Latest / BioSpace / Rumors of biggest pharma merger ever drop amid Q2 earnings, contentious FDA adcomms
Transcript
- Jef: Hello, and welcome to Biospaces the Weekly. I'm your host, Jeff Axt. And this week certainly started off with the bang. We learned that Bristol Meyer Squib and AstraZeneca are engaged in talks of a potential mega merger. Analysts say the deal is unlikely to go through, but if it did, the two giants would combine into the biggest pharma company of all time. Otherwise, this week has been busy with more second quarter earnings, so we'll have updates for you today on Pfizer and Merck. And finally, we'll recap those FDA adcoms from last week. Capricor therapeutics found itself arguing over statistical analyses, and advisors ultimately voted against recommending the approval of its cell therapy for Duchesne muscular dystrophy cardiomyopathy. Replimune, meanwhile, got a vote in support for its immunotherapy for advanced melanoma. Let's get started. Hi guys, thank you for holding down the fort last week. How did y'all survive the Heather: Yeah. Jef: first week of the earnings hell period? gabby: Gosh. Heather: We survived. I Annalee Armstrong: We're here. gabby: We're doing it Heather: we're we're still here. I Jef: Good. Heather: I coined a new term called FDA Adcom's Hell Week. gabby: Mm-hmm. Jef: Right. That really layered on top Heather: yeah. Jef: of an already busy earnings week. You had a lot going on. Heather: Yes, Annalee Armstrong: Yeah. Thank you for coming back, Jeff. You didn't see our our like group chat and just run away and and book another vacation. Heather: yeah. Mm-hmm. Jef: Ha ha. well actually that's funny that you say that because I actually am leaving on another trip tomorrow. But this one Annalee Armstrong: Ooh. Jef: was this is a family Heather: Mm-hmm. Jef: wedding, couldn't get out of this one. I did see all the chatter and realize that you Annalee Armstrong: Yeah. Jef: guys definitely needed the support back home. I appreciate the warning when I was getting into that catch up that I had a lot to catch up on. Heather: Yeah. But as of Monday gabby: We're just glad you were here for Heather: you are chained to your desk, right? As of next Monday? Yeah. Okay. Okay. Jef: Yes, I will be back. No more vacations planned. Heather: heads up, I will be on vacation next week, so I will not be here. Jef: Enjoy that, you deserve that break. Heather: Thank you. Yeah, it's gonna be fun. gabby: Yeah, I think we all have some like kind of consecutive out of office, just like it's the summer vacation always. Annalee Armstrong: It always happens. Jef: I know it's a Heather: Yeah. Jef: rare week that all four of us are together here on this podcast. Heather: I'm actually gabby: Probably. Heather: excited that mine is a staycation. my best friend and her little daughter are coming to visit me and we're gonna go to the beach and we're gonna go to this fun farm that's around here to do a lot of lotta lots of kids stuff. Jef: That sounds awesome. Heather: Yeah. Jef: All right, well, before you take off, you have to fill us in Heather: Yeah. Jef: on some of what happened last week. so first intros. Heather, why don't you start us off? Heather: Sure. I am Heather Mackenzie, Senior Editor here at Biospace, and I put together Clinica Space, which hits your inboxes on Mondays. Jef: You and Gabby? gabby: And I'm Gabrielle Mason, senior editor, and I put together our weekly manufacturing brief, which goes out every Tuesday, and then our daily Gene Pool newsletter. Jef: And last but not least, Annalie. Annalee Armstrong: Yeah, I am Annalie Armstrong. I am senior editor at Biospace and I do the weekly Biofarm Executive newsletter, which hits your inboxes on Wednesday mornings. Jef: And once again, I'm Jeff Axt, Managing Editor. And with that, we'll dive in. I want to start, of course, with this potential mega merger. So we've got Bristol Meyer Squibb and AstraZeneca, both massive pharma companies in their own right. BMS has a current market cap of just over 130 billion. AstraZeneca is closer to 200 billion. As I said at the top, analysts don't think this massive deal is likely to go through in part because of anti competitive regulations. But if it did, it would create the largest pharma company of all time, worth about 400 billion. So BMS's stock rose on the news, AstraZeneca shares fell. So there's a lot to unpack here. Annalie, what can you tell us? Annalee Armstrong: Yeah, I have to say this was a pretty wild one and one that even got me working on a Sunday to write this up. so the Financial Times absolutely have to give hat tip to them. they reported on over the weekend that AstraZeneca and Bristol Meyer Squibb have reportedly held talks recently about a potential merger. analysts pretty universally panned this idea. You know, there's a lot of antitrust concerns that would come up with this. AstraZeneca's shares fell on Monday