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Tuesday, August 6, 2019

CVS Health Q2 2019 Earnings Preview

CVS Health (NYSE:CVS) is scheduled to announce Q2 earnings results on Wednesday, August 7th, before market open.
The consensus EPS Estimate is $1.69 (flat Y/Y) and the consensus Revenue Estimate is $62.66B (+34.1% Y/Y).
Over the last 2 years, cvs has beaten EPS estimates 100% of the time and has beaten revenue estimates 75% of the time.
Over the last 3 months, EPS estimates have seen 13 upward revisions and 7 downward. Revenue estimates have seen 10 upward revisions and 2 downward.

Invacare up 24% after Q2 report as turnaround continues

Invacare (IVC +23.7%) is up on average volume following its Q2 reportreleased after the close yesterday. Key points:
Sales were down 4% to $235.9M. Non-GAAP EBITDA up 312% to $3.6M. Free cash flow improved by $24.9M.
Management says its turnaround plan remains on track and believe it will achieve its non-GAAP EBITDA target of at least $20M for the year. The run-rate by the end of next year should be $85M – 105M.
Cash and equivalents at quarter-end were $89.5M (-23%) due to funding requirements of the business.
2019 and 2020 guidance reaffirmed.

Ironwood Proposes Offering of $330 Million of Convertible Senior Notes

Ironwood Pharmaceuticals, Inc. (“Ironwood”) (Nasdaq: IRWD), a GI-focused healthcare company, today announced that it intends to offer, subject to market and other conditions, $165 million aggregate principal amount of convertible senior unsecured notes that will mature on June 15, 2024 (the “2024 Notes”) and $165 million aggregate principal amount of convertible senior unsecured notes that will mature on June 15, 2026 (the “2026 Notes” and, together with the 2024 Notes, the “Notes”). The Notes will be offered and sold to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). Ironwood also expects to grant the initial purchaser of the Notes an option to purchase, within a 13-day period from, and including, the date of original issuance of the Notes up to an additional $25 million aggregate principal amount of the 2024 Notes and $25 million aggregate principal amount of the 2026 Notes.
The Notes will bear cash interest, payable on June 15 and December 15 of each year, beginning on December 15, 2019. The Notes will not be redeemable prior to maturity. The Notes will be convertible, only during certain periods and subject to certain circumstances, into cash, shares of Ironwood Class A common stock (“Ironwood common stock”), or a combination of cash and shares of Ironwood common stock, at Ironwood’s election. Final terms of the Notes, including interest rate, conversion rate, conversion price, and certain other terms of the offering, will be determined at the time of pricing.
Ironwood intends to use the net proceeds, together with cash on hand, to redeem all of its outstanding 8.375% Notes due 2026, repurchase approximately $185 million aggregate principal amount of its outstanding 2.25% Convertible Notes due 2022 (“the existing convertible notes”), pay the cost of the capped call transactions (described below) and, to the extent additional proceeds are available, fund general corporate purposes. Ironwood currently expects to settle the remaining principal amount of the existing convertible notes in cash at maturity.

Gilead Descovy seems set for PrEP nod in men, but what about women?

As FDA panel experts gear up to debate the merits of Gilead’s Descovy for HIV prevention, the question doesn’t seem to be whether it’s worthy of an indication in men, the largest part of the market. It’s whether it should get a green light in women.
FDA reviewers said they were all for Descovy approval as PrEP in two groups of people, according to briefing documents (PDF) filed Monday. “[T]he data support the proposed PrEP indication for Descovy” in men who have sex with men and transgender women, the reviewers wrote.
And that’s obviously good for Gilead. “The most important insight and information from the briefing documents is that Descovy is clearly going to be approved for its most important indication,” SVB Leerink analyst Geoffrey Porges wrote in a note to clients.

As he notes, men account for the “vast majority” of pre-exposure prophylaxis (PrEP) use for Gilead’s Truvada, a med rapidly approaching the end of its exclusivity and whose sales Gilead is seeking to replace.
But the reviewers weren’t so sure about an OK in other women, which would be helpful to have, Porges noted. “[F]or Gilead’s purposes it is useful to have a broad label with all relevant at-risk populations included,” he added—including cisgender women.
Securing a go-ahead in those women depends on whether the FDA finds two external pharmacokinetic studies sufficient to extrapolate Descovy results from a study that enrolled only men and transgender women.
Getting “such an endorsement” from the FDA’s advisory committee, which is set to convene Wednesday, would give the Descovy PrEP launch “additional momentum,” Porges wrote.

All in all, the way Porges sees it, “Gilead’s requested label is likely to be granted”—and that’s good news for the company’s sales ambitions. Porges, for his part, forecasts $3.8 billion in peak Descovy sales, which should be more than sufficient to eventually offset the nearly $3 billion Truvada pulled in last year. More than 80% of Truvada’s 2018 haul came from its PrEP indication.
While a recent SVB Leerink survey indicated Descovy could “rapidly gain PrEP market share,” Gilead’s success will depend on how well it can penetrate a market that’s still in its early stages. An estimated 212,000 U.S. citizens currently take medication for PrEP, though the CDC pegs the potential population at 1.1 million.

