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Pharma Stock Roundup: MRK, LLY, PFE Q4 Results, J&J's Loss in Talc Lawsuits

This week, several drugmakers, Pfizer PFE, Merck MRK, Eli Lilly LLY, Novartis and Novo Nordisk announced their fourth-quarter results. A federal appeals court dismissed J&J’s JNJ bankruptcy filing related to its talc lawsuits. The European Commission approved Sanofi SNY and Regeneron’s Dupixent for a new indication.

Recap of the Week’s Most Important Stories

Earnings Update: Pfizer’s fourth-quarter results were better than expected as it beat estimates for both earnings and sales. Pfizer issued its financial guidance for 2023.

Revenues are expected in the range of $67.0 to $71.0 billion, indicating an operational decline of 29%-33% from the 2022 level. Adjusted earnings per share are expected to be in the range of $3.25 to $3.45, reflecting an operational decline of 48%-51% from the 2022 level. However, Pfizer’s 2023 outlook fell well below market expectations due to steep declines expected in revenues from its COVID-19 products as a result of lower demand. Excluding COVID-19 products, Pfizer expects its revenues to rise 7% to 9% on an operational basis in 2023.

Merck’s fourth-quarter results were better than expected, as it beat estimates for both earnings and sales. Sales of its COVID-19 antiviral pill, Lagevrio were better than expected backed by higher demand in outside U.S. market. Though sales of key products cancer drug, Keytruda and Gardasil vaccine rose in the quarter, they were less than our expectations. Keytruda sales of $5.45 billion rose 19% year over year while sales of HPV vaccines — Gardasil and Gardasil 9 — rose 6% year over year in the year.

Merck issued a fresh earnings and sales outlook for 2023. Merck expects revenues to be in the range of $57.2 - $58.7 billion in 2023. Adjusted earnings per share are expected to be between $6.80 and $6.95.

Lilly reported mixed fourth-quarter results, beating earnings estimates but missing on sales. Sales rose 9% year over year due to higher sales of key drugs like Trulicity, Taltz, Verzenio, Jardiance and others and contribution from the recently approved diabetes drug, Mounjaro. Lilly revised the financial guidance for 2023, which it provided in December 2022, reiterating the revenue guidance range of $30.3 billion and $30.8 billion while increasing its earnings expectations from $8.10-$8.30 to $8.35-$8.55 per share.

Novartis’ fourth-quarter results were also mixed. It beat estimates for earnings while missing the same for revenues. Sales in the Innovative Medicines unit rose 3% at constant currency, driven by the strong growth of products like Entresto, Kesimpta, Pluvicto and Kisqali. Sales in the Sandoz division were flat as higher volumes were offset by lower price. The company issued its financial guidance for 2023. It expects sales to grow in the low-to-mid single-digit range and core operating income to grow in the mid-single-digit range in 2023.

Novo Nordisk also beat estimates for earnings while missing the same for revenues. The Diabetes and Obesity Care segment’s sales rose 20% at CER, while sales in the Rare disease segment were down 2% at CER. In 2023, the company expects sales and operating profit to grow in the range of 13-19% at CER.

Appeals Court Rejects J&J’s Bankruptcy Claim in Talc Lawsuits: An appeals court rejected J&J’s bankruptcy filing via its subsidiary LTL Management LLC related to its talc lawsuits. J&J faces numerous lawsuits, which allege that its baby powder and other talc products contain asbestos that causes cancer. LTL Management, which was established to manage claims in the cosmetic talc litigation, filed for voluntary bankruptcy protection in North Carolina to resolve J&J’s talc-related claims in 2021. The J&J subsidiary is now prevented from transferring over 38,000 claims for its talc-based products out of trial courts and into a bankruptcy court. The appeals court believes that LTL Management was solely created to file for Chapter 11 (bankruptcy) protection. The court stated that only a debtor in financial distress can seek protection under bankruptcy laws.

Per the precedent passed by the appeals court, LTL Management is backed by J&J, an entity with a triple-A-rated payment obligation and holds billions in cash reserves, and therefore has ample financial resources to fulfil such claims.

FDA Approves Lilly’s New Lymphoma Drug, Jaypirca: The FDA granted accelerated approval to Lilly’s BTK inhibitor, pirtobrutinib (100 mg & 50 mg tablets) for the treatment of relapsed or refractory mantle cell lymphoma in adult patients previously treated with at least two lines of systemic therapy, including a BTK inhibitor. The drug will be marketed by the trade name of Jaypirca. The approval was based on data from the phase I/II BRUIN study, which showed that treatment with Jaypirca led to an overall response rate of 50% in the abovementioned patient group, with 13% of patients achieving a complete response. Jaypirca is the second of five new medicines that Lilly expects to launch by 2023 end. The other product already launched is Mounjaro for type II diabetes.

Sanofi/Regeneron’s Dupixent Gets EU Approval for Eosinophilic Esophagitis: The European Commission approved Sanofi and Regeneron blockbuster medicines, Dupixent (dupilumab) for treating adults and adolescents with eosinophilic esophagitis, a chronic inflammatory disease. With the approval, Dupixent has become the first and only targeted medicine indicated for people aged 12 years and older with eosinophilic esophagitis in the country. Dupixent was approved by the FDA for eosinophilic esophagitis in patients aged 12 years and above in May 2022. Dupixent is now approved to treat five type II inflammatory diseases, namely severe chronic rhinosinusitis with nasal polyposis, severe asthma, moderate-to-severe atopic dermatitis, eosinophilic esophagitis and prurigo nodularis, in both Europe and the United States.

The NYSE ARCA Pharmaceutical Index declined 1.5% in the last five trading sessions.

Large Cap Pharmaceuticals Industry 5YR % Return

Large Cap Pharmaceuticals Industry 5YR % Return
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.

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Zacks Investment Research

Image Source: Zacks Investment Research

In the last five trading sessions, Pfizer rose the most (0.2%), while Lilly declined the most (5%).

In the past six months, Merck has risen the most (19.2%), while Pfizer declined the most (11.1%).

(See the last pharma stock roundup here: JNJ Q4 Results Mixed, MRK Keytruda Prostate Cancer Study Ends)

What's Next in the Pharma World?

Watch out for the Q4 results of AstraZeneca and AbbVie and regular pipeline and regulatory updates next week.

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