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GSK battles Pfizer in meningitis vaccine race

In big biotech news last week, GSK published promising trial data for its five-in-one meningococcal vaccine. Meanwhile, Pfizer, which is battling GSK in the meningitis vaccine race, announced it’s to acquire Seagen in a blockbuster $43bn deal.

- GSK has published promising trial data for its five-in-one meningococcal vaccine.

- Pfizer’s $43bn deal for Seagen could kickstart acquisitions in the biotech industry.

- The VanEck Pharmaceutical ETF holds a number of companies that have been in the news in recent weeks.

Drugmaker GSK [GSK.L] hopes to simplify immunisation against meningitis in the US, after phase-three data from the trial of its five-in-one meningococcal vaccine showed promise.

The vaccine candidate, which is effectively a combination of GSK’s licensed vaccines Bexsero and Menveo, targets meningitis and blood poisoning caused by five groups of meningococcal bacteria. If eventually approved by the US Food and Drug Administration (FDA), it would reduce vaccination schedules and potentially encourage more people to get their shots.

GSK faces competition from Pfizer [PFE], which has a head-start in the race as it released phase-three results for its MenABCWY candidate last September.

The news comes just a couple of weeks after both pharma giants received the backing of an FDA advisory for their RSV vaccine candidates.

The GSK share price is down 1.6% year-to-date and down 4.1% in the past month. The Pfizer share price is down 21% and down 6.1% in the respective periods.

Novo Nordisk and Eli Lilly lower insulin price

In other biotech news, Novo Nordisk [NVO] has followed Eli Lilly and Co [LLY] in slashing the price of insulin by up to 75% for patients with diabetes.

Drugmakers have been under pressure to make the treatment more affordable, and the recent moves have been welcomed by US President Biden. The Inflation Reduction Act signed last year capped out-of-pocket insulin costs for Medicare recipients at $35 per month, but coverage is set to be extended to those with private insurance. Around 40% of diabetes patients have insurance, while 5% are uninsured, according to the American Diabetes Association.

Eli Lilly CEO David A. Ricks told CNN earlier this month that $35-a-month subscriptions “should be the new standard in America”.

The price cuts are unlikely to have a big impact on financials, given that the drugmakers have been reporting shrinking insulin revenue growth. Sales of Novo Nordisk’s insulin products in the US brought in Kr13.1bn in 2022, and the company’s total sales worldwide were Kr176.95bn. In 2021, those figures were Kr14.95bn and Kr140.8bn, while in 2020 they were Kr17.2bn and Kr126.95bn.

Pfizer’s Seagen deal boosts biotech M&A

The biggest biotech headline of last week was arguably Pfizer’s announcement that it’s to acquire cancer specialist Seagen [SGEN] for $43bn, or $229 per share.

Seagen’s treatments could contribute more than $10bn in sales in 2030, according to Pfizer. To put this into context, sales from Pfizer’s oncology treatments totalled $12.1bn in 2022.

Investors will now be hoping that the Seagen kickstarts mergers and acquisitions activity in the biotech industry. Sanofi [SAN.PA] also announced last week that it’s to acquire Provention Bio [PRVB], albeit for a much smaller sum of $2.9bn, or $25 per share.

In research published in February, Morgan Stanley analysts identified healthcare as a sector that is well-placed for an uptick in deal-making. Many big pharma companies have strong balance sheets and need to plug gaps left by expiring patents, they argued.

Pfizer is flush with cash from its Covid-19 vaccine. Chairman and CEO Albert Bourla said on the third quarter 2022 earnings call last November that the company is facing a revenue loss of approximately $17bn from 2025 through 2030 as patent protections on some of its key drugs expire.

Funds in focus: VanEck Pharmaceutical ETF

Novo Nordisk, Eli Lilly and Pfizer are the third-, fifth- and seventh-biggest holdings in the VanEck Pharmaceutical ETF [PPH], with respective weightings of 5.71%, 5.46% and 5.05% as of 17 March. The fund also holds GSK and Sanofi at weightings of 4.61% and 4.59%, respectively.

The fund is down 4.9% year-to-date and down 5.4% in the past month.

The Horizon Kinetics Medical ETF [MEDX], which launched in January this year, holds Eli Lilly and Pfizer as its third- and fourth-largest holdings, with respective weightings of 6.43% and 6.04% as of 20 March. The fund also holds Sanofi and GSK at respective weightings of 3.46% and 2.23%.

It is down 7.3% since it started trading on 31 January, though it gained 1.7% last week.

Seagen is the seventh-biggest holding in the iShares Biotechnology ETF [IBB], with a weighting of 3.62% as of 17 March. The fund, which doesn’t hold GSK or Pfizer, is down 5.2% year-to-date and down 4% in the past month, though it did gain 2.1% last week.


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