J.P. Morgan Healthcare Conference Notes #2: Sun is Out but Trump Storm Hits Biotech Stocks

Biotech Rally Snuffed Out Again By Tough Trump Talk  on Drug Pricing 

Any market optimism from the Conference about new product pipelines, M&A and “read-outs” on clinical data was chilled by Trump’s idea to let Medicare negotiate for better drug prices a perennial idea by DEMs in previous years. During the Trump news conference at about 11:35a EST the IBB went into free fall and hit lows of about $275 before closing at $277.94 down 3%.The XLV Healthcare SPDR was down 1% to $70.78.

Nonetheless there were winners today. As we reported yesterday Merck (MRK) partnered with Incyte (INCY) in a Keytruda deal for a combo drug and the Merck stock was up 2.85%.to $61.63 close to its all time high. With two combo medicines for Keytruda in lung cancer Merck leaps forward ahead of competitors. BristolMyers (BMY ) was down 5.3%. All large cap biotechs were in the red today.

Abbvie (ABBV) was down 4.57% despite an excellent update by CEO Richard Gonzalez on its pipeline in oncology and immunology with 20 new molecules and 200 studies for 14 diseases. Imbruvica is a core growth product and with several new indications like AML and MM.Late stage products include ABT-494, a JAK-1 selective inhibitor for RA and other autoimmune diseases, Risankizumab for psoriasis, Empliciti for Multiple Myeloma, Velaparib for breast, ovarian and lung cancer, Venclexta a Bcl-2 inhibitor for CLL and MM and Next Gen HCV. Humira market share has been maintained. Double digit revenue growth is forecast with EPS growth of 13-15%. Dividend will be maintained.

Array Biopharma (ARRY) momentum slowed today during the mid-day selloff. The stock is still up 42.5% over three months. Revenue estimates are $136M for 2017. The Company presented three lead oncology programs: Binimetinab (MEK inhibitor) for melanoma and colorectal, Encorafenib (BRAF kinase inhibitor) for melanoma and colorectal and Selumetinib (MEK inhibitor) for thyroid cancer. The PDUFA date for Binitimetinib for NRAS melanomais June 30. Partners for these products are Novartis and Astra Zeneca. The existing market for these products is over $1B.

It may be difficult to extract meaningful stock information until the political and macro rhetoric settles down. Until we see execution of actual Trump administration policies beginning in late January and February we will not know realities of Trump tweets and comments.

As of 12N trading here are green stocks in our universe BIIB,INCY,MRK, SGEN, TSRO.

MRK Merck & Co., Inc. daily Stock Chart

 

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