July 1, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Stock prices can take a hammering based on events that have no particular relevance to the actual value of the company. Between the presidential election and the recent Brexit vote for the UK, there has been plenty of instability, as well as the volatility in the Chinese markets. George Budwell, writing for The Motley Fool, takes a look at three biopharma companies whose stocks have taken a hit, but might be worth investing in for the long run.
AstraZeneca , headquartered in the UK, has been hit by the loss of patent protection for a number of its top products, including Nexium for acid reflux. Sales are projected to drop 1.3 percent this year and 2.5 percent next year. Then, after the Brexit vote, pound sterling lost significant value.
On the other hand, AstraZeneca reports in dollars and the majority of its overseas earnings are in currencies that are improving versus sterling.
The company’s strategy for the patent expirations is to move toward the immuno-oncology space, projecting a return to growth by 2018 and improved annual revenues by 2023 of 86 percent. “The feasibility of Astra’s lofty long-term guidance should get its first real test with the company’s key regulatory filings for its programmed death-ligand 1, durvalumab, in head and neck cancer and lung cancer next year,” Budwell writes. “Of course, experimental-stage drugs are never a sure bet, and durvalumab has run into some bumps along the way that may delay the drug’s expected regulatory time frame.”
Bothell, Washington-based Seattle Genetics has been cash-flow negative for almost five years since its drug, Adcentris, was approved. But the company is expected to release to-line data soon for the drug in cutaneous T-cell lymphoma, and data from other trials with the drug for front-line classical Hodgkin lymphoma and front-line mature T-cell lymphoma in the next two years. That could double the number of approved indications for the product.
The company also has a strong pipeline of oncology drugs and about $600 million in cash. Of its pipeline, Budwell writes, “As an example, the experimental ADC vadastuximab talirine (SGN-CD33A; 33A), indicated as a front-line treatment for patients with acute myeloid leukemia, has garnered a significant amount of attention lately because of its 41 percent complete remission rate in a small, early-stage study that prompted the company to push the drug into a pivotal-stage trial.”
Israel’s Teva Pharmaceuticals is finally wrapping up its acquisition of Dublin-based Allergan ’s generic drug business, which includes more than a thousand products. The two companies have been in the process of selling off some of those products in order to meet Federal Trade Commission antitrust requirements, including a deal announced this week where Mayne Pharma Group acquired 42 drugs for $652 million.
Teva is projecting an increase of 12.5 percent in its top line next year, although Budwell suggests there are concerns about the company’s multiple-sclerosis drug, Copaxone. “So, while the details might be somewhat fuzzy at this stage,” Budwell writes, “the main takeaway is that Teva should be in a much stronger position from a revenue standpoint after this deal closes, and the optimistic outlook suggests that Teva may even transform into one of the fastest-growing healthcare stocks as early as next year.”