morning as investors digested the news. BMS, surprisingly, they were actually up, which I know Gabby has some more about. but this deal would undoubtedly face really serious antitrust review because they have competing products, particularly in oncology. If these two companies were to combine, they would have what analysts called the deepest bench in oncology in the world. so basically the biggest oncology drug company in in the world. but I think one really key piece of this deal that that analysts did say is that if it were to be successful, big if, it would actually it could actually like reset the entire biopharma deal environment. this first half has been very busy. There's been a ton of deals. but a mega merger of this kind, if it were to be successful, would actually signal to other companies that this kind of crazy transformative deal might actually be successful. so essentially, mega deals might beget more mega deals if we get this one. so with all that said, I really would love to see a company that is called AstraZeneca Bristol Meyer Squib, which is a real mouthful. Heather: Hmm. Annalee Armstrong: you know, both of these companies are are. have been formed and their names come from kind of similar similar major business combinations. So that name would really roll off the tongue. gabby: Yeah, what would that be? Jef: BMSA Z. gabby: Yeah, I was going to say A C BMS. Heather: A yeah. Jef: Right. Annalee Armstrong: Just like GSK, which used to be Glaxo and then Smith Klein, which Jeff was hunting down the detail of that deal earlier today. Jef: Yeah, that was twenty six years ago that one went down. And at that point, that did create the largest pharma company of of all time at that time, twenty six years ago. But yeah, no, I again very not set in stone, but exciting to talk about nonetheless because we haven't seen something like this in a a quarter of a century. gabby: Kind of what Annaly foreshadowed a little bit is there is kind of one pharma that it would probably see a bigger upside from this deal than the other, and that's BMS. so even though it's still just rumored, you know, analysts are speculating about the potential benefits and disadvantages of a merger. So both pharmas do face, looming patent clips. but BMS looks to gain a lot more. than what it seems like AstraZeneca would, largely because of its 2028 patent cliffs for blood thinner Eloquis and Immunotherapy Opdevo, which together account for half of BMS's 2025 global sales. so that was 48 billion in total revenue. So about half of that came from just those two drugs alone last year. analyst at William Blair said, quote, additional bolt-on acquisition. acquisitions may prove difficult to offset the decline of legacy products. And they wrote that in a Monday note highlighting, how a merger would create near-term opportunities for the pharma. Meanwhile, analysts at Lee Ring partners characterized the strategic and financial rationale underlying the potential deal as very mixed, especially for AstraZeneca. they cited AstraZeneca's, you know, strong pipeline and kind of organic growth outlook. Annalee Armstrong: Organic rope out of gabby: So if we were to pick a winner of who would come out on the upside of that deal, BMS definitely, which we can kind of see in their their stock movement. meanwhile, AstraZeneca's stock has been down about seven percent since the deal was well not it wasn't announced, since the speculations of the deal were announced. Jef: Right, Annalee Armstrong: Yeah. Jef: right. Annalee Armstrong: One other way that this deal could kind of change things is that analysts pointed out that this would kind of remove some commercial friction between particularly BMS's OpDivo and AstraZeneca's Infinzy. Right now, companies when they are testing oncology combinations, they tend to stick within their own pipelines. If these two combinations join or if these two companies joined, they could combine these medicines a lot more freely than they currently can in the clinic, which, could have you know, some maybe double doublet or triplet combination benefits that they could now test out a little easier. Heather: And for the rest of their pipeline too. pipelines. Like this could be really you know, we when it when I s when I hear mega oncology company, I I kinda just think, wouldn't that be great for patients? I mean, I know there's all the antitrust stuff, but but the patients come first, right? gabby: Yeah, antitrust stuff aside, which the analyst kind of said that would mostly involve Okdevo and Infinzi. otherwise analysts said that their portfolios are broadly complementary. Like there's not a ton of overlap besides in that IO space. So really would be interesting. They truly would it would be a mega merger of such a differentiated pipeline. Jef: Yeah, and maybe more combinations to come out of it. Heather: I guess they only I guess the only drawback there