Clovis Oncology: Waiting on PARP Traction; Competition a Concern

  • Many institutional investors and sellside analysts hold tepid outlooks for Clovis Oncology

  • One concern is slow PARP uptake within maintenance therapy for recurrent ovarian cancer, and limited Rubraca share gains within the PARP class

  • The second concern is upcoming competitive threats that could further slow sales and impact Rubraca’s expansion into mCRPC and frontline ovarian cancer

  • Bulls see eventual PARP class gains, which should drive Rubraca sales higher, and potentially the first positive pivotal trial for PARP+PD1 in first line maintenance of ovarian cancer

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Biogen: Aducanumab Questions Linger After CTAD, but Trading Opportunities Exist

  • On Thursday, Biogen presented additional aducanumab data at CTAD that answered some questions, and raised others

  • Bulls believe the totality of the data, including the first positive pivotal trial in Alzheimer’s, is supportive of approval

  • Bears believe the data is too confounding to receive approval

  • Potential considerations beyond the stats could also potentially shift the odds of approval in Biogen’s favor

  • Drug approval could add over $10B in gross revenue, but investors should consider the potential for a more narrow label

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Amarin: Low Compliance and Competition Key to Bear Thesis, but Bulls Don't See the Threat

  • In this note, I detail some common elements of the bear thesis, as well as the counterarguments to this thesis.

  • Low compliance serves as a risk to consensus estimates, which suggest high growth rates after label expansion approval

  • Additionally, several competitors are expected to see trial readouts over the coming months

  • Finally, ongoing patent litigation could pose a risk to longer-term estimates

  • Bulls posit that compliance is not a significant issue, that competitors lack CV outcome results or a clean safety profile, and that patent litigation is in Amarin’s favor.

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GSK: Detailing Growth Opportunities in Oncology and Upcoming BCMA Data

  • GSK’s oncology portfolio is key to growth prospects, as they are expected to offset headwinds currently faced in HIV and the Advair business.

  • Zejula provided additional data in maintenance treatment of ovarian cancer that could present share gain opportunities from Lynparza. GSK will look to expand Zejula into additional oncology indications.

  • Belantamab mafodotin could be the first to market within the BCMA class of drugs in multiple myeloma, and will provide additional details at ASH in early December along with other BCMA treatments.

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Regeneron: Beovu Threatens Eylea Revenue, but Dupixent and Oncology Show Promise

  • Eylea faces increased competition, but is also benefiting from demographic tailwinds and additional line extensions. Future growth will depend on Beovu’s success.

  • Dupixent is seeing strong adoption in atopic dermatitis driven by a differentiated clinical profile, and is being explored in numerous additional indications

  • Investors are excited by REGN1979, which could challenge rituximab in non-Hodgkin’s Lymphoma. An update will be provided at ASH in early December

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Merck: Keytruda Competition Not Seen as a Threat, but Could Act as Stock Overhang in Near-Term

  • Keytruda is key to Merck’s growth prospects, as the drug’s growth makes up most of the company’s revenue growth for 2019

  • Two competing drug regimens announced positive results in 1L NSCLC recently, which could negatively impact Keytruda’s growth trajectory

  • Keytruda sets a high bar in efficacy and safety, and the street does not think that competitors will be able to meet this bar to commercially impact Keytruda sales

  • With that said, the trial results could act as an overhang in the near-term until full results are released in 2020

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Reata: A "Show Me" Story Showing the Results and with Two Upcoming Catalysts

- Strong omaveloxolone results in Friedreich’s Ataxia (FA) was a surprise and could generate over a billion in sales. Importantly, their Nrf2 activators hold promise to treat many other neurodegenerative indications beyond FA

- Moving forward, attention will shift back to bardoxolone with Alport Syndrome readout expected this quarter, and CTD-PAH by 1H20

- The bear case still centers on hyperfiltration and an abundance of caution given 2012 safety issues in BEACON. Reata appears to have put these issues to rest with its consistent results since 2012

- As Reata continues to validate its MOA, bulls see the platform growing into many other indications, including four others currently being studied in CKD.

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Amgen: With Enbrel Overhang Cleared, Investors Focused on AMG510, Omecamtiv, and Tezepelumab

- Amgen’s Enbrel patents held up in court, removing a major overhang on the stock. This has led to increased investor attention now that a major binary event is largely removed from the picture

- Amgen recently presented AMG510 results in NSCLC and CRC that were below high investor expectations. Results were still good, but durability remains the key unresolved question to focus on

- Omecamtiv and tezepelumab are interesting late-stage drugs in Amgen’s pipeline that will see additional readouts in 2020

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AbbVie: Can Skyrizi and Upadacitinib Offset Humira Competition?

- For International Humira, the debate centers on whether there is further downside to AbbVie’s 2019 guidance of a 30% ex FX decline. This follows several downward revisions by management over the last year.

- For US Humira, the drug will face competition from several novel mechanisms of action, including JAK, IL-17, and IL-23 inhibitors in rheumatoid arthritis and psoriasis. These drugs could also present downside risk to Humira estimates.

- Skyrizi and upadacitinib are the most often-cited drugs within the pipeline. While they could offset some of the gap, AbbVie is looking at a $10B+ revenue gap from Humira, and Skyrizi/upadacitinib do not look exciting enough to cover the shortfall.

