Keep an Eye on AstraZeneca, Bristol-Myers Squibb, and Vertex Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

Good morning, fellow Fools! It's time to check in on the movers and shakers in health care today.

Bristol-Myers and AstraZeneca go their separate ways 
Bristol-Myers Squibb (NYSE: BMY  ) is $4.1 billion richer today after inking a deal with AstraZeneca (NYSE: AZN  ) to hand over its half of the duo's diabetes franchise. Per the agreement, AstraZeneca will pay $2.7 billion for Bristol-Meyers' share, and $1.4 billion in milestone payments. The deal gives AstraZeneca sole commercial rights over the type 2 diabetes drugs Onglyza and Kombiglyze XR. This issue is key because type 2 diabetes is the fastest-growing form of the disease. 

So, who got the better part of the deal? Although the market's initial reaction seems to favor Bristol-Myers, my take is that both companies come off smelling like roses with this one. Although $4.1 billion is nothing to sneeze at, the diabetes market is growing by leaps and bounds , with multiple blockbusters already on the market. On the other hand, this gives Bristol-Myers more dry powder to continue building out their already robust oncology pipeline. In short, this is a win-win deal in my book.  

Vertex's cystic fibrosis drug fails in a late-stage trial
Vertex Pharmaceuticals (NASDAQ: VRTX  ) is down more than 5% in pre-market trading this morning after announcing that its experiment drug ivacaftor for cystic fibrosis patients with the R117H mutation failed to meet its primary endpoint in a late-stage study. Specifically, the drug failed to improve lung function across the patient population, but a subset of patients, 18 and over, did appear to benefit from the drug. The company plans to meet with the U.S. Food and Drug Administration early next year to discuss the results.

What's my take? While these results are certainly disappointing to investors and patients alike, it's important to remember that ivacaftor is approved for cystic fibrosis patients with the G551D mutation, and the company has other clinical candidates in the works. And the fact that the drug appears to work in a subset of patients means that all hope is not lost. The FDA could be agreeable to expanding the drug's use in this older population where it appears to provide some benefit. In sum, you may want to keep Vertex on your radar.

Another top stock you should be watching
The market stormed out to huge gains across 2013, leaving investors on the sidelines burned. However, opportunistic investors can still find huge winners. The Motley Fool's chief investment officer has just hand-picked one such opportunity in our new report: "The Motley Fool's Top Stock for 2014." To find out which stock it is and read our in-depth report, simply click here. It's free!


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2770798, ~/Articles/ArticleHandler.aspx, 11/27/2014 11:16:41 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement