Here’s What Just Happened With Pfizer Inc. (NYSE:PFE) and AstraZeneca plc (NYSE:AZN)

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The end of the week is here and we’ve seen a number of key inputs play into volatility as things are drawing to a close. Oftentimes, when we take a look at the markets in this market mover type article, we cover a number of smaller players in the space. This isn’t because of any particular bias towards the lower end of the industry, it’s simply that the smaller companies generally publicize their respective inputs more frequently and, when they do, these inputs are the ones that have the biggest impact on near term market capitalization. Rather unusually, but of no less significance (the opposite is true in reality), both of today’s biggest movers in the biotechnology space are behemoths of the industry.

So, let’s get to it.

The two companies that we are focusing on for the session today are Pfizer Inc. (NYSE:PFE) and AstraZeneca plc (NYSE:AZN).

First up, Pfizer.

On Thursday, Pfizer announced that it has picked up approval for a drug called inotuzumab ozogamicin (BESPONSA). The company was seeking approval for commercialization in the US for the asset in a target indication of relapsed or refractory B-cell precursor acute lymphoblastic leukemia (ALL). Expectations were relatively high that the drug would have a pretty clean run through to the shelves, given that the program put in place by Pfizer as underpinning the application that was with the agency was strong. Combined with the fact that the agency in the US had FDA previously granted Orphan Drug and Breakthrough Therapy designations to inotuzumab ozogamicin for the treatment of ALL, as well as priority review, and things looked good. There were some minor safety concerns and – as ever – these play an important role in any regulatory decision, but this time around they don’t seem to have swayed outcome.

Pfizer is a $200 billion healthcare company so an approval like this isn’t going to have too dramatic an impact on near term market capitalization. Indeed, in the hours immediately subsequent to the report hitting press, Pfizer is down a few points. With these sorts of companies, the topline impact is more important than the approval itself and that’s especially true when expectations of an approval are already high. With this in mind, the impact on capitalization of the drug is going to come when commercialization initiates and the sales start filtering through to topline.

Moving on, AstraZeneca.

Just as with its big pharma peer, this one’s also rooted in a regulatory approval for the company. On Thursday, the company announced that the FDA has approved label expansion of its PARP inhibitor, Lynparza, for the maintenance treatment of adult patients with recurrent epithelial ovarian, fallopian tube or primary peritoneal cancer, who are in a complete or partial response to platinum-based chemotherapy. That’s a bit jargony for a standard approval but it’s a clean sweep for AstraZeneca, which has been trying to push for an expanded approval on this asset since it first picked up a regulatory green light back in 2014.

As noted above, with a company this size (AZN is around half the size of Pfizer from a market capitalization perspective, but at circa $72 billion it’s still a pretty substantial entity), the impact of a regulatory approval is never going to be groundbreaking. With that said, markets have responded a little more positively to this news than they did the Pfizer report and AZN currently trades for a percentage point premium on its pre announcement market cap.

The real impact has come in AZN’s competitors in this space. A number of other companies are trying to bring this sort of asset to market (PARP inhibitors) and there’s historically been a well-established debate as to which will make it to market first. Now that AZN has done so, the company has technically beaten out its competition and there’s some collateral impact for those involved.

Most notably, the companies that have responded to the news are Clovis Oncology Inc (NASDAQ:CLVS) and TESARO Inc (NASDAQ:TSRO). Both of these companies took a pretty sharp hit immediately subsequent to the news, but both recovered somewhat into the session close to pare the losses to circa a few percentage points each.

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