December 12, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Prior to the U.S. presidential election, the biopharma industry was concerned over Hillary Clinton’s calls for regulations over drug pricing. Seemingly, the industry was at least mildly relieved when Donald Trump won the election, as he had little to say during the campaign about drug pricing. However, in the Time magazine “Person of the Year” cover story, President-elect Trump threw a wrench into the gears, saying, “I’m going to bring down drug prices. I don’t like what has happened with drug prices.”
John Persinos, writing for TheStreet, takes a look at three biotech companies that may be immune to Trump’s unpredictable threats.
1. AbbVie
The dominant player in arthritis, chronic plaque psoriasis, Crohn’s disease and rheumatoid arthritis with Humira, is the focus of concerns because the drug lost its patent protection this month in the U.S. and in October 2018 in Europe. However, Persinos notes that AbbVie has been busy filing more patents and lawsuits to fend off competition and delay biosimilar launches, which at the very least appear to be giving the company some breathing room. Those new patents expire between 2022 and 2034.
It also has Imbruvica, to treat chronic lymphocytic leukemia, and Viekira Pak to treat chronic hepatitis. In April, AbbVie acquired Stemcentrx for $5.8 billion. As part of that deal, it picked up the company’s lead product, rovalpituzumab tesirine (Rova-T), which is in clinical trials for small cell lung cancer (SCLC). The company is currently partnering with Bristol-Myers Squibb on combinations for SCLC with Bristol-Myers’ Opdivo and Opdivo + Yervoy in combinations with Rova-T.
AbbVie is currently trading for $62.06. Persinos points out that the analyst consensus for the company’s one-year price target is $69.95.
2. Amgen
Amgen has shown positive data for its Phase III trial of Romosozumab for osteoporosis, which has the potential to be a blockbuster drug. It also provided data on its new cholesterol drug, Repatha, which not only cuts cholesterol levels, but more significantly shows that it lowers the risk of heart attacks, strokes and death.
“Cost cutting, improved free cash flow and a strong pipeline of new drugs should boost operating results at the company next year and beyond,” Persinos writes.
Amgen is currently trading for $143.58.
3. Novartis
Novartis has a strong presence in manic depression with Anafranil, and in osteoporosis with Reclast/Aclasta, which is approved in more than 60 countries. It’s also working hard to push into the cancer market. Persinos writes, “Switzerland-based Novartis may face falling revenue and earnings over the short term, amid lackluster sales of certain drugs and patent expirations. However, when it comes to cancer research, the drug maker is taking aggressive actions to find a cure, positioning it for growth over the long haul.”
Novartis is currently trading for $69.10.
Of course, any of these companies, or any companies, as demonstrated by the recent tweets by President-elect Trump about Boeing, which resulted in a temporary stock drop of $2, could be negatively or positively affected if they find themselves in the crosshairs of a Trump Twitter tirade, unless markets start to ignore his missives. Persinos writes, “However, just as Boeing is an inherently strong company and a compelling buy, so are certain undervalued biotech stocks. If history is any guide, political grandstanding about controlling drug prices will all come to nothing, especially in a Trump administration that is already shaping up to be severely anti-regulatory.”
