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This week marked the beginning of the earnings season for drug and biotech sector with J&J (JNJ - Free Report) announcing its quarterly results. Roche (RHHBY) released its sales numbers for the first nine months of 2023 with sales declining due to a drop in COVID test sales. Pfizer (PFE - Free Report) cut its sales and earnings guidance for 2023 as sales from its COVID products declined. Novo Nordisk (NVO - Free Report) raised its sales growth rates for earnings and sales. Merck (MRK - Free Report) announced a new deal with Japan’s Daiichi Sankyo to jointly developthe latter’s three DXd antibody-drug conjugate (ADC) candidates for a total potential consideration of up to $22 billion.
Its Innovative Medicines (previously the Pharmaceutical segment) unit outperformed expectations, with sales of several key drugs like Stelara, Tremfya and Imbruvica beating estimates. Sales in the Innovative Medicines segment rose 5.1% year over year. MedTech segment sales rose 10% from the year-ago period J&J raised its full-year guidance for adjusted earnings and sales growth.
Roche Sales Decline in Nine Months of 2023: Roche’s revenues in the third quarter rose 7% at constant exchange rates (“CER”). However, in the first nine months of 2023, sales declined 6% due to an expected decline in sales of its COVID-19 tests. Excluding COVID products, group sales rose 1% at CER. Sales in the Pharmaceuticals Division rose 9% at CER in the first nine months due to higher demand for newer drugs. The Diagnostics division’s sales were down 18%. Excluding COVID-19 sales, Diagnostics Division’s base business increased by 7%.
Roche maintained its expectation of sales to decline in the low-single-digit range at CER in 2023 due to a plunge in sales of COVID-19 products. Core earnings per share are expected to be broadly in line with sales expectations
Pfizer Cuts 2023 Outlook on Lower COVID Sales: Pfizer announced that it is slashing its previously issued revenue guidance for 2023 due to lower-than-expected demand for its COVID products, COVID-19 vaccine, Comirnaty and its oral antiviral pill for COVID, Paxlovid.
The revenue guidance is being lowered from $67.0 to $70.0 billion to $58.0 to $61.0 billion, which includes a $7 billion cut in Paxlovid revenues and a $2 billion reduction in Comirnaty revenues.
With the demand for COVID products coming in lower than expected, Pfizer announced cost cuts, including layoffs, which are expected to deliver targeted savings of at least $3.5 billion. Of this, approximately $1.0 billion is expected to be realized in 2023 and at least $2.5 billion is expected to be realized in 2024. In the third quarter, Pfizer will record a non-cash charge of $5.5 billion as COVID inventory write-offs in cost of goods sold. As a result of the lower-than-expected COVID revenues and the inventory write-offs, adjusted EPS is expected in the range of $1.45 to $1.65, down from $3.25 to $3.45 expected previously.
The FDA granted approval to Pfizer’s oral, once-daily pill called etrasimod to treat moderately-to-severely active ulcerative colitis, to be marketed by the brand name of Velsipity (2 mg dose). The approval for etrasimod was based on data from two pivotal phase III studies, ELEVATE UC 52 and ELEVATE 12. An application seeking approval of etrasimod is also under review in the EU, with a decision from the European Medicines Agency anticipated in first-half 2024. Velsipity (etrasimod) was added to Pfizer’s inflammation and immunology portfolio with the March 2022 acquisition of Arena Pharmaceuticals.
NVO Ups 2023 Sales and Profit Growth Outlook: Novo Nordisk raised its previously issued sales and profit outlook at CER for 2023. While the sales growth range was upped from a range of 27-33% to 32-38%, the profit range was increased from 31-37% to 40-46%. Higher-than-expected sales of Ozempic and Wegovy led to the guidance uptick.
Novo Nordisk also announced preliminary sales and operating profit growth rates for the first nine months of 2023, Novo Nordisk’s sales increased 33% and operating profit increased 37%, both at CER in the first nine months of this year.
Novo Nordisk announced a deal to acquire ocedurenone for uncontrolled hypertension from Singapore-based biotech, KBP Biosciences, for up to $1.3 billion. The candidate is being developed in a phase III study, called CLARION-CKD, for uncontrolled hypertension and advanced chronic kidney disease (CKD). In a phase IIb study, ocedurenone demonstrated a clinically meaningful and statistically significant improvement in systolic blood pressure from baseline to day 84 in patients with stage IIIb/IV CKD and uncontrolled hypertension. Novo Nordisk believes the drug can be developed for cardiovascular and kidney diseases and has plans to conduct phase studies for the same going forward.
