Amazon May Push Walgreens To Expand UnitedHealth And LabCorp Deals

With Amazon officially entering the pharmacy business, pressure may be emerging for Walgreens Boots Alliance to expand its relationship with UnitedHealth Group, which is developing urgent care centers attached to Walgreens pharmacies.

For now, the collaboration between UnitedHealth Group’s MedExpress urgent care centers and Walgreens has connected primary care with the corner drugstore in 15 locations across the U.S. The relationship to date has been considered a pilot.

But the UnitedHealth venture and other Walgreens pilots are suddenly taking on urgency among some investors after Amazon last week said it would buy the online pharmacy PillPack, potentially threatening Walgreens drugstore revenues should customers opt not to come inside a brick-and-mortar pharmacy.

Some observers think Walgreens should be taking steps to lock in more sales from their patients and customers as rival CVS Health is doing by buying Aetna, the nation’s third-largest health insurer. Because Aetna provides health benefits to more than 20 million Americans, the deal with CVS is expected to eventually bring those customers inside CVS drugstores for prescriptions and primary care services. CVS and Aetna have already been discussing developing more healthcare services like urgent care inside the drugstores.

Investors want Walgreens to escalate its partnership strategy and expand its pilots across the country.

“For us, the biggest issue is the lack of revenue diversification, which could make (Walgreens) more vulnerable to market share gains over the long term than CVS,” Mizuho Securities USA analyst Ann Hynes said in a report out this week.

Hynes suggested a “strategic relationship with a high-quality partner that drives customers to the retail stores” like UnitedHealth Group or the diagnostic test maker LabCorp, which has been working with Walgreens since last year to provide lab-testing services in its stores in limited areas of the U.S. The retail approach of UnitedHealth’s Optum healthcare delivery unit also includes not only the MedExpress urgent care facilities but ambulatory surgery centers, doctor practices and related locally based community health clinics.

Walgreens executives have said they are currently evaluating whether to broaden the relationship with UnitedHealth as well as whether to expand its collaboration with LabCorp.

“In the quarter, LabCorp opened a number of clinics in our Gainesville (Fla.) stores as part of the extension of the trials we have been running with LabCorp in the last months,” Walgreens president Alex Gourlay told analysts last week on the drugstore chain’s fiscal third quarter earnings call. “These clinics have performed well. As this relationship continues to prove advantageous for both partners, we are looking at how we can expand the service further and faster throughout our network.”

https://bit.ly/2KFK0DL

Orion takes repurposed heart failure drug into phase 3 for ALS

Finnish drugmaker Orion Pharma is pressing ahead with a pivotal trial for its amyotrophic lateral sclerosis drug ODM-109, despite mixed results in a phase 2 trial.

The first patients have now been recruited into its phase 3 trial of ODM-109—an oral formulation of Orion’s heart failure drug Simdax (levosimendan)—in the hope of showing that it can help support breathing function in patients with the devastating neurodegenerative disease.

Orion said it plans to enroll 450 subjects in the placebo-controlled trial at sites in Europe, North America and Australia, with patients taking the drug for a year to see if it can slow down the respiratory difficulties that are the usual cause of death in ALS.

In a phase 2 trial involving 66 ALS patients, ODM-109 missed its primary endpoint of an improvement in sitting slow vital capacity (SVC)—a measure of lung function—but was able to improve SVC when patients were lying on their backs.

“If the results of the [phase 3] trial are positive, the aim is to file for marketing authorization in the U.S. and Europe,” according to Orion. Results from the study are due in 2020.

For years, ALS only had one FDA-approved therapy—Sanofi’s Rilutek (riluzole)—which has limited efficacy, with most patients still dying three to five years after diagnosis. In 2017, Mitsubishi Tanabe got FDA approval for free radical scavenger Radicava (edaravone), after filing the drug at the agency’s request, based on a six-month study that showed a slower decline in physical function compared to placebo.

Not all are convinced by the data for Radicava just yet, however, and it’s widely recognized that other new therapies are desperately needed that can definitively slow down the loss of function in ALS.

Prospects for a new therapy for ALS took a big knock last year after the high-profile failure in phase 3 of Cytokinetics’ tirasemtiv, despite major tweaks to the trial protocol, but the company is hoping a clutch of new drugs, along with ODM-019, could end the drought.

Another European biotech, France’s AB Science, had a marketing application for its masitinib drug for ALS provisionally turned down in Europe in April, with regulators saying a phase 2/3 trial that showed efficacy at the highest dose used wasn’t sufficient to support approval. The company has filed additional information to the EMA and is planning a confirmatory trial that it hopes will also support a U.S. filing.

Meanwhile, some of the other players in the field include Biogen and Ionis, which have a SOD1-targeting antisense drug called BIIB067 in phase 1/2 trials, Amylyx with AMX0035 (sodium phenylbutyrate and tauroursodeoxycholic acid) in phase 2 with results due later this year, and new startup QurAlis.

https://bit.ly/2KYhKs4

Biogen bullishness spreads to AC Immune

Thinly traded AC Immune (ACIU +32.4%) is up a 16x surge in volume in apparent concert with Biogen’s (BIIB +17.9%) rally related to positive Phase 2 data on early Alzheimer’s candidate BAN2401, a humanized anti-amyloid beta protofil monoclonal antibody.

One of AC Immune’s Alzheimer’s candidates is crenezumab, in Phase 3 development by licensee Genentech, a humanized monoclonal antibody that binds to all forms of misfolded proteins, including Tau and beta amyloid.

