Yesterday was a big day for a number of the big names in biotech. A host of announcements hit markets, and we got an influx of volatility, both bullish and bearish. Here’s a look at there of the biggest movers in big pharma, and the drivers behind the action.
AbbVie Inc. (NYSE:ABBV)
First up, AbbVie. AbbVie closed out last week at 59.55. By the time the session kicked off on Monday morning, the company was trading at 61.59, and closed on the day at 63.38 – a circa 6.5% gain across US trading. The driver behind this action? A revised guidance from Morgan Stanley. There has been a lot of concern as late as to the future of Humira – AbbVie’s runaway blockbuster that generates in the region of $10 billion a year for the company. Humira consistently ranks at the top of the biggest global sellers list, but AbbVie’s Humira patent (or at least some of the most important elements of it) expire at the end of next year. If the company cannot successfully mount protective cases to avoid generic competition, a large portion of its revenues (circa 50%) could be at risk. This concern has put pressure on AbbVie’s market capitalization over the last 12 months, but the company has consistently reiterated it believes its patent scope to be strong enough to mitigate any generic risk. Obviously, it is in AbbVie’s interests to maintain this position. The company surged yesterday as Morgan Stanley came out in support of the company’s opinion, and revised AbbVie to overweight, primarily based on Stanley’s in-house analysts’ opinions of its patent case.
Pfizer Inc. (NYSE:PFE)
Next we’ve got Pfizer. Pfizer gained close to 4% during Monday’s US session, and pre-session looks as though it is set to reiterate that strength today. There were some reports that suggested the driver behind these gains was a positive thesis outlined in an article on Barron’s, but in reality, the gains likely came as a result of trial data reported pre-session on Monday relating to the company’s rheumatoid arthritis treatment – Xeljanz. The drug is what’s called a JAK inhibitor, and is currently approved for treatment of rheumatoid arthritis. At the moment it only generates around $100 million a quarter for Pfizer (comparably small when considered against a number of the company’s other commercialized therapies) but the latest announcement suggests Pfizer is set to ramp up these revenues going forward. The company submitted an NDA for a psoriasis indication earlier this year, and yesterday announced it will present 20 abstracts relating to safety and efficacy in the RA indication, each of which could easily bolster its sales and marketing efforts when pitching to physicians. They will also likely highlight efficacy in combination therapies, which in turn could add to the approved indications of the drug going forward. You can check out the full list of abstracts here, but as far as we are concerned, the ones to watch are the post-hoc analyses of the drug in RA therapy. Pfizer expects to present data from six of these, and each could imply expanded Xeljanz revenues.
Valeant Pharmaceuticals International, Inc. (NYSE:VRX)
Finally, Valeant. Again, Monday’s session proved a winner for Valeant, with the company gaining more than 7% on the session open to close at 100.47, then gain a further 4% after hours to bring today’s open price to a minimum of 104.5. This one is an interesting one. Basically, there has been a considerable short interest for Valeant over the past year or so – primarily driven by the hypotheses of short seller Andrew Left – head of short selling firm Citron Research. The hypothesis revolves around so called “improprieties” in Valeant’s accounting – improprieties that Valeant has strongly denied. Markets expected Left to elaborate on the nature of the improprieties yesterday, in support of its short side bias. Instead, Citron released a statement that implied it would not be elaborating on the situation – something that markets look to have interpreted as suggesting there is nothing to worry about. Citron did state they would continue to investigate Valeant, but as yet they have not come up with any clear cut evidence to back their claims. It will be interesting to see how this plays out. If Citron reports something damaging, we could see a collapse in Valeant’s market capitalization in a very short period of time. If the whole thing dies down, we may see a steady upside revaluation for the company before the year draws to a close. Definitely one to watch going forward.