Monday’s Top Biotech Stories: Spectrum, Bristol-Myers Squibb, GSK, and Theravance

Spectrum, Bristol-Myers Squibb, GSK, and Theravance are the top biotech stocks to watch this morning.

Jul 7, 2014 at 8:58AM


Let's check in on four stocks -- Spectrum Pharmaceuticals (NASDAQ:SPPI), Bristol-Myers Squibb (NYSE:BMY), GlaxoSmithKline (NYSE:GSK), and Theravance (NASDAQ:THRX) -- which could all loom large in biotech headlines this Monday morning.

FDA approves Spectrum's Beleodaq nearly five weeks early
Shares of Spectrum Pharmaceuticals were up nearly 7% in pre-market trading this morning, after the company announced that the FDA approved Beleodaq, its treatment for patients with relapsed or refractory peripheral T-cell lymphoma (PTCL). The accelerated approval, which was granted nearly five weeks before its scheduled PDUFA date on August 9, was based on tumor response and duration of response during its BELIEF clinical trial, which tested the treatment on 120 evaluable patients.

PTCL consists of a group of rare and aggressive non-Hodgkin's lymphomas (NHL) which represent roughly 10% to 15% of all NHL cases in the United States. PTCL patients generally demonstrate a low response to other NHL treatments.

Spectrum expects to launch Beleodaq through its existing sales force within three weeks. Analysts at Edison Investment Research expect the drug to generate annual peak U.S. sales of $130 million. Spectrum is partnered with Topotarget, which originally purchased Beleodaq from CuraGen in 2008. Topotarget will receive mid-teen royalties from the drug when launched, while Spectrum retains revenue from the U.S. Spectrum also holds the marketing rights to Beleodaq in India.

Spectrum currently has four oncology/hematology drugs on the market -- two for different types of NHL patients (Zevalin and Folotyn) , one for late-stage colorectal cancer (Fusilev), and another for acute lymphoblastic leukemia (Marqibo).

Last year, sales of Fusilev accounted for 44% of Spectrum's full year revenue of $155.9 million, followed by Folotyn at 28% and Zevalin at 19%. Spectrum only reported $1.3 million in Marqibo sales last year, along with $12.4 million in licenses and services revenue. Therefore, Beleodaq's peak sales potential of $130 million would clearly be a valuable contributor to Spectrum's top line if the company can execute well.

Bristol-Myers Squibb's HCV combo approved in Japan
Meanwhile, the Japanese government just approved Bristol-Myers Squibb's hepatitis C (HCV) therapy Daklinza and Sunvepra for the treatment of chronic HCV type 1 -- the most common type of the disease in Japan (70% of the 1.2 million HCV patients in Japan have type 1b). The dual regimen is notably the first all-oral, interferon and ribavirin-free treatment for HCV available in Japan.

By comparison, Gilead Sciences' (NASDAQ:GILD) oral HCV drug Sovaldi, which hasn't been approved in Japan, requires an accompanying dose of ribavirin (an older HCV drug) and interferon for type 1 patients. Interferon is an unpopular treatment since it can cause flu-like symptoms. Both interferon and ribavirin can cause anemia, which makes Bristol-Myers Squibb's dual regimen very appealing for HCV patients.

The news from Japan is encouraging for Daklinza/Sunvepra in the U.S., where it was designated with a Breakthrough Therapy designation earlier this year. Peak sales estimates for the combo are unclear, but Gilead's Sovaldi posted sales of $2.3 billion last quarter -- an encouraging sign for Daklinza/Sunvepra if approved.

GSK and Theravance's Anoro Ellipta approved in Japan
Last but not least, GlaxoSmithKline and Theravance's COPD (chronic obstructive pulmonary disease, an umbrella term for multiple respiratory disorders) treatment Anoro Ellipta has been approved in Japan. Anoro Ellipta was approved in the U.S. last December and in the EU in May.

This is positive news for GSK, which needs a new blockbuster respiratory drug to take the place of its blockbuster respiratory drug Advair/Seretide, which accounts for roughly a fifth of its top line with annual sales of £5.3 billion ($9 billion). Although the U.S. patent for Advair expired in 2010, generic makers have had trouble manufacturing a replacement for the Diskus inhalation device, which remains patent protected until 2016. Analysts polled by Thomson Reuters believes Anoro has peak sales potential of $2.65 billion by 2019.

Another COPD drug from GSK, Breo Ellipta, was also approved in the U.S., Europe, and Japan last year. Analysts believe Breo could eventually generate peak sales of $1.3 billion. While combined sales of Anoro and Breo won't be enough to completely offset declining sales of Advair, they could considerably soften the blow.

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Leo Sun owns shares of Gilead Sciences. The Motley Fool recommends Gilead Sciences. The Motley Fool owns shares of Gilead Sciences. 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

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Jun 12, 2015 at 5:01PM

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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.

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