Merck’s New $22B Deal With Daiichi Sankyo: Merck signed a deal with Daiichi Sankyo to co-develop and co-commercialize the latter’s three DXd ADCs — patritumab deruxtecan, ifinatamab deruxtecan and raludotatug deruxtecan worldwide, except Japan. In Japan, Daiichi Sankyo has retained exclusive rights for the development of the candidates. The three candidates are being developed for multiple solid tumors across different targets, both as monotherapy and/or in combination with other cancer drugs. They are in early to mid-stage development and have shown promising results in clinical studies.
For the deal, Merck will make an upfront payment of $4 billion to Daiichi, while being entitled to make $1.5 billion in continued payments over the next 24 months. The deal also includes potential sales-based milestone payments of up to $16.5 billion.
The FDA as well as the European Commission granted approval to Merck’s blockbuster cancer drug, Keytruda for expanded use in earlier stages of the NSCLC indication.
The FDA approved Keytruda in combination with chemotherapy as neoadjuvant treatment followed by surgery and continued adjuvant treatment with Keytruda as a single agent for patients with resectable stage II, IIIA or IIIB (N2) NSCLC. The approval, based on data from the KEYNOTE-671 study, marks the sixth NSCLC indication for Keytruda in the United States across both metastatic and earlier stages of the disease.
The European Commission granted approval to Keytruda as an adjuvant treatment for NSCLC patients who are at a high risk of recurrence following complete resection and platinum-based chemotherapy. The approval was based on disease-free survival data from the phase III KEYNOTE-091 study. The decision marks the fifth approval for Keytruda in NSCLC in the EU. Keytruda was approved for similar use in the United States in January.
The NYSE ARCA Pharmaceutical Index declined 3.1% in the last five trading sessions.
Image: Bigstock
Pharma Stock Roundup: JNJ Posts Upbeat Q3 Earnings, PFE, NVO Revise 2023 View
This week marked the beginning of the earnings season for drug and biotech sector with J&J (JNJ - Free Report) announcing its quarterly results. Roche (RHHBY) released its sales numbers for the first nine months of 2023 with sales declining due to a drop in COVID test sales. Pfizer (PFE - Free Report) cut its sales and earnings guidance for 2023 as sales from its COVID products declined. Novo Nordisk (NVO - Free Report) raised its sales growth rates for earnings and sales. Merck (MRK - Free Report) announced a new deal with Japan’s Daiichi Sankyo to jointly developthe latter’s three DXd antibody-drug conjugate (ADC) candidates for a total potential consideration of up to $22 billion.
Recap of the Week’s Most Important Stories
J&J Q3 Earnings and Sales Beat: J&J reported strong third-quarter results, beating estimates for earnings as well as sales. The third-quarter results were the first quarterly update for the new J&J after the Consumer Health spin-off.
Its Innovative Medicines (previously the Pharmaceutical segment) unit outperformed expectations, with sales of several key drugs like Stelara, Tremfya and Imbruvica beating estimates. Sales in the Innovative Medicines segment rose 5.1% year over year. MedTech segment sales rose 10% from the year-ago period J&J raised its full-year guidance for adjusted earnings and sales growth.
Roche Sales Decline in Nine Months of 2023: Roche’s revenues in the third quarter rose 7% at constant exchange rates (“CER”). However, in the first nine months of 2023, sales declined 6% due to an expected decline in sales of its COVID-19 tests. Excluding COVID products, group sales rose 1% at CER. Sales in the Pharmaceuticals Division rose 9% at CER in the first nine months due to higher demand for newer drugs. The Diagnostics division’s sales were down 18%. Excluding COVID-19 sales, Diagnostics Division’s base business increased by 7%.
Roche maintained its expectation of sales to decline in the low-single-digit range at CER in 2023 due to a plunge in sales of COVID-19 products. Core earnings per share are expected to be broadly in line with sales expectations
Pfizer Cuts 2023 Outlook on Lower COVID Sales: Pfizer announced that it is slashing its previously issued revenue guidance for 2023 due to lower-than-expected demand for its COVID products, COVID-19 vaccine, Comirnaty and its oral antiviral pill for COVID, Paxlovid.
The revenue guidance is being lowered from $67.0 to $70.0 billion to $58.0 to $61.0 billion, which includes a $7 billion cut in Paxlovid revenues and a $2 billion reduction in Comirnaty revenues.
