ 1.92 billion) while Eliquis sales grew 11 percent (to US$ 3.21 billion). The drugmaker, however, trimmed its sales projection for 2022 due to stiff generic competition being faced by its mega-blockbuster blood cancer drug Revlimid.
Novo Nordisk lifted its sales and operating profit guidance, encouraged by increasing demand for its newer diabetes and obesity drugs. Its Q1 operating profit — at 19 billion Danish crowns (US$ 2.69 billion) — beat analyst estimates of 17.2 billion crowns (US$ 2.4 billion).
Another diabetes drug manufacturer, Eli Lilly, posted better-than-expected Q1 earnings. Lilly posted US$ 7.81 billion in Q1 revenues, an increase of 15 percent.
J&J's Q1 revenue grew by 5 percent to US$ 23.4 billion, driven by a 6.3 percent rise in the company's pharmaceutical sales and a 5.9 percent increase in medical device sales. However, J&J withdrew its Covid-19 vaccine from its revenue projections, due to a surplus in global supplies.
Gilead moved forward on its oncology ambitions as the US Food and Drug Administration (FDA) lifted its partial clinical hold placed on five cancer studies evaluating Gilead’s US$ 5 billion cancer drug candidate – magrolimab – in combination with azacitidine. The FDA also approved commercial production at Kite Pharma’s new CAR T-cell therapy manufacturing facility in Frederick, Maryland. Gilead had acquired Kite in 2017.
Access the Pipeline Prospector Dashboard for April 2022 Newsmakers
Novartis merges two units; Covid therapies take a hit
Novartis is undergoing an organizational makeover. The Swiss drugmaker said it is merging its pharmaceuticals and oncology units into an innovative medicines (IM) unit. The merger will help the drugmaker save at least US$ 1 billion in costs by 2024, but will result in thousands of job cuts. Meanwhile, Novartis has received the FDA’s approval to produce, test and ship its spinal muscular atrophy drug Zolgensma out of its North Carolina manufacturing facility.
Though Covid-19 cases are soaring in different parts of the world, stocks of most companies selling Covid products declined due to several reasons, the primary amongst them was the perception that Omicron infections are not severe.
In fact, there was plenty of news on Covid therapies. The FDA expanded the approval of Gilead’s antiviral drug Veklury (remdesivir) to include children aged 28 days and older and weighing three kg or more who are either hospitalized with Covid or are at risk of the disease progressing.
The demand for Pfizer’s Covid pill — Paxlovid — remained unexpectedly low. And GSK and Vir Biotechnology’s antibody therapy received a blow when FDA pulled the authorization granted to it, citing data that suggested the treatment was unlikely to be effective against the dominant Omicron sub-variant. The agency has also decided to delay a decision on Roche and Regeneron’s application for the full approval of its Covid-19 antibody therapy — REGEN-COV.
Meanwhile, the FDA authorized a fourth dose of the Covid vaccines from Moderna and Pfizer for those 50 and older, and one of its top experts hinted that a fifth dose may be on its way in fall. However, European Medicines Agency’s Covid-19 task force said it is too early to consider using a fourth dose of the mRNA vaccines. The EMA found no evidence of a benefit of a fourth dose, and said it should be provided only to people 80 years and older and to those who are immunocompromised.
Moderna’s shares slipped even though its Covid-19 vaccine won approval in Taiwan for use in six-to 11-year-old children. The drugmaker had to recall a batch of its Covid-19 vaccine – Spikevax – after a vial was found contaminated with a foreign body.
Access the Pipeline Prospector Dashboard for April 2022 Newsmakers
BMS-Nektar, AbbVie-BioArctic end their drug development partnerships
The month also saw important development programs and partnerships come to an end. BMS and Nektar Therapeutics decided to call off their global cancer drug development program for bempegaldesleukin in combination with Opdivo – part of a US$ 3.6 billion deal signed in 2018 – after two more late-stage trials failed to meet their primary endpoints.
Similarly, AbbVie terminated its collaboration with BioArctic. The two companies had entered into a US$ 755 million deal in 2016 for the research and development of BioArctic’s portfolio of alpha-synuclein antibodies for Parkinson’s disease and other potential indications.
AbbVie reported revenue of US$ 13.54 billion in Q1, up 4.1 percent year-on-year. However, the sales of megablockbuster drug Humira and cancer drug Imbruvica were down.
Roche’s experimental oral breast cancer drug – giredestrant – failed to slow disease progression in a phase 2 clinical trial. The pharma also said Russia’s attack on Ukraine has disrupted the development of a new generation of multiple sclerosis drugs.
Amgen was in news for a tax litigation. The California-based pharma said America’s Internal Revenue Service (IRS) has levied hefty back-taxes and penalties on it for the 2012-2015 period. This is related to how Amgen transferred its profits from the US to Puerto Rico, where the company houses most of its manufacturing. In total, the amount adds up to around US$ 12 billion.
Access the Pipeline Prospector Dashboard for April 2022 Newsmakers
GSK acquires Sierra Oncology; Pfizer buys ReViral
April didn’t see many big-ticket deals. The most significant deal was GSK’s acquisition of American drug developer Sierra Oncology for US$ 1.9 billion in order to boost its oncology pipeline.
San Diego-based Halozyme Therapeutics acquired auto-injector specialist Antares Pharma in a US$ 960 million all-cash deal. And Pfizer bought ReViral for potential US$ 525 million. The acquisition will strengthen Pfizer’s capabilities in infectious disease R&D.
Meanwhile, Pfizer recalled five batches of its Accupril (Quinapril HCI) blood pressure tablets due to the presence of high levels of N-nitroso-quinapril. The recalled lots were distributed in the US and Puerto Rico. Pfizer Canada also recalled all lots of three doses of Accupril for the same reason.
Among other deals, Jazz Pharmaceuticals signed a licensing deal with Werewolf Therapeutics to acquire the global rights of its investigational cancer therapy, WTX-613. And Harbour BioMed signed a global out-license agreement with AstraZeneca for its bispecific antibody.
Access the Pipeline Prospector Dashboard for April 2022 Newsmakers
Our view
The pharmaceutical industry is facing multiple headwinds due to the ongoing war between Russia and Ukraine, the ensuing pandemic and the concomitant supply chain disruptions, inflation along with a slowdown in several economies across the world and rising interest rates. Due to these factors, the stock market volatility is bound to continue.
Stock market corrections are a terrific time for big pharma to conduct M&As. Just this week, the industry saw its biggest M&A deal of 2022 thus far, with Pfizer announcing a US$ 11.6 billion acquisition of Biohaven. With this deal, Pfizer has expanded its innovative medicines pipeline. Surely, the stock market mayhem will bring with it some exciting news from the world of pharma.
Access the Pipeline Prospector Dashboard for April 2022 Newsmakers
Pharma & Biotech Newsmakers in April 2022
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