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MRK

Merck

$62.77

2.85 (4.76%)

, BMY

Bristol-Myers

$58.31

-1.675 (-2.79%)

11:12
01/11/17
01/11
11:12
01/11/17
11:12

Bristol-Myers slips after FDA gives Merck lung cancer therapy priority review

Shares of Merck (MRK) are on the rise after the company announced the Food and Drug Administration has accepted for priority review its application for its immunotherapy drug Keytruda with chemotherapy as an initial treatment for advanced lung cancer. Conversely, Bristol-Myers (BMY), who is developing a competing immuno-oncology therapy, is sliding following the news. APPLICATION ACCEPTED: Last night, Merck announced that the FDA has accepted for review the supplemental Biologics License Application for Keytruda, the company's anti-PD-1 therapy, plus chemotherapy for the first-line treatment of patients with metastatic or advanced non-squamous non-small cell lung cancer, or NSCLC, regardless of PD-L1 expression and with no EGFR or ALK genomic tumor aberrations. This is the first application for regulatory approval of Keytruda in combination with another treatment. The FDA granted Priority Review with a PDUFA, or target action, date of May 10, 2017. LUNG OPPORTUNITY: In a research note following the filing acceptance news, Leerink analyst Seamus Fernandez told investors that Merck's announcement comes as a "significant surprise," potentially positioning the company's Keytruda to be the first IO agent to be used broadly in non-squamous NSCLC regardless of PD-L1 status. Moreover, the analyst pointed out that if Merck's combo receives accelerated approval by its PDUFA, it likely would give the company "another leg-up" in the first-line NSCLC race over AstraZeneca (AZN) and Bristol-Myers' IO+IO combos and Roche's (RHHBY) IO+chemo combo. Leerink has a Market Perform rating on Merck shares. In a research note of his own, Jefferies analyst Jeffrey Holford noted that Merck's filing for Keytruda plus chemo in first-line NSCLC is a "positive surprise" that could disrupt market share dynamics in the near-term, particularly for Bristol-Myers. Nonetheless, the analyst argued that the filing does not "materially change" the company's long-term outlook, adding that the approval is "high risk due to several weaknesses" in the study, as well as its prior failure to gain a Compendia Listing. He reiterated an Underperform rating on Merck's shares. ADVANTAGE SHORT-LIVED: Commenting on Merck's announcement, Goldman Sachs analyst Jami Rubin said that if the company's chemo combo sBLA is approved, she would expect a "rapid uptake" for Keytruda in the first-line setting given there will be no requirement for PD-L1 testing. However, the analyst noted that she expects its competitive advantage to be "short-lived." Therefore, while Merck may benefit in the near-term in 2017, Rubin said she is making no change to her 2018 estimates given imminent competition from potentially three other players, with IO-IO and IO-chemo combos. Moreover, the analyst said she is also making no changes to her estimates for Bristol-Myers, highlighting that if the latter's accelerated filing strategy is successful, Merck's short-lived benefit may be mitigated even further. Her peer at Deutsche Bank voiced a similar opinion. While analyst Gregg Gilbert acknowledged that an approval would further enhance Keytruda momentum later this year, he noted that the durability of that momentum could be shaped in part by several NSCLC data read-outs from various companies in the coming year. PRICE ACTION: In late morning trading, shares of Merck have gained nearly 5% to $62.80, while Bristol-Myers' stock has dropped almost 3% to $58.28.

MRK

Merck

$62.77

2.85 (4.76%)

BMY

Bristol-Myers

$58.31

-1.675 (-2.79%)

AZN

AstraZeneca

$28.38

-0.375 (-1.30%)

RHHBY

Roche

$29.99

-0.03 (-0.10%)

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MRK Merck
$62.77

2.85 (4.76%)