FDA ready to crack down as Novartis reveals manipulated Zolgensma data

Novartis’ spinal muscular atrophy gene therapy Zolgensma made all kinds of headlines leading up to and following its approval. Now, it’s making just the kind of headlines no drug company wants to be caught up in.
On Tuesday, the FDA said Novartis submitted a drug application with manipulated data and didn’t inform regulators of the issue until one month after approval. The company was aware of the issues two months before the FDA greenlighted the drug, the agency says. If the regulator had been aware of the data manipulation, it would’ve had to delay its decision and strike up an investigation.
Acting FDA chief Ned Sharpless, M.D., tweeted that the agency “will use its full authorities to take action, if appropriate, which may include civil or criminal penalties.”
Still, the FDA believes the drug should remain on the market. Peter Marks, M.D., Ph.D., director of FDA’s Center for Biologics Evaluation and Research, said in a statement that the agency’s concerns are “limited to only a small portion of the product testing data” relating to testing in animals, not in humans.
Following an investigation, Wilson Bryan, M.D., director of the agency’s Office of Tissues and Advanced Therapies, wrote in a memo that he still believes Zolgensma is “safe, pure, and potent” for its approved population.
But, he wrote, Novartis’ AveXis unit “appears to have become aware of the data manipulation as early as March 14, 2019.” The drug won approval on May 24, and the company “did not inform FDA of the issue until over a month after the BLA approval,” Bryan wrote. AveXis told the FDA in late June that its “personnel had manipulated data from an in vivo murine potency assay,” Bryan wrote in the memo.
“If AveXis had informed FDA of this issue prior to the BLA approval, I believe that the approval would have been delayed beyond the PDUFA goal date of May 31, 2019,” Bryan wrote, saying the agency would’ve had to strike up a probe. In the end, though, Bryan believes the FDA would’ve approved the application.
Novartis acquired AveXis in April last year to bolster its presence in gene therapies, with Zolgensma representing the primary drug candidate from the takeout. The drug now carries the world’s highest pharma price tag at $2.125 million and treats SMA patients under 2 with biallelic mutations in the survival motor neuron 1 gene.
Tuesday’s news is only the latest regulatory misstep for Novartis, which has been working to bolster its compliance following a number of scandals around the world in recent years. From 2013 to 2015, scandals erupted in Japan as authorities discovered Novartis manipulated data and failed to report side effects.
The drugmaker has also been hit with bribery allegations in various countries and suffered through its embarrassing episode with President Donald Trump’s former personal attorney Michael Cohen last year. Upon taking the CEO post last year, Vas Narasimhan has made compliance a priority, but the Zolgensma issue shows the company still has some work to do in the area.

Jazz Pharma Advances Recombinant Crisantaspase Development Program

Jazz Pharmaceuticals plc (Nasdaq: JAZZ) today announced that the Phase 1 study of its recombinant crisantaspase molecule, JZP-458, met its efficacy and safety objectives. The company plans to initiate a single-arm, pivotal Phase 2/3 study evaluating JZP-458 as a potential treatment option for patients with acute lymphoblastic leukemia (ALL) or lymphoblastic lymphoma (LBL) who are hypersensitive to E. coli-derived asparaginase products.
‘Jazz is committed to the ALL patient community, and we are pleased to advance this development program with the goal of bringing a new treatment option to ALL and LBL patients who are hypersensitive to E. coli-derived asparaginase products as soon as possible,’ said Robert Iannone, M.D., M.S.C.E., executive vice president, research and development of Jazz Pharmaceuticals. ‘Following a meeting with the U.S. Food and Drug Administration, we are finalizing the Phase 2/3 study protocol in collaboration with the Children’s Oncology Group and plan to initiate the study later this year.’
A recombinant crisantaspase Phase 1 study in healthy volunteers in the U.S. met safety and efficacy objectives with efficacy based on measurement of serum asparaginase activity levels. Results of this Phase 1 study will be submitted for presentation at an upcoming medical meeting.

FDA says some data testing Novartis’ $2 million gene therapy was manipulated

 The U.S. Food and Drug Administration said on Tuesday that some data from early testing of Novartis more than $2 million gene therapy Zolgensma was manipulated, but the agency believes the treatment should remain on the market.

The FDA said it is carefully assessing the situation. The manipulated data was used to illustrate comparability between an early version of Zolgensma and the later version of the treatment, which was manufactured using a different process.
The FDA does not believe that the manipulation impacts the safety or testing surrounding the version of the drug, which treats spinal muscular atrophy (SMA), the leading genetic cause of death in infants.
Novartis’ Avexis unit informed the FDA of the data manipulation on June 28, the regulator said.
Novartis acquired the therapy’s maker in 2018, and the drugmaker was aware of the manipulation as early as March – more than two months before the treatments approval, the FDA said.
The regulator plans to take action against the company including possible civil or criminal penalties. Novartis could not be immediately reached for comment.
Zolgensma – the world’s most expensive drug – was approved as a one-time treatment for SMA in late May.
The disease often leads to paralysis, breathing difficulty and death within months for babies born with the most serious Type I form. SMA affects about one in every 10,000 live births, with 50% to 70% having Type I disease.
The FDA said its concerns were currently limited to a small portion of product testing data included in the marketing application for the therapy.
According to an inspection note released by the agency, there were discrepancies in some of its mouse survival data results.
The manipulated data does not change the FDA’s positive assessment of information from human clinical trials, it said. The agency said it will continue to evaluate the integrity of the product testing data used in the development of Zolgensma’s manufacturing process.
U.S.-listed shares of Swiss drugmaker Novartis fell 2.8% to $88.21 on Tuesday. Shares of Biogen Inc, which makes rival SMA treatment Spinraza, rose 2.1% to $240.17 and shares of PTC Therapeutics Inc, which is also developing an SMA treatment rose 4.9% tp $44.75.