Risk assets are trying to stage a recovery following Fed chair Powell's blunt statements last week that it is "very premature to think about pausing [rate hikes]" and the "path to a soft landing narrowed". The Fed has now raised the fed funds rate by 75 basis points at the last four consecutive meetings which is quite remarkable considering there has only been one other such 75 basis point hike in the past 30 years (and none larger than 75 basis points).
Pharma earnings wrapped up with another trio of beat and raise quarters from GSK Plc (GSK), Pfizer (PFE) and Eli Lilly (LLY).
Of these three, LLY was the only one to hit an all-time high stock price and trade at a sector high multiple of >40x in part due to excitement over their growth franchise Mounjaro, a glucose-dependent insulinotropic polypeptide (GIP) receptor and glucagon-like peptide-1 (GLP-1) receptor agonist. In contrast, PFE trades at <10x earnings and their combined 2022 covid-19 vaccine and antiviral revenue will be greater than Mounjaro's aggregate consensus revenue through 2030.
Strength was seen in many SMID biopharma quarterly numbers including those from Horizon Therapeutics (HZNP), United Therapeutics (UTHR), Exelixis (EXEL), Neurocrine Biosciences (NBIX), Dynaxax Technologies (DVAX), Galapagos (GLPG) and Puma Biotechnology (PBYI).
Bolt on M&A continued as Oyster Point Pharma (OYST) announced that it is being acquired by Viatris (VTRS) for a deal value of ~$360M in upfront cash and up to ~$425M with full contingent value right achievement. This represented a, ~30-50% premium over the prior day's closing price.
Midterm elections may provide yet another tailwind to the sector setting the stage for a more attractive biopharma investment landscape as the calendar flips to 2023.
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