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Biotech Analysis Central Pharma News: Allergan's Restasis Trouble, Mylan's Advance On Teva, Pfizer's Alzheimer's Exit

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Includes: AGN, AXON-OLD, AZN, BIIB, LLY, MRK, MYL, PFE, TEVA
by: Terry Chrisomalis
Summary

Allergan sets eyes on 1,000 job cuts as a generic version of Restasis looms.

Mylan continues its quest to steal market share from Teva's Copaxone.

Pfizer decides to make its exit out of the Alzheimer's and Parkinson's space.

Welcome to Biotech Analysis Central Daily News, a daily news report and analysis about what has happened lately in the biotech industry.

Allergan To Cut 1,000 Jobs As A Generic Restasis Sets To Take Stage

News: Recently, Allergan (AGN) announced that it would cut up to 1,000 jobs to counter its issue with generic versions of Restasis and reduce costs. The company employs around 18,000 workers, and will now cut jobs as part of a restructuring effort. The company failed to protect its patents, and could face competition from generics for Restasis. This all occurred back in mid-October when the court ruled against the company's patents. Allergan was forced to make a desperate move to protect the patents when it tried to transfer them to the Saint Regis Mohawk Tribe. It did so in order to protect the patents from the U.S. patent office. In the end though, Allergan's effort to protect its patents failed.

Analysis: It is a major problem that Allergan has on its hands. That's because Restasis is Allergan's second best-selling drug. To put this into perspective, Restasis sales back in 2016 came in at $1.49 billion which accounted for about 10% of total revenue for Allergan. Allergan can't really afford to lose a lot of that revenue to generics. It is currently fighting the court's ruling on the Restasis patents in an appeal. This spells big trouble for Allergan. A Seeking Alpha Author by the name of "Shock Exchange" does a good job of explaining why Allergan's growth is dead, and why it has many other problems. Allergan is not a good buy at this time.

Mylan Continues To Capture Share Against Teva

News: Mylan (MYL) has already taken a huge chunk of market share from Teva's (TEVA) Multiple Sclerosis (NYSE:MS) treatment Copaxone. After only three months on the market, Mylan is making a good stride at taking market share away from Teva. The problem is that Teva desperately needs to keep its sales of Copaxone. After only 3 months on the market, Mylan's generic versions of Copaxone have gobbled up to 10% of the total market share, leaving Teva's newest version of Copaxone with 72% market share and the original Copaxone formulation with 12% market share.

Analysis: The reason for Mylan doing so well with its generic version of Copaxone is because it has been able to beat Teva when it comes to the pricing of the drug for starters. Mylan had priced its generic version of the drug lower by as much as 25% to 30%. This has led Teva to attempt to counter with a discount of its own to try to match Mylan's price of treatment. That's not all that Mylan has accomplished to take market share from Teva. Mylan has even launched its own patient advocate program. These two things thus far have been positive steps in taking market share away. What does that mean for Teva? That means that Teva is likely to see a steep drop in Copaxone sales. Why is Copaxone losing market share a bad thing? That's because Teva needed Copaxone to at least perform well in order to keep its company afloat. The reason being is Teva's Copaxone accounts for 20% of the company's total revenues. I have shown this point in a Seeking Alpha Article I wrote named "Teva Receives Big Blow On Generics Pricing." As you can imagine, losing market share on Copaxone alone will have a negative effect on earnings. That does not include all the issues that Teva still faces with generic pricing pressure. Teva remains a sell at this time.

Pfizer Exits Out Of The Alzheimer's Space

News: Recently, it was stated that Pfizer (PFE) would exit the Alzheimer's and Parkinson's space. That means that it will not focus development in either of these two indications. That involves cutting out a lot of phase 1 and phase 2 trials that were focused on being advanced in the pipeline. In addition, that would bring up to 300 job cuts from the company itself.

Analysis: In my opinion, the move that Pfizer has done is the right one. I very much, though, would have liked to see it stay in the game on developing a treatment for Alzheimer's and Parkinson's. However, I can totally understand why they chose this route. That reason being is over the years, there has hardly been any significant advance achieved in the Alzheimer's space. The company has stated that it wants to advance in other areas of its pipeline that are showing better progress. Can you really blame the company for that? Especially after all the failures seen in the Alzheimer's space. Let's put it this way, since 2002 multiple biotech companies have been hoping to obtain positive late-stage data in the Alzheimer's space. To date, 99% of the companies have failed to achieve any success in this area. There was one company by the name of Axovant Sciences (AXON-OLD) which had failed its phase 3 trial using its Alzheimer's drug intepirdine back in September of 2017. Biogen (BIIB) has shown some early positive data, but is awaiting further results from its phase 3 to determine if its drug aducanumab has what it takes to succeed in this indication. Merck (MRK) has its BACE inhibitor drug known as verubecestat, which had shown not to do well in patients with mild Alzheimer's disease. It is hoping to achieve success in patients in the early stage of the disease instead in a phase 3 trial. Eli Lilly (LLY) and its partner AstraZeneca (AZN) are also using a BACE inhibitor to go after early-stage Alzheimer's patients. They too are only targeting the early stages of the disease. All these phase 3 trials are expected to read out results by 2019. Despite Pfizer exiting out of this space, it still remains a good buy. It garnered investors an 11% return during 2017, along with a 3% dividend yield as well. It remains a strong buy.

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.