Market Place
Pipeline Prospector March 2022: New Covid wave, Q4 results raise biotech stocks
The first two months of 2022 saw bearish trends on the bourses for biotechnology stocks, owing to factors such as the spread of the Omicron variant of Covid-19 and the ongoing war between Russia and Ukraine. But March 2022 was different — after falling for two months, the Nasdaq Biotechnology Index (NBI) increased by 4.83 percent to US$ 4,166. It had sunk by 5.5 percent to US$ 3,996 in February.
Moreover, the S&P Biotechnology Select Industry Index (SPSIBI) also moved upwards by 1 percent to US$ 6,996. It had sunk by 5.4 percent to US$ 6,992 in February 2022.
The reasons behind the pick up in these indices could be multiple. Over February and March, drug companies had reported their Q4 2021 results. While the results were mixed, our analysis shows that drug behemoths — such as Pfizer, J&J, Moderna, Eli Lilly and AstraZeneca — saw considerable growth in earnings during 2021. The good news was mirrored in the stock prices of these companies. Rise in Covid-19 cases also raised the prospects for vaccines and Covid therapies.
Access the Pipeline Prospector Dashboard for March 2022 Newsmakers
Stocks of vaccine makers gain momentum with rise of BA.2 strain
In our February update, we saw how Covid-19 vaccine and drugmakers — such as Pfizer Inc, BioNTech, Merck, Moderna Therapeutics, J&J and Roche — continued to see a fall in their stock prices due to a drop in Covid cases and debate over whether vaccines will be a sustainable revenue stream in the years to come.
But March saw Covid-19 cases soaring in different parts of the world. The BA.2 sub-variant of Omicron became the dominant strain in the US, Europe and Asia. By the end of March, Covid infections in Asia had crossed 100 million with the region reporting over 1 million new Covid-19 cases every two days. China was battling with its worst Covid outbreak since 2020. Major cities in China enforced fresh restrictions on business activities to fight the outbreak.
The positive fallout of this was on companies like Moderna, BioNTech, Pfizer and J&J — their stock prices rose as China battled with the outbreak. In fact, their stocks rose even as the broader market fell, with traders monitoring the impact of the Russia-Ukraine war and anticipating a rate hike by the US Federal Reserve to tackle runaway inflation.
Most of these companies posted healthy results and upbeat guidance for 2022. Pfizer, for instance, booked a profit of nearly US$ 22 billion in 2021. Sales from Pfizer’s Covid vaccine totaled US$ 36.7 billion in 2021, making up about 45 percent of its annual revenue of US$ 81.3 billion.
Positive developments came as a shot in the arm for vaccine makers. For instance, Pfizer and Moderna’s vaccines bagged FDA’s nod for a second booster dose in people 50 years and above as well as younger people with compromised immune systems. In the US, second booster shots can now be administered four months after the first booster dose. Moderna’s stock went up on this news.
Access the Pipeline Prospector Dashboard for March 2022 Newsmakers
Positive news raises stocks of Lilly, Astra, J&J, Merck
The biotech stock rise in March was not just about Covid vaccines and drugs. Companies like Eli Lilly, AstraZeneca, J&J, AbbVie, Merck, Roche and BMS also saw their stocks gain during March.
The European Union approved Eli Lilly’s Jardiance weeks after the drug bagged an FDA approval to curb the risk of cardiovascular death and hospitalization in adults with heart failure. Jardiance is now the first SGLT2 drug cleared in Europe to treat all adults with symptomatic chronic heart failure. Moreover, Lilly’s atopic dermatitis drug — lebrikizumab— has shown improvement in patients suffering from the chronic skin condition. Once approved, Lilly’s drug will challenge market leader Sanofi and Regeneron’s blockbuster drug Dupixent.
Lilly posted a 15 percent year-over-year revenue growth in 2021. With several potential blockbuster products in its pipeline, the company’s future looks promising. The company has 20 ongoing phase 3 trials that cover multiple therapeutic areas. One of its most promising candidates is donanemab, a treatment for Alzheimer’s, which promises an alternative to Biogen’s Aduhelm.
AstraZeneca was another big winner. The European Commission granted marketing authorization to Astra’s long-acting cocktail antibody therapy, Evusheld, for pre-exposure prophylaxis (prevention) of Covid-19 infection in adults and adolescents aged 12 years and above. Moreover, Astra and Merck’s cancer drug, Lynparza, bagged additional FDA approval for the treatment of patients with early-stage breast cancer. Astra’s revenues for 2021 rose 38 percent over 2020 (at constant exchange rates).
Johnson & Johnson’s stock also emerged a winner. The FDA approved J&J and its Chinese partner Legend Biotech’s latest CAR-T therapy Carvykti to treat a type of white blood cell cancer. Carvykti is also likely to bag an approval in Japan and Europe. For 2021, J&J recorded a 13.6 percent growth in sales — at US$ 94 billion.
Merck received an additional nod for Keytruda to treat certain patients with advanced endometrial carcinoma. The EU CHMP has recommended an approval of Keytruda as monotherapy for the treatment of microsatellite instability-high (MSI-H) or mismatch repair deficient (dMMR) tumors in certain adults. Moreover, a federal judge in New Jersey sided with Merck, tossing out over 500 lawsuits that alleged it failed to warn users of its osteoporosis drug — Fosamax— and the risk of thigh bone fractures associated with it.
