Biotech Analysis Central Pharma News: Teva's U.S. Erosion, Denali's Preliminary Results, Epizyme's Trial Shutdown

Welcome to Biotech Analysis Central Daily News, a daily news report and analysis about what has happened lately in the biotech industry.

Teva Dips As U.S. Generic Sales Continue To Drop

News: Recently, Teva Pharmaceuticals (TEVA) announced its Q2 earnings. It reported adjusted income of $0.78 cents per share on sales of $4.7 billion. In comparison analysts were expecting the company to earn $0.67 cents per share on sales of $4.76 billion. Generic U.S. Sales dipped down to $947 million for the quarter. It was also reported that sales of Copaxone dipped by 46% to $464 million. It was revealed that debt remains at around $30.2 billion.

Analysis: The earnings per share number was a beat, however sales came in slightly below the consensus of what was expected. However, setting that aside there are major issues that remain. The first issue is that earnings have still been declining year over year. In the same period last year, Teva reported adjusted earnings of $1.02 per share on sales of $5.72 billion. That’s a huge dip year over year in both EPS and in revenue from the numbers reported. Generic sales in the U.S. continue to erode due to increased competition from copycat drugs. It is just the landscape of the generics market which is bad and continues to fall. It is even said that generic U.S. drug sales fall an average of 15% per quarter. In my opinion, such a drop is not sustainable. Copaxone continues to fall by the wayside as a generic versions of the drug continue to eat into sales. Teva attempted to counter the eroding sales with laquinimod, but that has failed to live up to expectations in Multiple Sclerosis (MS) and in other diseases. Just recently, Teva and its partner Active Biotech (ACTI) failed a phase 2 study using laquinimod to treat Huntington’s disease. Debt is slowly coming down, but in my eyes it’s not fast enough. That debt of $30.2 billion will still continue to be a major risk factor and burden on the stock.

Denali Therapeutics Shows Positive Preliminary Data For Parkinson’s

News: Recently, Denali Therapeutics (DNLI) announced that it had obtained positive results from its phase 1 study treating patients with Parkinson’s using DNL201. This phase 1 study recruited more than 100 healthy patients who received either a single or multiple ascending doses of the drug. In addition, some patients in the study were given placebo. It is believed that DNL201 is able to inhibit leucine-rich repeat kinase 2 ((LRRK2)). The reason for doing so is because it is believed LRRK2 regulates lysosomal genesis and function, and for those with Parkinson’s this mutation causes the disease. The drug was shown to encourage robust target engagement in two blood-based biomarkers of LRRK2 activity. DNL201 was also shown to have an effect on biomarkers for lysosomal function. These may have some indication that this drug can work in this population.

Analysis: These are preliminary findings, but the most important item to note is that targeting LRRK2 activity may be a way to treat Parkinson’s. There is another item to make note of, and that is the ability for the drug to be adaptive. By that I mean even though DNL201 targets patients with the LRRK2 protein, it can also be used in a broad sense. That means DNL201 is going to be explored in a phase 1b study as the next part of its clinical advancement. It will treat Parkinson’s patients with or without the LRRK2 protein. This study is expected to start by the end of 2018. This is a good start on preliminary analysis, and the next study should incorporate a higher dose that should improve efficacy.

Epizyme Shutters B-Cell Cancer Study After Trial Observation

News: Recently, Epizyme (EPZM) released its Q2 earnings report and updates on its pipeline. It was noted in the report that it would stop development of its drug tazemetostat for treating patients with diffuse large B-cell lymphoma (DLBCL). It was noted that in cohorts from a particular study, tazemetostat was not performing well in treating patients with DLBCL. This observation was made with both tazemetostat as a monotherapy and as a combination with prednisolone.

Analysis: This is another huge blow for Epizyme, because tazemetostat is the main drug in its pipeline. This bad news is in addition to another prior issue where tazemetostat was placed on an FDA partial clinical hold for a study treating patients with genetically defined solid tumors and malignancies. The reason for the partial clinical hold was that a pediatric patient developed secondary T-cell lymphoblastic lymphoma. This prompted the FDA to immediately place the partial clinical hold on the trial. It has been about 3 months now since the hold was announced, but I guess the bright side is that it was only a partial hold. Meaning, patients that were already in the study could still receive treatment with tazemetostat. In essence, the hold was just to stop the recruitment of new patients. Even setting the issue with the FDA clinical hold aside, Epizyme having to dump its DLBCL indication due to lack of efficacy is not good at all. The hope now lies in the ability for Epizyme to get the partial clinical hold lifted by the FDA. If it can do that in a timely manner, then maybe it still has a shot to turn things around.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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