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Texas ruling shakes ACA law; J&J tanks on talc-related accusations


Essential IR Insights Newsletter Fall - 2023

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Texas ruling shakes ACA law; J&J tanks on talc-related accusations

Top news

* A federal district judge in Texas ruled the entire Affordable Care Act was unconstitutional, siding with a group of 20 Republican state attorneys general in their effort to invalidate the 2010 law — former President Barack Obama's key legislative achievement. The ACA has been challenged before, but the Supreme Court upheld the law. All five justices who kept the law in place in a 2012 ruling, including Chief Justice John Roberts, remain on the court. California Attorney General Xavier Becerra said he and a coalition of Democrats will appeal the ruling.

* An investigation by Reuters has found that Johnson & Johnson was aware of the presence of asbestos, a known carcinogen, in its baby powder as early as the 1950s.

Johnson & Johnson responded to the report calling it "one-sided, false and inflammatory." Nevertheless, Johnson & Johnson's stock dropped 9.37% as of 2:52 p.m. ET on Dec. 14, according to S&P Global Market Intelligence data. Cowen analyst Joshua Jennings said the move in shares was likely an overreaction. The drop eroded $25 billion from Johnson & Johnson's $369.9 billion market cap.

* Proteostasis Therapeutics Inc. said it entered an exclusive license agreement with a unit of Roche Holding AG regarding an undisclosed small molecule. Boston-based Proteostasis will eligible to receive up to $100 million in upfront and milestone payments from Roche along with royalties on potential sales of the molecule.

* Novo Nordisk A/S and Staten Biotechnology BV entered a collaboration deal worth up to €430 million to develop therapies for hypertriglyceridemia, characterized by elevated levels of fatty molecules in the blood and often seen in people with diabetes and in obesity.

On the policy front

* In another sign the U.S. Food and Drug Administration is putting more effort into directing critically ill patients who want to try experimental medicines to the agency's expanded-access program and away from using unproven therapies outside of regulators' control, Commissioner Scott Gottlieb disclosed plans for a new compassionate-use pilot program.

* Wisconsin's outgoing Republican governor, Scott Walker, signed legislation cementing the state's work requirement for people in the Medicaid health insurance program for low-income people and preventing Democratic Gov.-elect Tony Evers from eliminating it.

M&A and capital markets

* Shanghai-based cancer drug developer Shanghai Junshi Biosciences Co. Ltd. raised $394 million in its Hong Kong IPO after pricing the offering at HK$19.38 per share, the lower end of its initial range of between HK$19.38 and HK$20.38, Reuters reported.

* Bristol-Myers Squibb Co. and Taisho Pharmaceutical Holdings Co. Ltd. is close to reaching a deal over UPSA SAS, Bristol-Myers' French over-the-counter subsidiary, Bloomberg News reported. Tokyo-based Taisho Pharmaceutical is looking to acquire Bristol-Myers' consumer health business for $1.6 billion.

* Shanghai Henlius Biotech Co. Ltd., a subsidiary of Shanghai Fosun Pharmaceutical (Group) Co. Ltd. and Fosun International Ltd., applied to go public on the Hong Kong Stock Exchange. Bloomberg News reported in February that Henlius could raise at least $500 million in the IPO.

* Pfizer Inc.'s board approved a new $10 billion share repurchase program. This new program is in addition to the $4.9 billion remaining under the company's current buyback authorization.

* GlaxoSmithKline PLC issued a tender offer for all of the outstanding shares of Tesaro Inc. for $75 apiece as the U.K.'s biggest pharmaceuticals company acquires the Waltham, Mass.-based biotechnology company.

* Moody's downgraded Takeda Pharmaceutical Co. Ltd.'s issuer and senior unsecured ratings to Baa2 from A2 following a review, citing its $62 billion acquisition of Shire PLC.

* Inc. planned to buy a home-based diagnostic services provider, Confer Healt, earlier in 2018 to further entrench itself in the healthcare sector, but the deal fell apart, CNBC reported.

Drug and product pipeline

* The European Commission approved Merck & Co. Inc.'s cancer drug Keytruda as an adjuvant treatment — or given after initial therapy — for treating patients with an advanced form of skin cancer.

* The European Medicines Agency recommended the approval of seven new therapies this month, including Pfizer's Zirabev, a biosimilar of Roche Holding's cancer drug Avastin. Other drugs to get the panel's backing included: AOP Orphan Pharmaceuticals AG's Besremi, medac GmbH's Trecondi, Shionogi & Co. Ltd.'s Mulpleta, PARI Pharma GmbH's tobramycin and Dipharma's generic miglustat.

