Major news in the biotech sector include FDA approval for Regeneron’s REGN rheumatoid arthritis (RA) treatment, Kevzara, as well as data from companies like Amgen AMGN and Celgene CELG.  

Recap of the Week’s Most Important Stories

Regeneron Sanofi RA Drug Gets FDA Nod Second Time Round: It proved to be second time lucky for Regeneron and partner Sanofi with the companies gaining FDA approval for their RA treatment, Kevzara. The companies had got a complete response letter (CRL) for the IL-6R antibody in Oct 2016 due to manufacturing issues. While Kevzara has blockbuster potential, the RA market is highly crowded given the presence of treatments like Humira and Xeljanz among others. Regeneron and Sanofi have priced Kevzara at $39,000/year, a discount of about 30% to the U.S. wholesale acquisition cost for the two most widely used TNF-alpha inhibitors. Moreover, the patient population is huge with many patients spending years on different treatments without achieving their treatment goals. With RA affecting about 1.3 million Americans, Kevzara represents a new treatment option for patients (Read more: Sanofi/Regeneron's Kevzara Gets FDA Approval for Arthritis). Regeneron is a Zacks Rank #1 (Strong Buy) stock. You can see the complete list of today’s Zacks #1 Rank stocks here.

Celgene MS Drug Tops Study but Falls Short on Disability Endpoint: Celgene reported positive data on its experimental multiple sclerosis (MS) drug, ozanimod, from a second phase III study with the candidate meeting the primary endpoint in patients with relapsing multiple sclerosis (RMS). However, the drug failed to meet the disability endpoint in a pooled analysis. While the failure in the disability endpoint is disappointing, it should not really hamper the drug’s chances to gain approval though it may impact sales. Celgene remains on track to file for FDA approval by year end. We note that ozanimod, which has blockbuster potential, is also being evaluated for ulcerative colitis and Crohn's disease, both representing significant commercial potential (Read more: Celgene Multiple Sclerosis Drug Meets Primary Endpoint.

Amgen Osteoporosis Drug Hit by Safety Event: Amgen and partner UCB’s plans for their experimental osteoporosis drug, Evenity, met a roadblock with a new safety signal emerging in a late-stage study. Although Evenity met both the primary endpoints and the key secondary endpoint in the study, the companies said that an imbalance in positively adjudicated cardiovascular serious adverse events was observed. Evenity is currently under regulatory review in the U.S., Canada and Japan but based on the new safety event, Amgen said that it does not expect FDA approval in 2017 (Read more: Amgen Evenity Approval Derailed on Cardiovascular Side Effect).

While Amgen’s shares were down 2.2% on the news, Radius Health’s shares shot up 6.6% -- Radius’ osteoporosis drug, Tymlos, gained FDA approval just last month. A delay in FDA approval for Evenity will give Radius’ drug some breathing space before new competition enters the market.

Alexion Shares Hit by Top Management Shakeup: Alexion’s ALXN shares were down 9.3% with the company announcing changes in its executive leadership team. The company announced the appointment of a new Chief Commercial Officer, while the existing Chief Financial Officer will resign his position at the end of August. The Executive Vice President, Head of Research & Development will also be retiring from Alexion at the end of 2017. The Executive Vice President, Chief Human Resources Officer, will also be leaving the company effective Jun 1, 2017. Year-to-date, Alexion’s shares are down 14.5%, lagging the Zacks-categorized Medical-Biomedical/Genetics industry which is up 0.4% so far in 2017.

Another Indication for Vertex CF Drug: Vertex VRTX gained FDA approval for the use of its cystic fibrosis (CF) drug Kalydeco in patients 2 and older who have one of 23 residual function mutations in the cystic fibrosis transmembrane conductance regulator (CFTR) gene. More than 900 people in the U.S. have one of these mutations. Following the approval, Vertex upped its Kalydeco 2017 revenue guidance to $740 million - $770 million.

Vertex is also working on gaining rapid approval for more than 600 additional people who have mutations responsive to Kalydeco, including one of five "splice" mutations (Read more: Vertex Ups Kalydeco Sales View as FDA Okays Label Expansion).

Bioverativ To Buy North Therapeutics, Strengthen Pipeline: Biogen’s spin-off, Bioverativ BIVV, which is focused on developing treatments for hemophilia and other rare blood disorders, will be acquiring privately-held, clinical-stage rare disease biotech company True North Therapeutics for $400 million upfront plus assumed cash. The company will also shell out as much as $425 million on the achievement of development, regulatory and sales milestones.

With this acquisition, which is scheduled to close in mid-2017, Bioverativ will add TNT009 to its pipeline. TNT009, True North’s lead candidate, is being evaluated for the treatment of cold agglutinin disease (CAD), a rare and chronic hemolytic condition affecting about 16 people per million globally including 5,000 people in the U.S. There are currently no approved treatments for CAD.

Performance

Medical - Biomedical and Genetics Industry 5YR % Return

Medical - Biomedical and Genetics Industry 5YR % Return

The NASDAQ Biotechnology Index declined 1.5% over the last five trading sessions. Among major biotech stocks, Regeneron gained 1.5% on the back of FDA approval for Kevzara while Alexion lost 13% during this period. Over the last six months, Vertex was up 33.5% while Biogen was down 18.9% (See the last biotech stock roundup here: Biogen Inks Deal to Boost Pipeline, Sangamo Soars on Pfizer Deal).

What's Next in the Biotech World?

Puma PBYI, which saw its shares shoot up 52.9% this week on what is being viewed as favorable FDA briefing documents for the advisory panel meeting of the company’s experimental breast cancer treatment, neratinib, will get to know about the FDA’s Oncologic Drugs Advisory Committee’s recommendation today.

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