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AstraZeneca, Chugai report earnings hike; Amazon acquires healthcare startup

Top news

* AstraZeneca PLC reported third-quarter core EPS of 99 U.S. cents, up 40% from a year earlier, and compared to the S&P Global Market Intelligence consensus normalized EPS estimate of $1.02. The U.K. drugmaker raised its full-year sales guidance for the second time, citing the strong performance of its new medicines, and now expects product sales to grow by a low- to mid-teens percentage at constant exchange rates.

* Chugai Pharmaceutical Co. Ltd. said net income attributable to shareholders for the first nine months rose 66.9% year over year to ¥117.39 billion from ¥70.34 billion. The Japanese drugmaker revised its full-year outlook and now expects core EPS to be ¥302.00, an increase from the previous forecast of ¥198.00.

* Online retail giant Inc. acquired healthcare startup Health Navigator Ltd. as part of its new healthcare offering for employees, a company spokesperson confirmed to S&P Global Market Intelligence. London-based Health Navigator, which specializes in the provision of healthcare services for high-risk patient groups, will be part of Amazon Care, a virtual health clinic for the company's Seattle-based employees.

* Moody's said drug distributors could have higher liability than drugmakers in any global settlement in opioid litigation. The rating agency highlighted the $215 million settlement reached by AmerisourceBergen Corp., Cardinal Health Inc. and McKesson Corp. with Ohio's Cuyahoga and Summit counties — significantly larger than those previously agreed with drug manufacturers such as Teva Pharmaceutical Industries Ltd.

* Meanwhile, Johnson & Johnson said it has reached an "agreement in principle" with a committee of state attorneys general for $4 billion to settle all remaining opioid lawsuits that claim the company engaged in wrongful marketing practices leading to the painkiller addiction epidemic in the U.S. The pharmaceutical company did not admit to any wrongdoing, and the settlement would free J&J from future lawsuits filed by states, cities or counties.

* In a recurring column dubbed First in Human, S&P Global Market Intelligence talks about the search for a vaccine that could render a patient immune to the addictive properties of opioid painkillers. The National Institutes of Health solicited proposals for the clinical development of vaccines that could prevent the passage of opioids into the brain in a March 2019 broad agency announcement.

On the policy front

* Seema Verma, administrator of the U.S. Centers for Medicare and Medicaid Services, declined House Democrats' requests to provide details of President Donald Trump's backup plan if the Affordable Care Act is invalidated by the U.S. Supreme Court. Rep. Frank Pallone, D-N.J., chairman of the House Energy and Commerce Committee, and other Democrats pressed Verma about the administration's plans for how it would address millions of Americans being left without healthcare insurance and other programs forced to stop if the ACA is declared unconstitutional.

* The U.S. Food and Drug Administration proposed that manufacturers put warning labels on breast implant products to better inform patients of the risks associated with their use. Risks stated on the boxed warning label should include that implants are not considered lifetime medical devices, risk of complication increases over time and breast implants have been associated with breast implant-associated anaplastic large cell lymphoma.

M&A and capital markets

* Cerberus Capital Management LP is looking to sell privately held Covis Pharma Holdings Sàrl, which makes therapies for respiratory, allergy, cardiovascular, gastroenterology and central nervous system diseases, Bloomberg News reported. The deal could be valued at about $800 million, insiders told the news outlet.

* Italy's Recordati Industria Chimica e Farmaceutica SpA completed the $390 million acquisition of worldwide rights to Novartis' Cushing's disease drug Signifor and its extended-release version, Signifor LAR. Cushing's is a severe endocrine disease caused by an enlargement in the pituitary gland that results in overproduction of the body's main stress hormone, cortisol.

Drug and product pipeline

* The U.S. National Institutes of Health said it is collaborating with the Bill & Melinda Gates Foundation to develop affordable and effective gene-based treatments for sickle cell disease and HIV. The NIH and the foundation will each invest at least $100 million in the next four years to bring these therapies to parts of the world most affected by the diseases.

* India's Dr. Reddy's Laboratories Ltd. initiated a voluntary recall of its ranitidine medicines in the U.S. market due to the confirmed contamination of a potential cancer-causing impurity called N-Nitrosodimethylamine, or NDMA. The recall, which was initiated Oct. 1, follows a warning issued by the U.S. FDA in September regarding the presence of NDMA in ranitidine, which is used to treat heartburn associated with acid indigestion and sour stomach.

Sanofi, which markets ranitidine as Zantac, and GlaxoSmithKline PLC, Novartis AG and Perrigo Co. PLC — makers of generic versions of the drug — were among companies that pulled ranitidine off shelves in response to the NDMA issue.

In an Oct. 23 update, the U.S. FDA said preliminary tests showed there was no NDMA found in alternatives to Zantac, such as AstraZeneca's Nexium, GSK's Prevacid and McNeil Consumer Pharmaceuticals Co.'s Pepcid.

* The U.S. FDA granted expanded approval for GlaxoSmithKline's Zejula to treat certain patients with advanced ovarian, fallopian tube or primary peritoneal cancer. GSK gained Zejula, or niraparib, from its $5.1 billion acquisition of Waltham, Mass.-based cancer-drug maker Tesaro Inc.

* Johnson & Johnson filed an application with the European Medicines Agency seeking approval for expanded use of its medicine Tremfya to treat adult patients with active psoriatic arthritis.

Operational activity

* Eli Lilly and Co. is depending heavily on newer products as the effects of pricing pressures, competition and the withdrawal of a cancer drug from the market are weighing on earnings. Diabetes drug Trulicity saw sales volume growth of 42% in the U.S. but dragged due to pricing pressure as a result of rebate reform and payer consolidation, according to CFO Joshua Smiley.

* Alkermes PLC is pulling $20 million to $30 million from its research and development investments for the year in a restructuring bid to cut costs by $150 million and change the beleaguered company's therapeutic profile. As part of its restructuring plan, Alkermes will ax approximately 160 jobs and in the meantime turn its attention to novel drug candidates amid slipping sales of its approved medicines, substance use disorder treatment Vivitrol and schizophrenia drug Aristada.

* Alexion Pharmaceuticals Inc. is looking to substantially expand its product portfolio by potentially launching at least 10 drugs by 2023, according to CEO Ludwig Hantson. The expansion of the company's clinical-stage pipeline is a mix of business development and internal research, Hantson told investors on the company's Oct. 23 third-quarter 2019 earnings call.

* BioMarin Pharmaceutical Inc. said its non-GAAP income for the third quarter was $78.1 million, an increase of 28.7% from $60.7 million in the prior-year period. The company expects non-GAAP income in the range of $150 million to $170 million for the full year, compared with previous guidance of $130 million to $170 million.

The day ahead

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

In Asia, the Hang Seng jumped 0.87% to 26,797.95, while the Nikkei 225 was up 0.55% to 22,750.60.

In Europe, around midday, the FTSE 100 increased 0.69% to 1,099.00, and the Euronext 100 increased 0.68% to 1,098.98.

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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