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Gilead: What Will Provide the Growth Needed for Multiple Expansion?

- In order to outperform, Gilead will need to generate higher revenue growth going forward

- HIV franchise sales will depend on Gilead’s ability to transition TDF-based patients onto newer TAF-based drugs after 2021. TAF-based drugs are safer, but generic TDF could look favorable to payers.

- Filgotinib is a key component of the pipeline and will have two important readouts this quarter. Expectations are high and Gilead will need to show strong safety results.

- Ultimately, Gilead has a path to growth, but the visibility is poor. Gilead must show a clearer vision to growth in order for the stock to rerate.

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Allergan: Botox Durability is the Key Value Driver

- Allergan’s recent failure with Rapastinel adds to the company’s woes. However, there is a portion of the investor community that remain believers in Allergan’s underlying value

- These investors see value in the Medical Aesthetics business, which will face competition soon from Evolus’s Jeuveau and Revance’s RT002. Bulls still believe the segment will grow in the mid single digits.

- Unlocking this value, either through drastic company actions (as activists are pushing for) or through consistent execution over the next several quarters, should drive the stock higher.

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Pfizer: Street Bullish as Growth Set to Reaccelerate Beyond 2019

- Lyrica sales are expected to erode significantly over the next two years as generics enter the market.

- Pfizer’s pipeline has strengthened significantly over the last several months and has a number of opportunities that could offset these losses and drive mid-single digit growth in the coming years

- Specifically, Ibrance, Xeljanz, Xtandi, Tanezumab, and Tafamidis represent significant opportunities that could drive growth for Pfizer

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TEVA: Is 2019 the Trough, or Will 2020 Continue to See Pressure?

- After showing several years of resilience, competition is finally starting to eat away at Teva’s Copaxone and ProAir revenue

- Investors and management expect Ajovy and Austedo to make up much of the loss in revenue in 2019 and 2020

- Beyond those two components, the generic environment, management’s ongoing cost cutting efforts, and the pipeline could determine whether 2019 will ultimately be the trough year or if declines will continue.

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Biogen: BAN2401 Not A Home Run Anymore, But Still Holds Some Promise

- Since releasing initial BAN2401 results in July, excitement among investors has waned as detailed analysis has shown confounding results. However, many investors still see promise in the drug.

- When viewed within the context of Biogen’s entire Alzheimer’s portfolio, Biogen remains well positioned to get an Alzheimer’s drug to market with aducanumab, BAN2401, and elenbecestat

- Amyloid beta hypothesis still has legs as drugs that target subtypes beyond monomers have shown some degree of clinical efficacy

- Possible futility analyses for aducanumab/crenezumab and FDA statement on ADCOMS as a legitimate endpoint are catalysts to watch, while aducanumab P3 readout in 2020 remains the key conclusive event.

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Mylan: Issues Persist but Expectations are Low and Several Catalysts Are Coming

- While investors have long criticized Mylan’s new product yield, a generic Advair and Restasis could finally be coming to market before the end of the year.

- In terms of recently launched drugs, gCopaxone has had a slow start but could be starting to pick up. Fulphila continues to do well, and Yupelri was approved by the FDA earlier this month.

- 3Q outperformance was helped in part by strong margin expansion due to new product launches and continued integration efforts

- Mylan still has issues, including a difficult generic environment and the ongoing Morgantown remediation. However, expectations are low, and the risk/reward could be favorable

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Johnson and Johnson: Pharma Remains the Key Debate but Other Segments Showing Signs of a Recovery

- The story around Johnson and Johnson consists of three components: an eroding piece (Zytiga and Remicade), a growing piece (numerous new drug launches and line extensions), and a turnaround effort in its Consumer and Medical Devices segment

- Within the eroding piece, Remicade, Zytiga, Concerta, and Velcade face ongoing competition and loss of exclusivity that could impact sales. Invokana has also struggled.

- However, management is optimistic that an extensive pipeline of new drug launches and line extensions can offset the declines. Stelara, Tremfya, Erleada, and Esketamine are most often discussed by investors.

- Outside of the Pharmaceutical segment, management is focused on turning around the Consumer and Medical Devices segments. Results from 3Q showed that these efforts were beginning to see returns.

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Abbott Laboratories: MitraClip Sees Significant Success in Functional Mitral Regurgitation

- Expectations were low for COAPT due to disappoting results from MITRA-FR. However, some analysts still believed COAPT was different enough to see a more positive outcome

- These analysts were right. COAPT results were overwhelmingly positive; both primary endpoints were met, as hospitalization and mortality saw significant reductions

- Results should provide a boost to ABT stock on Monday and positive read through to other companies pursuing transcatheter mitral valve repair

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Regeneron: Eylea Competition Coming but Pipeline Could Maintain Growth

- Eylea represents a significant portion of revenue and will face upcoming competition, which could slow Regeneron sales growth over the coming years

- Eylea recently received approval for a 12 week dose, but with cautious language on the label, leaving the door open for competitors to potentially take share when they enter the market.

- Dupixent is a promising asset that could drive growth after Eylea, but will need to get past reimbursement issues and execute on indication expansions to stay ahead of competition.

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