Among the large cap gainers were companies like Bayer, Moderna and BioNTech. Bayer filed for Nubeqa’s label expansion in the US and Europe. The sNDA is seeking approval for Nubeqa (darolutamide) in combination with docetaxel for treating patients with metastatic hormone-sensitive prostate cancer. Bayer will invest over US$ 2.26 billion in its pharmaceutical manufacturing over the next three years, as it expands in both Europe and the US.
Access the Pipeline Prospector Dashboard for March 2022 Newsmakers
Intellia, Novavax, Recursion stocks crash on negative news
Several drugmakers had a tough going in March. Japanese drugmaker Takeda’s hopes to relaunch its hypoparathyroidism drug Natpara were dashed after it received a complete response letter (CRL) from the FDA.
Intellia Therapeutics met a similar fate — the US Patent and Trademark Office invalidated a key patent Intellia had licensed. As a result, Intellia’s stock saw the greatest fall in over five years. The ruling was pertaining to a litigation regarding CRISPR/Cas9 editing patents, and the USPTO said the patents in question belonged to the Broad Institute.
Novavax continued to see its fortune’s dip. Its Covid vaccine rollout in the EU has seen a slow start and the jab is taking too long to bag an FDA approval. During Q4 2021, Novavax posted a loss of US$ 846.3 million.
Another company to lose out was Nektar — its drug bempegaldesleukin failed a phase 3 study that was testing it in combination with BMS’ Opdivo as a first line of treatment in patients with previously untreated unresectable or metastatic melanoma.
Shares of clinical-stage biotechnology company Recursion Pharmaceuticals closed at an all-time low in early March as the company announced a delay in a phase 2 trial for its rare genetic disorder drug REC-3599. Similarly Amylyx Pharmaceuticals’ stock crashed after a panel of external advisers to the FDA voted six to four against its drug for amyotrophic lateral sclerosis (ALS), a neurodegenerative disease.
Access the Pipeline Prospector Dashboard for March 2022 Newsmakers
Sanofi, BMS, Astra sign deals; AbbVie acquires Syndesi
Though March did not see any big-ticket M&A deals, the month did witness several tie-ups and partnerships. For instance, Sanofi announced a tie-up with bi-specific antibody producer Adagene for up to four antibody candidates in oncology. Sanofi will pay US$ 17.5 million upfront and has promised up to US$ 2.5 billion in potential milestone payments and royalties. Sanofi also entered into a potential US$ 6 billion partnership with US-based IGM Biosciences to co-develop three cancer targets and three inflammation targets. The French-drugmaker also announced a US$ 330 million collaboration with Blackstone Life Sciences to advance an innovative treatment for multiple myeloma.
Swiss drugmaker Novartis inked a potential US$ 1.7 billion licensing deal with Massachusetts-based biotech Voyager Therapeutics for the discovery of capsids for central nervous system disorder gene therapies.
Alexion, AstraZeneca’s rare disease group, signed an exclusive global collaboration and license agreement with Neurimmune AG for NI006 – an investigational human monoclonal antibody in phase 1b for the treatment of transthyretin amyloid cardiomyopathy (ATTR-CM). The disease leads to progressive heart failure and high rate of fatality within four years from diagnosis. Alexion also settled all patent disputes with Chugai Pharmaceutical, pertaining to Ultomiris (ravulizumab).
In M&As, AbbVie bolstered its neuropsychiatric and neurodegenerative portfolio with the acquisition of Belgium-based Syndesi Therapeutics in a deal valued at up to US$ 1 billion. AbbVie also settled a legal dispute with Alvotech over when the latter’s Humira biosimilar can be launched.
Fresenius made two acquisitions in March to bolster its Kabi drugs unit. First, it acquired a 55 percent stake in biotech mAbxience for €495 million (US$ 553 million). Second, Kabi acquired Ivenix Inc, a maker of infusion therapies, for an upfront payment of US$ 240 million.
BMS has forged a potential US$ 1.1 billion oncology drug discovery and development deal with New York-based start-up Volastra Therapeutics. Besides, BMS’ Opdivo won an FDA go-ahead for use alongside platinum-doublet chemotherapy for treating resectable NSCLC before surgery in the neoadjuvant setting.
Access the Pipeline Prospector Dashboard for March 2022 Newsmakers
Our view
The last two years have been a roller-coaster ride for pharmaceutical companies. More than regulatory news and financials, its Covid-related news that has played havoc with stock prices. Take the case of GSK and Vir Biotechnology. Last week, FDA had pulled the authorization granted to the duo’s monoclonal antibody — sotrovimab — for Covid-19. As a result, Vir’s stock price was down 11.49 percent.
Some drugmakers, like Pfizer and Moderna, are making hay while the pandemic drags on. Assuming that Pfizer meets its estimates for 2022, its total revenue will grow by around 23 percent and cross US$ 100 billion. Clearly, this kind of growth is unsustainable in the long run.
Given the uncertainties around Covid, the ongoing Russia-Ukraine war, global inflation and geopolitics, the volatility in the stock markets is likely to continue through much of 2022. But that can’t deter drug companies from forging deals, discovering drugs and securing drug approvals.
Access the Pipeline Prospector Dashboard for March 2022 Newsmakers
Pharma & Biotech Newsmakers in March 2022
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