10 Non-COVID News Updates To Listen For In Second Quarter Reporting

Biopharma's remarkable rush to address the global health crisis posed by the COVID-19 pandemic, as well as the impact of the virus on bottom lines, will be a central theme the upcoming second quarter sales and earnings reporting season – with investors and the public particularly keen to hear about the trajectory or commercial prospects for treatments or vaccines for COVID-19. But big pharma is a big business, and there are plenty of other updates worth listening for when second quarter earnings kick off on 16 July with Johnson & Johnson.

1. US Unemployment Poses New Challenge For Pharma

A new long-term risk for the pharmaceutical industry is looming on the horizon if US unemployment and a corresponding loss of private health insurance persists. Drug makers are starting to think about how high rates of US unemployment could impact their 2021 financial forecasts, as reimbursement could shift from the more profitable private payers to Medicaid. (Also see "US Unemployment Looms As A Threat To Pharma, But More Impact In 2021" - Scrip, 8 May, 2020.) Some drugs are more exposed to the risk than others. Medicaid reimburses drugs differently than employer-based private health insurance and requires inflationary rebates that particularly impact larger, more mature franchises. While the US unemployment rate improved in June to 11.1%, the COVID-19 pandemic is continuing to rage in the country, which is expected to result in further economic uncertainty. A study by the consumer advocacy group Families USA released in July estimated that 5.4 million American workers lost their health insurance between February and May.

2. Tackling Industry's Diversity Challenge

A summer of protests over racial inequality and police brutality in the US has put the issue of diversity front and center – and shone a spotlight on the industry's lack of it. Corporate America has found itself reevaluating how it can bridge the divide in its top leadership ranks. Merck & Co., Inc. CEO Ken Frazier, an African American, has been refreshingly outspoken about his experience growing up as a black person in America in recent public commentary, talking also about the breaks he got that led him on a path to become the CEO of a top pharma company and his efforts to improve diversity at Merck. During an interview with Harvard Business School professor Tsedal Neeley posted online 13 July, Frazier noted that 30% of the firm’s senior management team is African American, but acknowledged that fell dramatically for the rest of the company. Industry leaders need to bring forward action items to improve pharma's weak diversity track record and create an environment of inclusion. The topic was a popular one at the BIO virtual meeting in June. (Also see "Leading A Diverse Company: Biopharma Executives Offer Ways Forward" - Scrip, 12 Jun, 2020.) The biotechnology trade group has followed through on its positive messages with action, hiring Michelle McMurray-Heath, an African American woman, as its next CEO. (Also see "BIO’s New CEO, Michelle McMurry-Heath, Aims To ‘Change The Dialogue’ Around Science" - Pink Sheet, 14 May, 2020.)

3. GSK Bracing For A Shingrix Slowdown

GlaxoSmithKline plc warned investors in April that the second quarter could be a challenging one for Shingrix, its fast-growing vaccine for shingles. Shingrix generated strong sales in the first quarter, £674m ($805.3m), representing 79% growth year-over-year, and has become a big growth-driver for the company. However, vaccines generally took a hit toward the end of the first quarter and into the second quarter as patients sat out non-essential doctor visits amid the pandemic, and GSK said Shingrix prescriptions were impacted. (Also see "GSK Braces For A Hit To Its Vaccines Business Despite A Strong First Quarter" - Scrip, 29 Apr, 2020.) Now, investors will find out how big the hit was in the second quarter and if the trend has persisted. GSK maintained its 2020 guidance after the first quarter, and Shingrix is a valuable component of it.