Previously: Biogen +6% after Alzheimer’s drug succeeds in trial (July 5)

Previously: Biogen’s Alzheimer’s candidate BAN2401 flunks mid-stage study(Dec. 21, 2017)

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Abbott Q2 organic growth estimated near 7% at RBC

RBC Capital analyst Glenn Novarro keeps his Outperform rating and $67 price target on Abbott Laboratories ahead of its Q2 results, saying he expects the company’s accelerated growth in its Established Pharmaceuticals segment and continued strength in Medical Devices to produce organic growth close to 7%. Novarro adds that in spite of the more challenging comps coming in the second half of this year, Abbott’s diversified portfolio performance discussed in the company’s most recent investor event in May should help it achieve organic growth of 6.5%-7.0% in FY18. The analyst recommends that investors buy Abbott stock heading into the earnings report.
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Hitting cancer early: AstraZeneca’s bid to outmaneuver rivals

 AstraZeneca suffered its biggest daily share price drop a year ago after a key cancer drug trial failed amid feverish speculation the chief executive might quit.

Yet today two-thirds of analysts tracked by Thomson Reuters recommend the stock, making it one of the sector’s biggest consensus buys, and CEO Pascal Soriot says he is “absolutely” happy to carry on into the 2020s as he chases early use of modern cancer drugs.

“I don’t have any plans to retire anytime soon,” he told Reuters.

Soriot and his team are increasingly confident that while AstraZeneca may have lost one part of the battle for cancer market dominance, it can still win elsewhere by targeting tumors before they have spread around the body.

That is the second element of a twin-track strategy to differentiate AstraZeneca in the hot area of immune system-boosting drugs, which has seen rivals – led by Merck & Co – leap ahead in late-stage or metastatic disease.

The idea that immunotherapy may actually work best in less sick patients is logical, since the immune system’s natural role is to destroy nascent tumors. Indeed, some cancer doctors believe this could become the main battleground in future.

“It’s not yet prime time … but in the long run I think we will move immunotherapy to a more front-line early disease situation and I hope we will be treating more patients in that setting than in late-stage disease,” said John Haanen, an oncologist at the Netherlands Cancer Institute.

JUMP-START

AstraZeneca already has a jump-start here, since its Imfinzi immunotherapy is the new standard of care in treating early inoperable stage III lung cancer. That win follows a decision to run a study in this setting ahead of competitors.

“It was a smart move by AstraZeneca and they are now absolutely in business,” said Haanen.

Imfinzi sales will be a major focus for investors when the company reports half-year results on July 26.

Competitor Merck last month presented similar stage III results from a small study, but a larger trial using Bristol-Myers Squibb’s Opdivo drug recently stopped recruiting patients, suggesting direct competition is not imminent.

AstraZeneca hopes to build on this lead in the so-called adjuvant setting, where drugs are given after surgery to keep the cancer from coming back.

Its BR.31 immunotherapy trial with Imfinzi was the first to start adjuvant therapy for lung cancer and the company thinks it could be the first to complete a major trial, with disease-free survival data due in 2020.

“We are certainly hopeful to be the first,” said David Berman, the group’s head of immuno-oncology.

Berman jumped ship from Bristol-Myers three years ago and believes his new employer has hit on a winning strategy. “By moving to early stage you can actually leapfrog competitors who are ahead of you in stage IV,” he said.

Still, the race is on in both the adjuvant and neoadjuvant setting, where treatment precedes surgery. With each trial taking several years, picking winners is not easy.

“If everyone is similar on timing, then it is going to come down to data,” said Liberum analyst Roger Franklin, who rates AstraZeneca a hold.

HOW LONG TO TREAT?

Lung cancer is by far the biggest killer among cancers and the top commercial opportunity for so-called PDx immunotherapy infusions expected to be worth $15 billion in sales this year, according to Thomson Reuters’ consensus forecasts.

AstraZeneca estimates the majority of lung cancer patients are being diagnosed relatively early in the disease, when there is a better chance of a cure.

One issue that concerns doctors is how long patients treated post-surgery should take immunotherapy drugs, especially given that they cost nearly $150,000 a year.

Most of the adjuvant trials now under way against various cancers are designed to give drugs for one year. Haanen is skeptical: “Do you really need a year’s treatment? Probably not.”

AstraZeneca is also pushing its early treatment mantra beyond immunotherapy with its lung cancer pill Tagrisso, which works is targeted at patients with specific genetic mutations that are particularly common in the booming Chinese market.

With a clear lead in this particular treatment area, AstraZeneca has time to build out its Tagrisso business in early disease through two big ongoing clinical trials.

Dan Mahony, a healthcare fund manager at Polar Capital, is bullish on AstraZeneca’s prospects but reluctant to predict how the fight will play out in the long term.

Still, he says: “There’s more going on at AstraZeneca than met the eye a year ago.”

https://bit.ly/2ziml6U

J&J target cut at RBC

Johnson & Johnson price target lowered to $143 from $155 at RBC Capital. RBC Capital analyst Glenn Novarro lowered his price target on Johnson & Johnson to $143 ahead of its Q2 results, saying the trends in the U.S. prescription drug market suggest that any upside in the company’s Pharmaceutical segment is unlikely. Novarro expects the management to affirm its FY18 guidance for operational growth and earnings, but warns that the revenue guidance may see a downgrade due to the recent USD strength. The analyst also lowered his FY18 revenue projections to $81.1B from $81.3B and FY19 forecast to $80.6B from $83.0B.

https://bit.ly/2zmpC5k

Arbutus cut to neutral by B. Riley

Arbutus Biopharma downgraded to Neutral from Buy at B. Riley FBR. B. Riley FBR analyst Madhu Kumar downgraded Arbutus Biopharma to Neutral with an unchanged price target of $9. The analyst cites valuation for the downgrade following the stock’s recent rally.

https://bit.ly/2ubEc9T