01/11/17
BMOC
01/11/17
NO CHANGE
BMOC
FDA decision a significant boost for Merck, says BMO Capital
BMO Capital analyst Alex Arfaei says that the FDA's acceptance and priority review of Merck's Keytruda+chemo in first line non-small cell lung cancer "is a positive surprise." and "represents significant upside" for the company. The analyst thinks that Keytruda's market share in first line non-small cell lung cancer can reach about 80%-85%, up from about 25% now. He continues to identify Merck as his top pick.
01/11/17
JEFF
01/11/17
NO CHANGE
Target $48
JEFF
Buy
Merck filing for Keytruda could disrupt market, says Jefferies
Jefferies analyst Jeffrey Holford views Merck's (MRK) filing for Keytruda plus chemo in first line non-small cell lung cancer as a "positive surprise" that could disrupt market share dynamics in the near term, particularly for Bristol-Myers (BMY). The filing, however, does not materially change Merck's long term outlook, Holford tells investors in a research note. He believes approval risk is high given limited data and keeps an Underperform rating on Merck. The stock is up $1.78 to $61.70 in pre-market trading while Bristol-Myers is down $1.98 to $58.00.
01/11/17
JPMS
01/11/17
NO CHANGE
JPMS
Overweight
Keytruda filing a 'distinct positive' for Merck, says JPMorgan
JPMorgan analyst Chris Schott views the acceptance of the Keytruda plus chemo combo supplementary Biologics License Application for priority review as a "distinct positive" for Merck (MRK). The company is increasingly well positioned in first-line lung cancer, Schott tells investors in a research note. The analyst reiterates an Overweight rating on Merck.
01/11/17
GSCO
01/11/17
NO CHANGE
Target $70
GSCO
Neutral
Goldman sees Merck advantage for Keytruda in first-line NSCLC to be short-lived
Goldman Sachs analyst Jami Rubin said that if Merck's (MRK) chemo combo sBLA is approved, she would expect a "rapid uptake" for Keytruda in the first-line setting given there will be no requirement for PD-L1 testing. However, while Merck may benefit in the near-term in 2017, she is making no change to her 2018 estimates given imminent competition from potentially three other players, adding that she is also making no changes to her estimates for Bristol-Myers (BMY) as she has estimates for first-line non-small cell lung cancer only from 2018. Rubin maintains her Neutral rating and $70 price target on Merck shares.
BMY Bristol-Myers
$58.31

-1.675 (-2.79%)

12/19/16
12/19/16
UPGRADE

On The Fly: Top five analyst upgrades
Catch up on today's top five analyst upgrades with this list compiled by The Fly: 1. Bristol-Myers (BMY) and Bayer (BAYRY) were upgraded to Buy from Hold at Jefferies. 2. Costco (COST) upgraded to Buy from Neutral at Citi with analyst Kate McShane saying she sees a "clear path" to accelerating same-store-sales growth in fiscal 2017 as gasoline price deflation headwinds abate and benefits arise from the new co-branded credit card. 3. United Technologies (UTX) upgraded to Outperform from Neutral at Credit Suisse with analyst Julian Mitchell saying he believes consensus estimates are poised to move higher after years of heavy investment spending drive an earnings recovery. 4. ASML (ASML) upgraded to Buy from Neutral at BofA/Merrill with analyst Kai Korschelt saying a recent expert's call indicates progress with Extreme Ultraviolet/EUV lightsource optics & ecosystem and sees improving volume visibility from 2018 forward. 5. Gulfport Energy (GPOR) upgraded to Buy from Neutral at Guggenheim and to Overweight from Equal Weight at Stephens. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
12/19/16
JEFF
12/19/16
DOWNGRADE
Target $48
JEFF
Underperform
Merck downgraded to Underperform from Hold at Jefferies
Jefferies analyst Jeffrey Holford downgraded Merck (MRK) to Underperform, his firm's sell-rating equivalent. The analyst sees Pharmaceutical sector fundamentals weakening in 2017 amid political overhangs and an adverse macro environment. Potential dual eligible rebate reform is the most significant risk, Holford tells investors in a research note. Specific to Merck, the analyst expects further pressure on Keytruda in 2018, driven by share losses in non-small cell lung cancer to Bristol-Myers Squibb (BMY), AstraZeneca (AZN) and Roche (RHHBY). Merck screens poorly on many valuation metrics, Holford contends. He lowered his price target for the shares to $48 from $59. The stock closed Friday up 7c to $62.44. The analyst this morning also upgraded both Bristol-Myers Squibb (BMY) and Bayer (BAYRY) to Buy from Hold. His top picks in Pharmaceuticals are AbbVie (ABBV) and Eli Lilly (LLY) for the U.S. and AstraZeneca and Novartis (NVS) in Europe.
AZN AstraZeneca
$28.38

-0.375 (-1.30%)