4. Roche: Stemming The Tide Of Biosimilars

Roche Holding AG managed to generate strong pharmaceutical growth in the first quarter despite the entry of biosimilars to several of its big blockbusters in the US. Global pharmaceutical division sales grew 7% and US pharma sales grew 3% despite the launches of biosimilar versions of Herceptin (trastuzumab), Rituxan (rituximab) and Avastin (bevacizumab). New growth-drivers like Ocrevus (ocrelizumab) and Hemlibra (emicizumab) offset declines – and investors want to know if that trend will continue at the level Roche has forecast. The Swiss pharma has guided investors to expect a more than $4bn hit this year from biosimilars. (Also see "Roche Reveals Impact Of Multisource Biosimilar Competition" - Generics Bulletin, 23 Apr, 2020.) Biosimilar manufacturers on the other hand – companies like Amgen, Inc. and Pfizer Inc. – are reporting positively on the early launch, suggesting Roche will not hold off large-scale brand erosion long-term. (Also see "US Biosimilars Market Is On Solid Footing, 10 Years In" - Scrip, 9 Jun, 2020.)

5. Novartis Launches Slipping?

Novartis AG has an ambitious lineup of new launches that are expected to drive near-term growth, but some have gotten off to a slow start, and the market for new products is facing a particularly daunting environment thanks to COVID-19. Beovu (brolucizumab) was approved by the US Food and Drug Administration in October for wet age-related macular degeneration, but ran into a safety snag, which has impacted the launch, especially given the already competitive category. (Also see "Novartis’s Beovu Launch Clouded By Safety Worries " - Scrip, 25 Feb, 2020.) Beovu generated $68m in the first quarter, and labeling was updated in June with new information on risk of endophthalmitis and retinal detachment.

The sickle cell disease drug Adakveo (crizanlizumab) launched last year, and while it was expected to be a slow ramp, it only generated $15m in the first quarter. Mayzent (siponimod) for multiple sclerosis also got off to a slow launch, generating $30m in the first quarter, after nearly a full year on the market. (Also see "FDA Backs Novartis MS Pill Mayzent With Broad Label" - Scrip, 27 Mar, 2019.) In addition to these launches, Novartis has also committed to turning around the launch of the dry eye drug Xiidra (lifitegrast), which it acquired last year from  Takeda Pharmaceuticals International GmbH for $3.4bn. (Also see "Novartis Delighted With Xiidra Deal Despite Eye-Watering Price" - Scrip, 9 May, 2019.) Another drug that Novartis has big commercial expectations for – ofatumumab for multiple sclerosis – has been delayed at the FDA by three months until September. (Also see "Novartis’s MS Franchise Setback For Ofatumumab In US" - Scrip, 3 Jun, 2020.) Investors will be eager for an update on how Novartis' new products are tracking as the year moves on.

6. The Blockbuster Potential Of Pfizer's Vyndaqel/Vyndamax

To the surprise of investors, Pfizer Inc.'s new cardiomyopathy drug Vyndaqel/Vyndamax (tafamidis) is in shooting range of becoming a blockbuster drug its first full year on the market. The trajectory of the drug in the second quarter – and particularly the level of impact on new prescriptions from stay-at-home orders related to COVID-19 – will impact whether or not it can reach blockbuster status this year.

Vyndaqel/Vyndamax has been one bright spot for Pfizer in a transition year in which it is cycling out of the impact of Lyrica (pregabalin) to generics last year and spinning out its Upjohn established products business. The franchise continued its strong trajectory in the first quarter, generating $231m, but Pfizer said it expected a slowdown in the second quarter due to COVID-19. (Also see "Pfizer Q1: Headwinds And Tailwinds From COVID-19" - Scrip, 28 Apr, 2020.) The amount of the impact will become clearer when Pfizer reports earnings on 28 July. Since last quarter, Pfizer has become a frontrunner in the race to bring a vaccine to market for COVID-19 and initiated a Phase III trial, topics that will surely dominate the company's second quarter call.

7. Viatris Merger Poised To Close

Mylan N.V. and Pfizer's Upjohn established products business are marching closer to the closing of a merger that will result in the creation of a new company called Viatris, but the timing remains uncertain. Earlier this year, the companies pushed back the timeframe for closing the deal until October because of delays caused by COVID-19. The big requirement outstanding is approval by the US Federal Trade Commission. The European Commission has already granted its blessing with some divestiture requirements, and Mylan shareholders approved the transaction in June. (Also see "Mylan Shareholders Say Yes To Upjohn Merger" - Generics Bulletin, 1 Jul, 2020.) Any updates on the timeline will be closely watched by investors because the merger will need to remain on track for Mylan and Pfizer to move forward with their business plans.