With the demand for COVID products coming in lower than expected, Pfizer announced cost cuts, including layoffs, which are expected to deliver targeted savings of at least $3.5 billion. Of this, approximately $1.0 billion is expected to be realized in 2023 and at least $2.5 billion is expected to be realized in 2024. In the third quarter, Pfizer will record a non-cash charge of $5.5 billion as COVID inventory write-offs in cost of goods sold. As a result of the lower-than-expected COVID revenues and the inventory write-offs, adjusted EPS is expected in the range of $1.45 to $1.65, down from $3.25 to $3.45 expected previously.
The FDA granted approval to Pfizer’s oral, once-daily pill called etrasimod to treat moderately-to-severely active ulcerative colitis, to be marketed by the brand name of Velsipity (2 mg dose). The approval for etrasimod was based on data from two pivotal phase III studies, ELEVATE UC 52 and ELEVATE 12. An application seeking approval of etrasimod is also under review in the EU, with a decision from the European Medicines Agency anticipated in first-half 2024. Velsipity (etrasimod) was added to Pfizer’s inflammation and immunology portfolio with the March 2022 acquisition of Arena Pharmaceuticals.
NVO Ups 2023 Sales and Profit Growth Outlook: Novo Nordisk raised its previously issued sales and profit outlook at CER for 2023. While the sales growth range was upped from a range of 27-33% to 32-38%, the profit range was increased from 31-37% to 40-46%. Higher-than-expected sales of Ozempic and Wegovy led to the guidance uptick.
Novo Nordisk also announced preliminary sales and operating profit growth rates for the first nine months of 2023, Novo Nordisk’s sales increased 33% and operating profit increased 37%, both at CER in the first nine months of this year.
Novo Nordisk announced a deal to acquire ocedurenone for uncontrolled hypertension from Singapore-based biotech, KBP Biosciences, for up to $1.3 billion. The candidate is being developed in a phase III study, called CLARION-CKD, for uncontrolled hypertension and advanced chronic kidney disease (CKD). In a phase IIb study, ocedurenone demonstrated a clinically meaningful and statistically significant improvement in systolic blood pressure from baseline to day 84 in patients with stage IIIb/IV CKD and uncontrolled hypertension. Novo Nordisk believes the drug can be developed for cardiovascular and kidney diseases and has plans to conduct phase studies for the same going forward.
Merck’s New $22B Deal With Daiichi Sankyo: Merck signed a deal with Daiichi Sankyo to co-develop and co-commercialize the latter’s three DXd ADCs — patritumab deruxtecan, ifinatamab deruxtecan and raludotatug deruxtecan worldwide, except Japan. In Japan, Daiichi Sankyo has retained exclusive rights for the development of the candidates. The three candidates are being developed for multiple solid tumors across different targets, both as monotherapy and/or in combination with other cancer drugs. They are in early to mid-stage development and have shown promising results in clinical studies.
For the deal, Merck will make an upfront payment of $4 billion to Daiichi, while being entitled to make $1.5 billion in continued payments over the next 24 months. The deal also includes potential sales-based milestone payments of up to $16.5 billion.
The FDA as well as the European Commission granted approval to Merck’s blockbuster cancer drug, Keytruda for expanded use in earlier stages of the NSCLC indication.
The FDA approved Keytruda in combination with chemotherapy as neoadjuvant treatment followed by surgery and continued adjuvant treatment with Keytruda as a single agent for patients with resectable stage II, IIIA or IIIB (N2) NSCLC. The approval, based on data from the KEYNOTE-671 study, marks the sixth NSCLC indication for Keytruda in the United States across both metastatic and earlier stages of the disease.
The European Commission granted approval to Keytruda as an adjuvant treatment for NSCLC patients who are at a high risk of recurrence following complete resection and platinum-based chemotherapy. The approval was based on disease-free survival data from the phase III KEYNOTE-091 study. The decision marks the fifth approval for Keytruda in NSCLC in the EU. Keytruda was approved for similar use in the United States in January.
The NYSE ARCA Pharmaceutical Index declined 3.1% in the last five trading sessions.
Large Cap Pharmaceuticals Industry 5YR % Return
Large Cap Pharmaceuticals Industry 5YR % Return
Here’s how the eight major stocks performed in the last five trading sessions.
Image Source: Zacks Investment Research
In the last five trading sessions, all stocks declined with AstraZeneca declining the most (5.4%).
In the past six months, Lilly has risen the most (53.4%), while Pfizer has declined the most (22.4%).
(See the last pharma stock roundup here: LLY Meets IBD Study Goal, PFE, MRK Give Cancer Pipeline Updates)
What's Next in the Pharma World?
Watch out for MRK, ABBV, SNY and NVS’ Q3 earnings and regular pipeline and regulatory updates next week.