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Drug Roundup - December 19, 2013
There have been several noteworthy developments in the drug space recently, which will likely have a material impact on the companies in this sector and the markets they serve.
Pfizer Raises its Dividend
On December 16th, Pfizer’s (PFE - Free Pfizer Stock Report) board of directors approved an 8% increase in its quarterly cash dividend to $0.26 a share, payable March 4, 2014 to shareholders of record at the close of business February 7, 2014. This represents the fifth-consecutive year in which the company has upped its dividend payout and is an encouraging sign that business is heading in the right direction. Shares of Pfizer are now yielding an attractive 3.5%, well above Value Line’s 2.0% median.
Teva Secures Generic Viagra for 2017
On December 17th, Teva Pharmaceuticals (TEVA) announced it would begin selling generic forms of Viagra in the U.S. beginning in late-2017 as part of a settlement agreement with the drug’s manufacturer, Pfizer. The agreement represents a resolution between the two companies after Pfizer sued Teva back in 2010 over its plans to launch a generic Viagra (Teva argued the patent was invalid). While Teva will pay an undisclosed royalty for a license to produce its copycat version, Pfizer will allow Teva to launch its product in late-2017, several years before other generic versions can enter the market (Viagra U.S. patent expires in April, 2020). With what’s looking like a minimum of 2 years of generic exclusivity, Teva stands to benefit nicely from the settlement. Viagra generated roughly $1.2 billion in U.S. sales last year, and more than $2.0 billion worldwide.
Gilead vs. AbbVie in Race for Hep-C Approval
On December 18th, Gilead Sciences (GILD) released impressive late-stage data for its once-daily combination pill to treat Hepatitis-C, seemingly advancing its lead on AbbVie (ABBV) in the race to develop a new oral treatment for the liver disease. In the Phase III trial, Gilead’s drug demonstrated cure rates in excess of 90%, with as little as 8 weeks of treatment for some patients. While AbbVie reported similar success in its Phase III trial last week (96% cure rate in 12 weeks), Gilead’s version has emerged as the odds-on favorite in the race due to the fact it can achieve similarly high cure rates using a less-stressful regimen and fewer pills. Management indicated it plans to file in the first quarter of 2014 for U.S. approval of the combination treatment, which pairs recently-approved sofosbuvir and experimental ledipasviri. Assuming Gilead can be the first to bring its product to market, the payoff is expected to be huge as current analyst projections have peak sales ranging from $5 billion a year to an eye-popping $16 billion a year. Hype surrounding this potential opportunity has surged on Wall Street with shares of GILD shooting up more than 5% in price since the late-stage trial announcement.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.