Pharma Stock Roundup: EU Nod for PFE's Hympavzi, NVS Ups Sales View

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This week Novartis NVS upgraded its mid-term sales growth guidance. The European Commission approved Pfizer’s PFE hemophilia drug Hympavzi (marstacimab). AstraZeneca’s AZN Tagrisso was recommended for approval in the EU for expanded use in EGFR-mutated lung cancer. J&J JNJ and Lilly LLY announced positive data from mid/late-stage studies.

Here's a recap of the week’s most important stories.

Novartis Raises Mid-Term Sales Outlook

Novartis raised its mid-term sales growth guidance by increasing its CAGR target for the 2023-2028 period from 5% to 6%. Using 2024 as the base year, Novartis expects its sales to witness a CAGR of 5% during 2024-2029. The company’s guidance increase was backed by higher sales expectations for key drugs like Pluvicto, Kesimpta, Kisqali, Cosentyx and Leqvio coupled with some upcoming launches. According to Novartis, eight of its drugs have peak sales potential between $3 billion and $8 billion. Additionally, it said that there are 30 candidates in its pipeline, which should help continue mid-single-digit sales growth beyond 2029. NVS remains on track to deliver core operating income margin of more than 40% by 2027.

EU Approval for Pfizer’s Hemophilia Gene Therapy Hympavzi

The European Commission granted marketing authorization to Pfizer’s anti-TFPI inhibitor Hympavzi (marstacimab) for the treatment of hemophilia A and B. The drug will be marketed as a prophylactic treatment to prevent or reduce the frequency of bleeding episodes in adults and adolescents with hemophilia A or B without inhibitors. Hympavzi’s approval was based on positive data from the phase III BASIS study. It was approved in the United States by the FDA last month.

Hympavzi is Pfizer’s second hemophilia treatment to be approved this year. Beqvez/ Durveqtix (fidanacogene elaparvovec), a one-time gene therapy for hemophilia B, was approved by the FDA in April 2024 while it is still under review in the EU.

J&J’s Icotrokinra Meets Goals in Pivotal Plaque Psoriasis Study

J&J pivotal phase III study evaluating icotrokinra (JNJ-2113) for moderate to severe plaque psoriasis (PsO) met its co-primary endpoints at week 16. The ICONIC-LEAD study’s primary endpoints were Psoriasis Area and Severity Index (PASI) 90 and Investigator’s Global Assessment (IGA) of 0/1 response at week 16. Top-line data from the study showed that at week 16, 64.7% of adult and adolescent patients treated with icotrokinra achieved clear or almost clear skin (IGA 0/1) and 49.6% achieved PASI 90.

The positive responses continued to improve through week 24. At week 24, 74% achieved clear or almost clear skin (IGA 0/1), and 64.9% achieved PASI 90. J&J also said that another phase III study, ICONIC-TOTAL, which evaluated once-daily icotrokinra, met the primary endpoint of IGA of 0/1 at week 16 compared to placebo.

CHMP Nod to AZN’s Tagrisso for Expanded Use in NSCLC

AstraZeneca announced that the Committee for Medicinal Products for Human Use (“CHMP”) of the European Medicines Agency (“EMA”) has recommended approval of Tagrisso (osimertinib) for treating unresectable EGFR-mutated non-small cell lung cancer (NSCLC) following treatment with platinum-based chemoradiation therapy. The CHMP recommended Tagrisso for the treatment of EGFRm patients whose tumors have exon 19 deletions or exon 21 (L858R) substitution mutations. The CHMP’s recommendation was based on data from the phase III LAURA study. The FDA approved Tagrisso for similar use in September.

Currently, Tagrisso is approved in several countries as a monotherapy for the first-line treatment of EFGR-mutated NSCLC, locally advanced or metastatic EGFR T790M mutation-positive NSCLC and adjuvant treatment of early-stage EGFRm NSCLC. Tagrisso is also approved in combination with chemotherapy for frontline EGFR-mutated NSCLC based on data from the FLAURA2 study in the United States and some other countries.

LLY Oral Cholesterol Drug Lowers Lipoprotein Levels in Phase II

Lilly’s oral, once-daily cholesterol-lowering candidate muvalaplin reduced lipoprotein(a) or Lp(a) levels in adults with a high risk of cardiovascular events in a 12-week phase II study.

In the study, muvalaplin led to a significant reduction in elevated Lp(a) levels compared to placebo, meeting the study’s primary endpoint of percent change in Lp(a) from baseline to week 12. Using an intact Lp(a) assay, the highest dose (240 mg) of muvalaplin reduced Lp(a) levels by 85.8%. Muvalaplin also met secondary endpoints for all three doses. Muvalaplin has a novel mechanism of action. It disrupts the interaction between apolipoprotein(a) and apolipoprotein(b), which prevents the formation of Lp(a). Apolipoprotein(a) is a key component of Lp(a), which increases the risk of cardiovascular events.

The NYSE ARCA Pharmaceutical Index declined 1.1% in the past 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 previous five trading sessions.

In the last five trading sessions, Lilly declined the most (4.6%), while J&J rose the most (2.4%).