12/20/16
SBSH
12/20/16
NO CHANGE
Target $151
SBSH
Buy
Citi views Rubraca approval as positive for PARP class
Citi analyst Robyn Karnauskas views the approval of Clovis Oncology's (CLVS) Rubraca as positive for the PARP class. She keeps a Buy rating on TESARO (TSRO) with a $151 price target. TESARO's Niraparib is expected to be approved for second-line maintenance in 2017 while data from its third-line study are expected in the second half of the year. The analyst currently assigns a50% probability to Niraparib in third-line line and 35% market share. Karnauskas notes that Rubraca costs $13,740 for 30 days, below AstraZeneca's (AZN) Lynparza's $11,984. Her model assumes monthly pricing of $10,000 for Niraparib.
12/20/16
LEER
12/20/16
NO CHANGE
LEER
Outperform
Clovis Rubraca approval unlikely to impact TESARO niraparib, says Leerink
Commenting on Clovis' (CLVS) Rubraca accelerated approval by the FDA for the treatment of germline or somatic BRCA-mutated ovarian cancer patients, Leerink analyst Seamus Fernandez says the label appears "fairly broad" and does not restrict use based on platinum sensitivity/resistance. While he believes this current approval is unlikely to impact the initial competitive dynamics for TESARO's (TSRO) niraparib or AstraZeneca's (AZN) Lynparza in second-line maintenance, the analyst points out that data from Rubraca's Phase 3 ARIEL3 trial in this setting is now expected in mid-2017. Despite the earlier readout, Fernandez continues to see niraparib as the ultimate winner in second-line maintenance. He reiterates an Outperform rating on TESARO's shares.
12/19/16
JEFF
12/19/16
UPGRADE
Target $69
JEFF
Buy
Bristol-Myers upgraded to Buy from Hold at Jefferies
Jefferies analyst Jeffrey Holford upgraded Bristol-Myers Squibb (BMY) to Buy on expectations the company will share with AstraZeneca (AZN) the cytotoxic T-lymphocyte-associated antigen-4 combo opportunity in non-small cell lung cancer. Holford views Bristol shares as attractive valued and upped his price target for the name to $69 from $60.
RHHBY Roche
$29.99

-0.03 (-0.10%)

12/15/16
CANT
12/15/16
NO CHANGE
Target $8
CANT
Overweight
Pacific Biosciences a 'viable takeout target,' says Cantor
Cantor analyst Bryan Brokmeier says Pacific Biosciences' (PACB) shares are oversold after the company announced that Roche (RHHBY) has terminated their IVD-distribution agreement, whereby Roche had exclusive distribution rights of the Sequel into the clinical market. While the analyst acknowledges Roche's termination of the agreement is a clear long-term strategic negative, he says it is not nearly as much as the stock selloff is implying and notes that Pacific Biosciences is now positioned to sell into the clinical sequencing market directly or through other partners. Moreover, Brokmeier believes Pacific Biosciences is now "effectively a viable takeout target" for other companies, with Agilent (A), Bio-Techne (TECH), Illumina (ILMN), PerkinElmer (PKI), Thermo Fisher (TMO), and Roche among potential acquirers. He reiterated an Overweight rating on Pacific Biosciences' stock, but lowered his price target on the shares to $8 from $15.
01/03/17
RAJA
01/03/17
NO CHANGE
RAJA
Drug price hikes continue unabated, says Raymond James
In a research note titled "Think the Era of Drug Price Increases is Over? Think Again.," Raymond James analyst Christopher Raymond says drug price increases in 2017 are continuing unabated. According to Wolters Kluwer Health, January 1 saw a "sizeable amount of key biotech drug price increases," Raymond tells investors. The price hikes look in-line with previous patterns, or - in the case of Biogen (BIIB) - "measurably more aggressive than norm," the analyst contends. Of the names he follows, Biogen, Acorda Therapeutics (ACOR) and AMAG Pharmaceuticals (AMAG) implemented increases. Raymond also highlights AstraZeneca's (AZN) 5% Lynparza increase and Roche's (RHHBY) "slew of increases" with Actemra up 1.5%, Herceptin up 3%, Pegasys up 5%.
01/03/17
LEER
01/03/17
NO CHANGE
Target $20
LEER
Outperform
Leerink remains bullish on Exelixis in 2017
Leerink analyst Michael Schmidt remains bullish on Exelixis in 2017 and expects continued strong U.S. sales growth of Cabometyx in renal cell carcinoma while several label extension opportunities as well as Roche's (RHHBY) IO strategy for Cotellic are key sources of upside to the current valuation. The analyst reiterated an Outperform rating on Exelixis' stock and raised his price target on the shares to $20 from $16 to reflect his more bullish stance on Cabometyx label extension opportunities, as well as incrementally higher Cotellic profit share estimates following recently announced plans by Roche to initiate additional Phase 3 trials.

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