8. For Biogen, Good News And Bad News

Biogen, Inc. has experienced two big catalysts since the company reported its first quarter results. The company lost an important patent battle with Mylan for its blockbuster multiple sclerosis drug Tecfidera (the bad news), but it finally completed the submission of the high-profile Alzheimer's candidate aducanumab with the FDA (the good news). Investors will be eager for updates about what each of the events could mean for the company in 2021.

A potential launch of a generic Tecfidera (dimethyl fumarate) entry earlier than expected would be a painful blow for Biogen, which gets one-third of its revenues from the product. (Also see "Biogen's Tecfidera Future Uncertain After Patent Challenge Loss To Mylan" - Scrip, 18 Jun, 2020.)Uncertainty around the future of Tecfidera also puts more pressure on the launch success of Vumerity (diroximel fumarate), a new formulation that has so far gotten off to a slow start. At the same time, the opportunity for Biogen to bring the first disease-altering medicine for Alzheimer's to market has some investors enthusiastic on the stock, despite a lot of questions about the data. (Also see "Biogen/Eisai Hit ‘Send’ On High Stakes BLA For Aducanumab In Alzheimer’s Disease" - Scrip, 8 Jul, 2020.) Any commentary from management about the FDA's current thinking on the application will be gobbled up by investors and chewed over on Twitter.

9. Keeping An Eye On HER2-Positive Breast Cancer Drugs

It is still early days for two new drugs for HER2-positive breast cancer, AstraZeneca PLC/Daiichi Sankyo Co., Ltd.'s antibody drug conjugate Enhertu (fam-trastuzumab-deruxtecan) and Seattle Genetics, Inc.s' tyrosine kinase inhibitor Tukysa (tucatinib), but the drugs have significant commercial potential and the companies are each trying to carve space out of the market and expand. Enhertu had a small head start with an approval by the US FDA late last year, but Tukysa was approved in April, four months ahead of the user fee date. (Also see "Seattle Genetics Win Early US FDA Approval For Tukysa, Plans Rapid Launch" - Scrip, 17 Apr, 2020.)Both drugs have shown impressive early efficacy in heavily treated advanced or metastatic HER2-positive breast cancer patients, including for Tukysa in patients with brain metastases. It will be interesting to see how the early launches are progressing, especially with two products competing for share in the late-stage setting. In its first quarter on the market, AstraZeneca reported Enhertu generated $30m in sales, with about 1,000 patients treated.

10. Merck's Deal Blitz

Merck & Co. has been on a deal-making spree as it looks for long-term opportunities to expand beyond its immuno-oncology blockbuster Keytruda (pembrolizumab), and updates on the company's development plans for some of its newest projects will be on investor radars. So will the company's thinking on how much more deal-making it will undertake after Merck acquired three oncology companies last year. In May, the company jumped into the COVID-19 space, with an eye on developing a vaccine via the acquisition of Themis Bioscience GmbH, as well as an antiviral through an alliance with Ridgeback Biotherapeutics LP. (Also see "Latecomer Merck Enters Coronavirus Vaccine Field With Themis Acquisition" - Scrip, 26 May, 2020.) In June, Merck partnered with Yumanity Therapeutics Inc. on preclinical candidates for neurodegenerative diseases. (Also see "Deal Watch: Merck Gets Rights To Yumanity’s Preclinical ALS, FTLD Candidates" - Scrip, 24 Jun, 2020.) In July, Merck paid $425m for rights to new gene-regulating therapies from Foghorn Therapeutics Inc.. (Also see "Merck To Pay Up To $425m For Foghorn’s Gene Regulation Therapies" - Scrip, 9 Jul, 2020.) Merck's partnering team has been keeping busy even in the midst of virtual deal-making. Investors will want to know how these acquisitions advance Merck’s strategy, and whether the deal spree will continue.