Novartis Revenue Jumps, And Other News: The Good, Bad And Ugly Of Biopharma

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Summary

Novartis Revenue Jumps but Net Income Falls for Q4

Novartis (NVS) posted mixed numbers for its fourth quarter. The company announced strong revenue growth but showed negative impact of higher taxes. Its core operating income for the quarter stood at $3.46 billion, up 11 percent while its net income showed decline of 7 percent to $1.1 billion. The decline was mainly due to one-time tax charge. Novartis reported its revenue from continuing operations at $12.4 billion, up 8 percent.

Novartis reported that its revenue was mainly helped by the continued strong performance shown by its star products such as Cosentyx and Entresto. The former drug is designed for treating psoriasis while latter is for treating heart failure. The revenue from Cosentyx stood at $3.6 billion for the 12 month time period, showing 28 percent growth while the revenue from Entresto grew 71 percent to $1.7 billion. The core margin for the company's main drug business grew to 33.5 percent of revenue during 2019. The company expects it to further improve to mid to high 30s "in the mid term".

The company also provided guidance for 2020 where it is likely that its sales will increase by mid to high single digit percentage. It expects the core operating income to grow by a high single to low double digit percentage. However, the company noted that the projections exclude Alcon and Sandoz U.S. oral solids and dermatology business. It also does not take into account growing competition to Sandostatin and Gilenya from generic products.

Novartis is currently going through restructuring phase, under the helm of its CEO Vas Narasimhan. The company has shed a number of units and products, deemed unviable to become a leaner organization. Novartis also recently spun off its eye care unit, Alcon so as to focus on developing innovative medicines.

In the meantime, the company has fortified its prescription medicine pipeline by entering into new collaborations. Two main products added to the company's portfolio through these acquisitions are Lutathera and Zolgensma. The first one is designed to treat cancer and works by delivering radioactive dose to tumor cells while the latter is a gene therapy for treating a muscle wasting ailment occurring in infants.

Novartis has faced several issues on different fronts including the regulatory scrutiny on account of escalating prices for its drugs. Its Zolgensma therapy is currently one of the most expensive treatments in the world, with a hefty price tag of $2.1 million. The company has claimed that the price tag is reasonable keeping in view that it is a one time treatment and proves to be economical in the long run. The therapy garnered $186 million in revenue during the quarter, up from $160 million in revenue it had earned during the third quarter. However, it still fell short of consensus estimate of $196 million.

Novartis stock showed strong performance in the past 12 months as it registered nearly 25 percent growth. With optimistic 2020 guidance provided by the company and its ongoing restructuring, it is expected that the stock will be able to retain its positive trajectory. The company is also focusing on converting its strong pipeline into viable products. It recently received Europe approval for its drug candidate Mayzent. The treatment is designed for managing secondary progressive multiple sclerosis in adult patients. It was approved in the United States in March 2019 for treating relapsing forms of multiple sclerosis.

Hepion Pharmaceuticals Provides Encouraging Data

Hepion Pharmaceuticals (HEPA) offered positive laboratory data for its drug candidate CRV431. The drug candidate is being tested for treating liver disease nonalcoholic steatohepatitis or NASH. The study involved an expanded study using human precision cut liver slices. During the test, the drug candidate prevented experimentally induced liver fibrosis in a better manner than four other NASH drug candidates. These major drug candidates are Aramchol, Resmetirom, Elafibranor and obeticholic acid.

The Phase 1, single ascending dose study showed the drug candidate to be a safe option and was also shown to be well tolerated by humans. The study design as well as the findings from the study was in line from the corresponding data obtained from a previous study which involved the drug candidate being tested on tissue from a single human donor. The treatment resulted in the reduction of tissue fibrosis and such reduction was measured by Picrosirius Red staining. CRV431 also decreased gene expression and secretion of different inflammation and fibrosis markers. Hepion conducted this study in collaboration with FibroFind.

Hepion Pharmaceuticals is a clinical stage biopharmaceutical company. It is mainly engaged in developing targeted therapies for treating liver ailments caused by NAH and chronic hepatitis virus infection. CRV431 is the lead drug candidate of the company and is in clinical phase development.

Amphastar Receives CLR for Lead Drug Candidate

Amphastar Pharmaceuticals (AMPH) stock slipped as the company reported receiving MINOR Complete Response Letter from the FDA with regard to its Epinephrine injection USP 30mg/30mL (1mg/mL) Multiple Dose. The company received the CRL in response to its marketing application for the drug candidate. Amphastar has submitted its response to the FDA. It is expected that the FDA will provide its revised verdict within next three months.

Amphastar is a specialty pharmaceuticals company and is mainly focused on developing generic and proprietary inhalation, intranasal and injectable products. The company currently has five ANDAs with the FDA. It also has three biosimilar products in its pipeline, apart from 11 generic products. Amphastar has four proprietary products including naloxone in the development stage.

For its third quarter, the company had reported net revenue of $80.1 million while its GAAP net income stood at $1.3 million. On per share basis, the GAAP net income stood at $0.03. Non-GAAP adjusted net income was reported at $5.2 million. During the quarter, the company also authorized adding $20 million to its share buyback program. The main aim of the program is to nullify the impact of dilution occurring due to the equity compensation program.

In the past 12 months, Amphastar Pharmaceuticals stock has lost over 10 percent of its value. However, the stock also managed to retain its volatility at the low levels, thereby reducing its risk profile.

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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.