will be, you know, when when there's a really big giant, and this would be a super big giant, do other companies are they a little more gun shy about competing? And do they still have the same amount of momentum? Because that's also important for innovation. Jef: Absolutely. No, I again I really no idea if this one will ever come to fruition. Sounds like analysts think it won't, but it's just an interesting one to talk about. A fun thought experiment for this week, if nothing else. Well, let's move on to earnings. Of course, we are now in the second week of the height of Q two earnings. so this week we heard from a few companies and we're gonna focus right now on Pfizer and Merck. So let's get started with Pfizer, Annalie. Annalee Armstrong: Yes, I just got off the Pfizer call before jumping on this call this morning. so Pfizer's Earning Report started off with the announcement of another $2.5 billion in cost reductions that are going to now extend that ongoing program through 2029. they have been cutting costs since about October 2023 as they kind of see their COVID-19 revenues taper off. they were really pretty mum on the details here, although the release said that they would be paying out severance and investing in new digital technologies. we weren't able to get more details from them, but it'll be interesting to watch what exactly that means. Are we talking layoffs? Are we talking, you know, program cuts, like how are they using AI to replace some functions here? So we'll be keeping an eye on that. another key point on the call that I thought was really interesting is Pfizer CEO Albert Borla had some pretty pointed comments for analysts who asked if they should be allocating more money to MA. So Pfizer said that they have about $7 billion to play with right now. one analyst specifically asked if they could be contributing maybe less to the dividend and putting more towards MA Since there's been such a frenzy in the MA markets right now. Borla seemed to suggest that $7 billion was plenty. He said that they have made significant investments over the past five years. He pointed to MetSera and CGEN and said that they are executing on those programs at light speed, was his quote. Borla did, however, say that there's likely going to be a bolt-on deal of some kind. He pointed to immunology, oncology, or obesity as potential areas of investment. Jef: Yeah, I was just thinking about that Met Sarah deal when you were talking. So seven billion would have gotten them started in that bidding war, but it wouldn't have finished the job. So, you know, if let's hope, you know, these Bolton deals they're looking at now, they don't have any competition. Somebody like Novo coming out of the woodwork to steal out a s a company from underneath them. Annalee Armstrong: Yeah, for sure. And for comparison, we were just talking about BMS and AstraZeneca. Analysts said that both of those companies have thirty five billion dollars. Not enough to buy each other, but pretty significantly more cash than what Pfizer has on hand. gabby: Can always count on Jef: All right. gabby: big pharma to make, you know, billions seem small. Jef: Right exactly. and so let's move on to Merc now. Gabby, you covered them. gabby: Yeah, so over at Merck, the New Jersey pharma recorded pretty solid earnings for this quarter. Some of the biggest news to come from the call really revolved around the anti-TL 1A antibody called Tuliskobart, which delivered positive mid-stage results in a skin condition, but failed in a type of lung disease. So that drug was the centerpiece of Merck's almost $11 billion buyout of. Prometheus a few years ago and scored this June in a phase three ulcerative colitis trial. So now Merck, you know, kind of reported that the candidate was able to significantly reduce skin abscesses and inflammatory nodules In hydrogenitis suporativa, but it failed in a phase two study for interstitial lung disease associated with systemic sclerosis. So Merck is actually choosing to discontinue the HS study, though they didn't really share any data behind either the win or the miss. So a mixed bag there. Jef: Yeah, definitely. And, you know, we're always interested in seeing how those deals play out, talking about those millions going around. There's one that Pfizer could not afford right now. Could not buy another Prometheus at that that cost. So yeah, it sounds like it's still going okay for the asset overall. I did hear the the commentary that the miss wasn't an indication that was a bit of a stretch for it anyway. So I mean, I think they're staying the course with the the asset in UC and some of the more common inflammatory diseases. All right, well, we also covered, if you missed them, BMS, Abby, Biogen, Vertex, Moderna. Like I said, it's been Earnings Hell Week. So there's plenty more to check out on Biospace. And then of course we've got the two weight loss juggernauts