The third quarter earnings season concluded this week for major pharmaceutical companies, highlighted by announcements from AstraZeneca AZN and Bayer BAYRY. AbbVie’s ABBV candidate for schizophrenia, obtained through a recent acquisition, did not succeed in mid-stage trials. Meanwhile, the FDA has granted Breakthrough Therapy Designation (“BTD”) to J&J’s JNJ nipocalimab for Sjögren’s disease, while Merck MRK has acquired rights to a new cancer therapy from a private biotech in China.

Here’s a recap of this week’s most significant stories.

AstraZeneca Surpasses Q3 Expectations with Updated Guidance

AstraZeneca’s third-quarter performance exceeded projections, showing increases in both earnings and sales. Core earnings reached $2.08 per share, up 27% year-over-year at constant exchange rates (CER), while revenue grew by 21%. Sales rose in all segments, with many leading drugs like Tagrisso, Fasenra, Farxiga, Lynparza, and Symbicort surpassing estimates. AstraZeneca has boosted its revenue and core earnings guidance for the year to a high teens percentage increase, compared to a previously forecasted mid-teens increase at CER.

Concerns have emerged regarding ongoing investigations at AstraZeneca China. CEO Pascal Soriot stated that the company is aware that Chinese authorities are looking into some current and former employees related to medical insurance fraud, illegal drug importation, and personal information breaches. However, the company has not been notified of any formal investigations at AstraZeneca China.

In an ambitious move, AstraZeneca plans to invest $3.5 billion in the United States by 2026 to enhance its research and development and manufacturing capabilities. This includes a new capital investment of $2 billion aimed at creating over 1,000 jobs.

AstraZeneca and partner Merck shared promising results from the phase III KOMET study that tested Koselugo in adults with neurofibromatosis type 1 (NF1) and symptomatic, inoperable plexiform neurofibromas (PN). The study showed Koselugo effectively reduced the size of these benign tumors in adults, with the drug already approved in some regions for certain pediatric NF1 patients.

Bayer Reports Q3 Decline in Earnings, Yet Sales Show Modest Growth

Bayer’s third-quarter core earnings fell to €0.24 per share, a decline of 36.8% compared to the previous year. Sales reached €10.9 billion, up 0.6% on a currency and portfolio-adjusted basis. Growth from new products like Nubeqa, a cancer medication, and Kerendia, a kidney therapy, helped offset declines in Xarelto sales due to loss of exclusivity. Additionally, Bayer’s Consumer Health segment saw growth, although at a slower pace, while the Crop Science segment faced notable declines in glyphosate-based herbicides.

Crop Science sales dropped 3.6%, whereas sales in Pharmaceuticals grew by 2.3%, and Consumer Health saw a 5.7% rise on a currency and portfolio-adjusted basis. Bayer maintained its previous currency-adjusted sales guidance for 2024.

AbbVie’s Schizophrenia Drug Fails in Phase II Trials

AbbVie reported failures in two phase II trials (EMPOWER-1 and EMPOWER-2) for emraclidine, a candidate for schizophrenia treatment. The studies aimed to demonstrate a statistically significant improvement over placebo in the Positive and Negative Syndrome Scale (PANSS) total score after six weeks. AbbVie had acquired emraclidine as part of its $8.7 billion purchase of Cerevel earlier this year, making it a key part of AbbVie’s strategy. Following the announcement, AbbVie’s stock price fell.

FDA Grants Breakthrough Designation for J&J’s Nipocalimab

The FDA awarded Breakthrough Therapy Designation to J&J’s nipocalimab, aimed at treating moderate-to-severe Sjögren’s disease, a condition lacking approved advanced therapies. This designation followed data from the phase II DAHLIAS study. Nipocalimab is under investigation for several rare diseases driven by autoantibodies.

Merck Secures Rights to Innovative Cancer Treatment

Merck has entered an agreement to acquire exclusive global rights to LM-299, an investigative anti-PD-1/VEGF bispecific antibody, from the Chinese biotech firm LaNova Medicines. The deal involves an upfront payment of $588 million, with potential milestone payments totaling up to $2.7 billion. LM-299 is currently in phase I studies in China, and the transaction is expected to conclude in the fourth quarter of 2024.

In a notable development, Summit Therapeutics recently announced that its partnered PD-1/VEGF inhibitor, ivonescimab, outperformed Merck’s well-known PD-L1 inhibitor, Keytruda, in a head-to-head study for lung cancer. Both LM-299 and ivonescimab operate via similar mechanisms.

The NYSE ARCA Pharmaceutical Index decreased by 3.64% over the last five trading days.

Large Cap Pharmaceuticals Industry 5YR % Return

Large Cap Pharmaceuticals Industry 5YR % Return

Below is a performance summary of the eight major stocks over the last five trading sessions.

Image Source: Zacks Investment Research