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  • Jonathan Poyer

ONO Pharmaceutical Acquires Deciphera in a Monster Deal - Earnings Season has Begun with Big Beats

M&A Monday helped the S&P Select Biotech Index bounce off the 200 day moving average as investors wonder if a 20% pullback since March fully reflects repricing of rate expectations.

Small caps remain the least expensive size segment with the relative P/E of small vs. large at 0.75x compared to a long-term average of 1.0x. Major index concentration remains at peak levels with the top 10 US stocks accounting for a record 34% of S&P 500 market capitalization.


  • Deciphera (DCPH) to be acquired by ONO Pharmaceutical (ONO) for $25.60 per share. The deal is valued at $2.4 billion, a 75% premium over the last close. DCPH markets KIT inhibitor Qinlock (peak sales est $400-$500 million) and is on track to file an NDA for CSF1R inhibitor vimseltinib in TGCT in 2Q24. The modest premium (<3x peak sales estimates) suggests competitive bidding may have been muted

  • Incyte Corp (INCY) announced the acquisition of Escient Pharmaceuticals (private) for $750 million for lead candidate EP262, a first-in-class oral Mas-related G protein-coupled receptor X2 (MRGPRX2). EP22 is being evaluated to treat multiple mast cell driven disorders such as atopic dermatitis (AD), chronic inducible urticaria (CIndU) and chronic spontaneous urticaria (CSU)


  • ImmunityBio (IBRX) announced FDA approval of Anktiva, the first in class IL-15 agonist, in combination with Bacillus Calmette-Guerin (BCG) for BCG-Unresponsive Non-Muscle Invasive Bladder Cancer (NMIBC). Approval was based on a single arm, multi-center trial in n=77 patients that showed a 62% CR rate and duration of response still ongoing after 47 months as of the latest data cutoff date

  • Abeona Therapeutics (ABEO) announced FDA issued a Complete Response Letter (CRL) for the Pz-cel BLA for patients with recessive dystrophic epidermolysis bullosa (RDEB) based on the need for additional CMC information. Shares were off ~50%


  • Neurocrine Biosciences (NBIX) reported positive P2 data for NBI-1065845 which looks competitive with recently approved MDD therapies. The program has the potential to be the first-in-class AMPA positive allostatic modulator with >$1B peak sales potential

Corporate Updates & Earnings:

  • Merck (MRK) announced a 1Q beat (rev $15.75B vs street $15.2B) and raised FY guidance (Revenue $63.1B-$64.2B vs prior $62.7B-$64.2B, aEPS $8.53-$8.65 vs prior $8.44-$8.59) on strength from Keytruda (1Q $6.95B vs street $6.7B) and Lageviro (1Q $350 million vs street $150 million)

  • Abbvie (ABBV) reported a Q1 beat ~3% ahead of the street, but shares sold off on concerns biosimilars to Humira are gaining share (branded sales down ~40% year-on-year)

  • AstraZeneca (AZN) reported a Q1 beat (1Q revenue of $12.67B vs street of $11.8B) and reitered 2024 guidance with most products coming in ahead

  • Sanofi (SNY) reported Q1 ahead of the street (revenue 2% ahead) and reaffirmed 2024 guidance with Dupixient in-line and Beyfortus ahead

  • Gilead Sciences (GILD) announced a 1Q revenue beat ~5% ahead of the street with EPS negative due to the Cymabay acquisition

  • BioMarin (BMRN) 1Q revenue was ~1% below consensus, but adj EPS beat ($0.71 vs street $0.62). 2024 revenue guidance was maintained with EPR increasing to $2.75-$2.95 vs prior $2.60-$2.80 due to cost cuts. Voxzogo contributed $153 million (+5% Q/Q) and Roctavian generating only $0.8 million

  • Bristol Myers (BMY) reported results ahead of consensus driven by slower than expected erosion of Revlimid to generics. Key franchises Opdivo, Camzyos and Sotyktu all came in light. 6% workforce reduction announced

  • Novartis (NVS) reported a Q1 beat and raise. Net sales (CER) updated to grow "high-single to low-double digit" versus prior "mid single digit" driven by Entresto/Cosentyx strength

  • Roche (RHHBY) reported a 1Q revenue decline driven by currency headwinds, but came in ahead of the street (2% growth at CER) reiterated full year guidance for growth

  • Biogen (BIIB) reported 1Q earnings ahead of street estimates ($2.67 vs $3.54 street) with revenue down 7% from the prior year period. Alzheimer's drug Leqembi revenue was $19 million (missed $30 million street) with an uptick seen in March. 2024 guidance of low- to mid-single digit percentage decline in total revenue and ~5% income growth on lower expenses was reaffirmed

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