Today's Biggest Biotech Stories: Roche, Merck, Bayer, and Regeneron

Roche, Merck, Bayer, and Regeneron could make health care headlines this morning. Here’s why.

Feb 10, 2014 at 9:06AM

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 Foolish investors! Let's take a closer look at four stocks which could loom large in health care headlines this morning -- Roche (NASDAQOTH:RHHBY), Merck (NYSE:MRK), Bayer (NASDAQOTH:BAYRY), and Regeneron (NASDAQ:REGN).

Roche bans direct comparisons of biosimilars to Herceptin
First and foremost, Roche recently secured an injunction in India, which prevents generic competitors from comparing biosimilar versions of Roche's blockbuster breast cancer drug Herceptin to the original drug. Herceptin, a targeted treatment which treats HER2-positive breast cancer (15% to 20% of all breast cancers), generated revenue of 6.08 billion Swiss Francs ($6.79 billion) in fiscal 2013.

The injunction is aimed squarely at Mylan and Biocon, which launched the world's first biosimilar version of Herceptin last week in India. India was never a huge market for Herceptin -- in 2012, it only reported $21 million in Herceptin sales from India. Roche attempted to boost sales in India by lowering the price to $1,366 per month (compared to $4,500 in the U.S.).

Since Roche's injunction prevents any direct comparisons between biosimilar versions of Herceptin with the original, it could be difficult for doctors and patients to make an informed decision between the two. Biocon called Roche's injunction "extremely shocking, but not unexpected."

Mylan, the third largest generics manufacturer by revenue in the world by 2012 revenue, is expecting India to become a major pillar of top line growth for the company. In addition to the launch of biosimilar Herceptin, the company signed a deal with Gilead Sciences on January 31 to become its exclusive branded medicines business partner in India, which allows Mylan to distribute Gilead's blockbuster antiviral drugs Viread, Truvada, Stribild, and the systemic fungal infection treatment AmBisome within the country.

Merck settles its NuvaRing lawsuits for over $100 million
Meanwhile, Merck just paid over $100 million to settle over 1,700 lawsuits regarding its NuvaRing contraceptive ring, according to a recent Bloomberg report. The ring was implicated in a higher rate of fatal blood clots than most other competing products.

NuvaRing is a hormonal contraceptive which combines the hormones estrogen and progestin in a vaginal ring to prevent pregnancy. The product was launched in the United States in 2001. The FDA first issued a warning regarding the risk of blood clots in 2011.

Merck reported $686 million in NuvaRing sales in fiscal 2013 -- a 10% jump from the previous year. The product only accounts for 1.6% of Merck's top line, and $100 million isn't a huge settlement for a company which generated $44 billion in sales last year -- but the lawsuits could cause substantial PR damage to the company. Many investors still remember the damaging $4.85 billion settlement Merck paid in 2010 to settle lawsuits regarding 3,468 deaths caused by its Vioxx painkiller. Vioxx, which was pulled from the market in 2004, was found to double the risk of heart attacks and strokes.

Bayer's Aleve gets reevaluated by an FDA advisory committee
Speaking of heart issues, an FDA advisory committee will be reevaluating the safety of Bayer's Aleve (naproxen) this week. The committee will determine if Aleve poses any heart danger at all in patients.

If the review is favorable, Aleve will no longer be required to carry a "heart warning" that is currently standard for all NSAIDs (non-steroidal anti-inflammatory drugs) -- which could result in "a cleaner label and major marketing advantages for Aleve," according to a recent report in The Wall Street Journal.

Aleve competes against other NSAIDs such as Pfizer's Celebrex and Advil, and Johnson & Johnson's Motrin. A recent warning by the FDA stating that acetaminophen painkillers (llike Johnson & Johnson's Tylenol and GlaxoSmithKline's Panadol) could cause liver damage could also boost Aleve sales.

Last quarter, sales of Aleve fell 6% year-over-year to €79 million ($108 million), mainly due to unfavorable currency impacts. The drug accounted for less than 1% of Bayer's overall sales, so an FDA opinion probably won't dramatically affect Bayer's business much either way. However, a favorable ruling for Aleve bodes well for NSAIDs in general, which means that companies which rely on acetaminophen painkillers, such as J&J and GSK, stand to lose market share in consumer health.

Regeneron edges closer to a DME approval for Eylea
Last but not least, Regeneron and Bayer just reported that two-year results from their phase 3 VISTA trial of Eylea for the treatment of DME (diabetic macular edema) showed sustained improvement in patients' vision. The trial notably does not compare Eylea to its main competitor, Novartis' (NYSE: NVS) Lucentis (which is approved for DME), but compares two different doses of Eylea to laser photocoagulation treatment.

Regeneron is relying on an eventual approval of Eylea for DME to improve the drug's already impressive sales. Eylea is currently approved for Wet AMD (age-related macular degeneration) and macular edema following CRVO (central retinal vein occlusion).

Regeneron expects to finish fiscal 2013 with $1.4 billion in Eylea sales, but current peak sales estimates of $4 billion suggest that the drug, which accounted for 61% of the company's top line in third quarter 2013, still has plenty of room to run. Regeneron is expected to release its fourth quarter and full year earnings tomorrow morning.

Another great stock opportunity for 2014...
There’s a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it’s one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Gilead Sciences and Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information

Compare Brokers