In the past six months, while AbbVie rose the most (8.5%), Novo Nordisk declined the most (24.3%).

(See the last pharma stock roundup here: AZN, BAYRY’s Earnings, ABBV’s Pipeline Setback)

What's Next in the Pharma World?

Watch this space for regular pipeline and regulatory updates next week.

AstraZeneca, Lilly, Merck and J&J have a Zacks Rank #3 (Hold) each, while Pfizer has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Moderna Stock Jumps Following Bullish Sales View at Healthcare Conference

Investopedia

KEY TAKEAWAYS

Moderna shares surged further Friday, a day after a senior executive made bullish comments at a healthcare conference about the vaccine maker's pipeline and cash position.
Moderna expects to become self-funding by 2028, head of investor relations Lavina Talukdar said at the Jefferies London Healthcare Conference.
Moderna stock is down almost 60% this year, however, and—like other vaccine makers—was hit recently by President-elect Donald Trump's nomination of vaccine sceptic Robert F. Kennedy Jr. to head the Department of Health and Human Services (HHS).

Moderna (MRNA) shares surged further Friday, a day after a senior executive made bullish comments at a healthcare conference about the vaccine maker's pipeline and cash position.

Moderna head of investor relations Lavina Talukdar said at the Jefferies London Healthcare Conference on Thursday that the Cambridge, Mass.-based company sees 2028 as the year by which its revenue can sustain its business.

"We expect to end the year with $9 billion in cash," Talukdar said, according to a transcript provided by AlphaSense. "Our investment rate ... is declining each year going forward. And we anticipate that $9 billion will have us launching 10 products over the next three years that will start to contribute to revenue a year after approval."

Moderna shares recently were up 7% Friday afternoon and have added 11% in the last two sessions. Still, Moderna shares are down almost 60% this year amid waning COVID-19 vaccines demand.

Moderna Exec Downplays RFK Jr. Nomination To Be HHS Head

Talukdar downplayed the nomination of vaccine skeptic Robert F. Kennedy Jr. to head the Department of Health and Human Services (HHS) by President-elect Donald Trump, which had hammered pharma companies like Moderna, Pfizer (PFE) and Eli Lilly (LLY) last Friday.

"If you listen to where his stance is on vaccines most recently, so starting— dating from 2022 and as recently as shortly after the election results, he is a lot more moderate than I would have thought," she said.

Moderna Recently Swung To Surprise Q3 Profit

Earlier this month, the company swung to a surprise profit and topped revenue estimates for the third quarter following the launch of its updated COVID-19 vaccine earlier this year.

In September, the company said it was launching a plan to cut its research and development (R&D) budget by $1.1 billion over the next three years as it focuses on getting 10 products like cancer treatments and vaccines for several respiratory illnesses approved by the Food and Drug Administration (FDA).

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Latest Zantac Trial Against Boehringer Ingelheim Ends With Hung Jury

Reuters

Pfizer

+2.07%

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Swiss Market Index Closes Higher; Pierer Mobility Shares Jump

MT Newswires

Novartis AG

+0.41%

Swiss stocks ended the trading week in the green as markets assess the latest private sector data releases in Europe.

Amid another quiet day of economic news locally, the Swiss Market Index was up 1.08% on Friday's close.

In the euro area, the HCOB Flash Eurozone Composite PMI Output Index edged down to a 10-month low of 48.1 in November from 50 in October, flash data from S&P Global and Hamburg Commercial Bank showed. The latest reading indicates that business activity in the bloc slipped back to contraction territory, with Germany and France seeing a decline in business activity.

"Hard data has actually come in better than expected recently - so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it's the latter," ING said. "The November PMI is another wake-up call for eurozone policymakers that the economy continues to show signs of weakness ... But don't be mistaken, the underlying message is in line with GDP growth slowing markedly. We expect the fourth quarter to show stagnation with 0% growth."

In corporate news, Pierer Mobility's shares surged 15.69% amid chatter that Mark Mateschitz, who holds a substantial interest in energy drink company Red Bull, is looking to acquire a stake in the Switzerland-listed motorcycle manufacturer and its KTM subsidiary unit. Pierer Mobility denied the media reports, saying there are no talks regarding such a transaction.

Meanwhile, Novartis purchased US-based biotechnology company Kate Therapeutics, which is focused on developing gene therapies for neuromuscular diseases in a deal worth up to $1.1 billion. The acquisition is expected to bolster the Swiss drugmaker's efforts to advance gene therapies for patients. The stock closed 2.32% higher.

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Novo Nordisk Plunges 25% in 3 Months: How to Play the Stock

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Novo Nordisk NVO shares have lost 25.1% in the past three months compared with the industry’s decline of 17.7%. The company has also underperformed the sector and the S&P 500 during the same time frame, as seen in the chart below. The stock is currently trading below both its 50 and 200-day moving averages.

NVO Stock Underperforms the Industry, Sector & the S&P 500

Novo Nordisk's stock price primarily dipped due to disappointing third-quarter results announced earlier this month. NVO missed estimates for both earnings and revenues. This was mainly because Diabetes and Obesity care sales failed to meet investor expectations. Subsequently, management lowered its expectations for both sales and operating profit growth.

The company is struggling to meet the heavy demand for its semaglutide (GLP-1 agonist) drugs, particularly Ozempic (for type II diabetes or T2D) and Wegovy (for weight management), in the United States as well as international markets. Eli Lilly LLY, whose tirzepatide medicines, diabetes drug Mounjaro and weight loss medicine, Zepbound, are primary competitors to NVO’s semaglutide drugs has been far more successful in increasing the production capacity of its drugs.

In September, U.S. Senator Bernie Sanders criticized Novo Nordisk for charging high prices for its semaglutide medicines in the United States compared to countries like Canada, Denmark and Germany, which also contributed to the stock price drop.

However, the company’s strong fundamentals and the untapped nature of the obesity market make us believe that the setback is temporary. Long-term investors are advised not to be spooked by the current declining trend of the stock price as strong demand for Ozempic and Wegovy, coupled with NVO’s efforts to expand the drugs’ indications, exhibit significant potential in the future. Shares of Novo Nordisk have surged more than 260% in the past five years over the past five years. Total revenues jumped 90.3% on a reported basis, while the net profit margin consistently exceeded 31%, reaching a five-year high of 36% in 2023.

Semaglutide has been the key driver of Novo Nordisk’s growth in the past few years.

Let’s dig deeper and understand the company’s strengths and weaknesses in greater detail to understand how to play the stock after the recent price drop.

Semaglutide - NVO’s Growth Engine

Novo Nordisk enjoys around 54% value market share in the GLP-1 segment, primarily on the back of its semaglutide medicines.

Wegovy is a significant contributor to Novo Nordisk's revenues. Despite supply challenges limiting the company’s ability to meet investor sales expectations, Wegovy continues to show strong prescription growth, driving higher revenues and profits. The company is making substantial investments to expand production capacity to address rising demand. Additionally, Ozempic sales are contributing positively to overall revenues.

However, several companies like Amgen AMGN and Viking Therapeutics VKTX are making rapid progress in the development of GLP-1-based candidates in their clinical pipeline. These can pose strong competition to NVO in the future.

NVO’s Diversification Plans to Treat Other Indications

Novo Nordisk is actively exploring additional uses for semaglutide, including evaluating Wegovy for heart failure in diabetes and obesity patients, and Ozempic as a treatment for T2D and chronic kidney disease. The company is also studying semaglutide for nonalcoholic steatohepatitis. These efforts could expand the eligible patient base for the drug, pending approval.

Wegovy’s label was expanded in the United States in March 2024 to reduce the risk of serious heart problems in obese/overweight adults, which has been boosting its sales. The drug’s label was also recently expanded in the EU for the same indication. The company is also looking to expand the drug’s label to treat patients with obesity-related heart failure with preserved ejection fraction in the EU and U.S. markets. Additionally, a late-stage cardiovascular outcomes study, evaluating oral semaglutide (Rybelsus) as an adjunct to the standard of care for the prevention of serious heart problems in T2D patients, recently met its primary endpoint.

Beyond diabetes and obesity, Novo Nordisk is diversifying its portfolio by developing Mim8 for hemophilia A, with plans to submit it for regulatory approval by the end of 2024. The company also recently received a positive opinion from the advisory committee of the regulatory body in the EU, recommending the approval of Alhemo (concizumab) for haemophilia A or B with inhibitors. A final decision is expected by 2024-end. Alhemo is not approved in the United States.

NVO’s Premium Valuation, Mixed Estimates Movement

Novo Nordisk is trading at a premium to the industry, as seen in the chart below. Going by the price/earnings ratio, the company’s shares currently trade at 26.01 forward earnings, which is more than 16.35 for the industry.

NVO Stock Valuation

Earnings estimates for 2024 have increased from $3 to $3.24 per share over the past 30 days. During the same time frame, Novo Nordisk’s 2025 earnings estimates have decreased from $4.14 to $4.03 per share.

NVO Estimate Movement

The stock’s return on equity on a trailing 12-month basis is 86.32%, which is higher than 31.88% for the large drugmaker industry, as seen in the chart below.

NVO Return on Equity

Stay Invested in NVO Stock?

Novo Nordisk, currently carrying a Zacks Rank #3 (Hold), has boosted shareholder value in the past five years. Although the poor financial performance in the third quarter caused the stock price to slide, we remain confident that NVO is a good stock to retain. Its growing market share and profit margins suggest that the company has the potential for further growth in the years to come, primarily driven by increased sales of Wegovy and Ozempic. Though not as successful as its arch-rival, Lilly, yet, NVO is heavily investing in manufacturing to meet the rising demand for Wegovy.

Furthermore, the company is looking to expand the indications for Wegovy, Ozempic and Rybelsus to increase patient eligibility, which, if approved, would further boost revenues. Novo Nordisk is also developing new obesity treatments to stay competitive, especially in the U.S. market, which holds significant growth potential.

Thus, we can conclude that the temporary decline in the stock price should not bother long-term investors. In fact, such opportunities make for a lucrative entry point for potential new long-term investors. Investors who already own the stock should continue to hold it for long-term gains.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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