coming up. We've got Novo Nordisk and Eli Lilly both reporting today, Wednesday. So stay tuned for those reports. But for now, we're gonna move on to the FTA, which honestly I think was perhaps the most exciting news that I missed while I was out last week. it was definitely a a regulatory showdown in both of those adcom meetings, one for a Capricorn and one for Replimoon. These were for two assets that had previously been rejected by the agency. So we were eagerly watching how it would play out. And especially for Capricor, it sounded really contentious. And I I know that Capricor itself was surprised the Adcom was even called in the first place. So then to see how it all went out or all played out, Heather, what can you tell us? Heather: Yes. Well it was yeah, so it was definitely not a positive meeting for Capricor. the FDA's advisors voted nine to three against Deremia Cell, which is the cell therapy they're developing for Deshayne cardiomyopathy. It was probably, I have to say, the most confusing adcom I've ever attended, well virtually attended. There was confusion between Capricor the FDA about which st statistical analysis plan the FDA should have reviewed. apparently the one that they did review, CEO Linda Marbain, in an interview last week, she compared it to your professor editing or I guess grading your your draft term paper. so so that was definitely a point of contention. And then the what the endpoint should have been. this has been a point of contention for a couple of years with this drug, because they were targeting DMD associated cardiomyopathy, but also the the primary endpoint for the Hope 3 trial was actually upper body strength. but then the adcom focused primarily on the cardiomyopathy, which was the secondary endpoint. both of which, by the way, Capricorn announced in December that the Deremaia cell hit. Jef: if you didn't Heather: So Jef: use that draft statistical analysis plan, right? That's where they didn't hit statistical significance was that first Heather: Yes. Jef: SAP. But then if you go with the updated statistical analysis plans, any of them, according to Linda Marbane, any of those, all of them yielded statistical significance. It was just that very first one that did not. Heather: Yeah, and that first draft SAP, that really set the tone for the entire the entire adcom. I really got drawn into this one. I I didn't get a lot else done that day. But so yeah, you know, I I spoke with Linda and and she didn't hold back. She never does. She's she's candor as her strong suit. she you know, she when asked about the possible legal action about the FDA's review of that SAP, she said, quote, I don't know. you know, she emphasized that she likes to collaborate, that she's a consensus builder. but she said that, you know, this is this is a partial paraphrase of a quote, but if the FDA really dig their heels in and they say there's no path forward for Jeremiah Cell, then they will look at strategic options, including pulling it out of the Duchenne space. I guess that means kind of looking at it more as a cardiomyopathy drug, and and yes, pursuing legal action. Jef: That would be something. Yeah. And you know, it was it's interesting too because I think there was a lot of optimism in the field going into these adcoms because we're under new FDA leadership and FDA the temporary FDA leaders we now have have really made a lot of effort to repair trust and rebuild you know, some of the trust that was broken under McCarry. And so I think this was a bit of a surprise how this all went down. Heather: Yeah, I also talked to Mindy Leffler. She's a a patient mom and a DMD consultant. She was understandably extremely upset about the adcom. I talked to her in the hotel lobby. She was in the hotel lobby the the next day and she said that the FDA created optics that were quote evidence of biased intentions. Jef: Yeah, that quote stuck out to me, as did one from Linda about a potential ulterior motive. Like there it th there's definitely Heather: Yeah. Jef: accusations of something shisty going on at the FDA, which is again not a good look for an FDA that's actively trying to rebuild trust among the industry as a whole, patient groups and its own staff. Heather: Yeah, it is all you it's a a lot of it is about optics and there are more optics when it comes to Rep Imune. so this one, you know, I thought it would go poorly because Repli Imune has already had two rejections, for for RP one, its advanced melanoma drug. but its advisory committee voted ten to three in support of the drug. And this isn't actually all that surprising when you think about it, because last year after the first rejection, twenty-two scientists that were involved in the design of of RP one's program wrote an open letter to the FDA petitioning for a re-review. so it it isn't that surprising that their peers, you know, a lot of the a lot of the invited temporary