* The U.S. FDA approved Shire's Motegrity to treat adult patients with chronic idiopathic constipation. In chronic idiopathic constipation, the cause of the difficult, infrequent or incomplete bowel movements, is unknown.

* Eli Lilly's Taltz worked better than AbbVie Inc.'s Humira in a phase 3b/4 study in treating active psoriatic arthritis, a disease involving joint pain and swelling. The study, involving 566 patients with the joint disease, also showed that Taltz led to complete skin clearance among patients with a skin disorder called plaque psoriasis.

* Rockville, Md.-based Supernus Pharmaceuticals Inc.'s epilepsy drug, Oxtellar XR, was approved by the FDA as a stand-alone therapy to treat partial-onset seizures in patients ages six to 17 years.

* Teva Pharmaceutical Industries Ltd. and Celltrion Inc. said the FDA approved Herzuma, a biosimilar version of Roche's blockbuster breast cancer medicine Herceptin. The regulator approved Herzuma, or trastuzumab-pkrb, to treat breast cancer in patients with a mutation of the human epidermal growth factor receptor 2, or HER2 gene.

* Amgen Inc. said the U.S. Food and Drug Administration approved Nplate to treat a rare bleeding disorder in children who are one year old and older. Nplate is now approved to treat children with immune thrombocytopenia for at least six months who have had an insufficient response to corticosteroids, immunoglobulins or splenectomy.

* Roche said the European Medicines Agency granted priority medicines designation to risdiplam for treating spinal muscular atrophy, a neuromuscular disease. Spinal muscular atrophy is a rare, genetic disease affecting the area of the nervous system that controls voluntary muscle movement.

* Houston-based Bellicum Pharmaceuticals Inc. said its experimental chimeric antigen receptor T cell therapy BPX-601 shrank tumors among two patients with advanced pancreatic cancer in an early-stage study. BPX-601 is a controlled form of CAR-T cell therapy in which the administration of the drug, rimiducid, triggers the growth of re-infused cells.

Operational activity

* Innovent Biologics Inc. agreed to buy the rights from U.S. drugmaker Incyte Corp. to develop and commercialize three cancer drugs in China, Hong Kong, Macau and Taiwan. The Suzhou, China-based company will pay $40 million in cash as an upfront payment and an additional $20 million subject to the first clinical trial application for the three drugs in China, which Innovent aims to achieve in 2019. Incyte will also receive up to $129 million in potential development and regulatory milestones and as much as $202.5 million when certain commercial milestones are reached. It will also gain royalties from the high teens to the low twenties on future sales.

* Advaxis Inc. said Amgen withdrew from a collaboration to develop a customized cancer treatment. Princeton, N.J.-based Advaxis will regain the worldwide rights to develop and commercialize ADXS-NEO, an immunotherapy designed to trigger the immune system's response against unique mutations contained and identified in the tumor.

* Eli Lilly and Co. will acquire a preclinical pain drug program from Hydra Biosciences Inc. The Indianapolis-based company will acquire all assets related to Cambridge, Mass.-based Hydra's pre-clinical program related to the transient receptor potential ankyrin 1 inhibiting drugs.

* Elanco Animal Health Inc. will restructure its international operations and transition to a distribution model rather than operating out of physical locations in certain countries as part of the animal health unit's separation from former parent company Eli Lilly. The restructuring actions will cost an estimated $37 million in the fourth quarter of 2018.

Our features

Pinpointing antibiotics use in farm animals remains elusive amid drug resistance: Though the mounting threat of antibiotic-resistant bacteria has risen to the forefront of global health authorities and consumers alike, the use of antibiotics in farm animals in the U.S. remains murky due to a lack of federal oversight.

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Other features

* Novartis AG is planning to partner with reinsurance companies to help fund the cost of the latest, but expensive, personalized therapies, the Switzerland-based company's CEO Vas Narasimhan told the Financial Times in an interview.

The day ahead

Early morning futures indicators pointed to a lower opening for the U.S. market.

In Asia, the Hang Seng retreated 0.03% to 26,087.98. The Nikkei 225 rose 0.62% to 21,506.88.

In Europe as of midday, the FTSE was down 0.47% to 6,812.80, and the Euronext 100 fell 0.69% to 936.76.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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