voting members were were oncologists and melanoma specialists, that that they would agree. Jef: Yeah, I was just thinking that when you you said the positive vote. I do know that this has a lot of support from the medical community and so that makes a lot of sense. So we'll have to see what the FDA reviewers now say. Very different community there. Heather: Yeah, what's what's really interesting too is that the the FDA scheduled the PADUFA date for RP1. It was actually this past Sunday, and we don't have a decision yet, but that was just scheduled just three days after the adcom itself, which doesn't give the FDA a lot of time to to consider its advisor's opinion. And some people have kind of pointed out that that might have been on purpose. Jef: Well, I mean, I don't know about the planning and th and the thought process between behind scheduling it only three days later, but they Heather: Yeah. Jef: have missed that Padoofa now, which, you know, it's kind of t a two sided coin here. Like it's not a good look to be missing dates 'cause there were a lot of complaints of delays early on under McCary. But I guess if we want them to be considering the adcom's vote, then they need some time to do that. I think what the industry might like what I would like is for the FDA to acknowledge that the Padufa has come and gone and to give us a new date for when to expect 'cause right it's just a waiting game. And you think about the patients out there who are eager to have access to this drug, it's not it's not a fun situation to be in this limbo. Heather: Yeah, and I just checked before we came on on the show just to make sure that nothing had happened and I didn't see anything. I didn't see any SEC filings, which is what Replamine would have to disclose that extension in. So Yeah. Jef: Okay. So yeah, we'll wait and see on both of those. But in the meantime, adcoms are picking up. We've got more coming down the pike. gabby: Yeah, and kind of amid, you know, all the hub out, there's unique year. And they've kind of, come out and said that they welcome an adcom. you likely have heard of Unique Year already, given their, you know, high profile back and forth with the FDA over AMT 130. that's their investigational Huntington's disease gene therapy. So last year the agency said that phase one, two data for the gene therapy would No longer be sufficient to support a biologics license application, despite having, you know, they already agreed to the study protocol and statistical analysis. The regulator has since walked that back And now unique year CEO Matt Capusta is saying their recent interactions with the FDA have been, you know, constructive and productive. He basically said. The data the data that they have stands on its own and you know Unique Ear would look forward to having an extended conversation around if an adcom were to be called. Despite similar certainties in the situational kind of aspects of Unique Year, Capricor, Replimune, stifle analysts say that the read-through to Unique Ear from those other two decisions will be pretty limited. Heather: Yeah. Yeah, it's interesting. You say that or you mentioned that he's Matt Capusta is said that he would look forward to one. Linda Marbaine said very similar last month and I don't think she enjoyed herself. so it's just interesting. But but yeah, you know, Sale Sale Therapeutics has also resubmitted and they've been granted a December thirtieth action date for their rare disease drug. nothing has been said about an adcom or planned atcom for this one that's still four and a half months away. but Sale is is developing DCA for short, which is for a rare life-threatening mitochondrial disease and they received a complete response letter last August and so it's you know it'll be interesting to see if they also if an if an adcom is also called for for their drug. Jef: Yeah, the FDA under new leadership and the like I said, the current temporary leadership has brought adcoms back after that long hiatus and especially in the rare disease space. I think, you know, everyone welcomes these discussions. These are tough decisions, and nobody's looking for like an easy green light, an easy straight to market or anything like that. But I think what we are looking for is some clarity and consistency from the FDA on expectations. And that's what I think that especially the Capricorn adcom last week really did not deliver. There was a lot of confusion and frustration from the company side and certainly from the patients as well. So yeah, not a great look. Hopefully the FDA can clarify for us in the coming weeks. We will stay on top of all of these stories. And again, stay tuned later today for more earnings from Eli Lilly and Novo Nordisk. And then we'll have all the biotechs reporting as well. So that's it for today's show. Thanks for listening. Subscribe on all your podcast channels, and we'll see you next week.