巴克莱-美股-生物制药行业-美国生物制药行业策略分析-2020.2.26-246页.pdf

Equity Research 26 February 2020 CORE Barclays Capital Inc.and/or one of its affiliates does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.PLEASE SEE ANALYST CERTIFICATION(S)AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 239.Restricted-Internal U.S.Biopharmaceuticals Initiating Coverage We are launching coverage of the U.S.Biopharmaceuticals industry with a Positive view and a universe of 16 large-and smid-cap stocks.Our Positive view is driven by waning near-term concerns on drug pricing reform,P&L upside,evidence of strong innovation,an accommodating regulatory landscape,and modestly attractive valuations relative to the broader market.We are hosting a conference call at 11am ET on Feb 27(dial-in 800-493-6965(US);706-679-5836(OUS);passcode 9970835).Our Overweight-rated names are tilted toward(1)higher-quality large-cap growth narratives with dominant commercial franchises,improving margins,and relatively lower loss of exclusivity(LOE)risk,and(2)smid-cap names with near-launch narratives and pipeline optionality.The negative turn in sentiment on Merck(MRK,$93 PT)seems overdone to us;we dont see Keytruda being threatened in lung cancer from Bristols CM-227 or CM-9LA datasets,and operating margin expansion is significant over 2021-25.For Eli Lilly(LLY,$160 PT),we are bullish on tirzepatide phase 3 data extending the diabetes franchise into the 2030s,while P&L leverage is starting to kick in.At Regeneron Pharmaceuticals(REGN,$530 PT),Eylea and Dupixent are both set up to exceed 2020 estimates,while Libtayo NSCLC data provides attractive optionality.For Biogen(BIIB,$389 PT),we think aducanumab for Alzheimers disease gets approved.For Acceleron Pharma(XLRN,$107 PT),sotatercept data in pulmonary arterial hypertension(PAH)opens up a$2bn+opportunity,and we model Reblozyl with$3bn+peak potential.On Applied Therapeutics(APLT,$64 PT),we like the combination of a 2021 launch in galactosemia,a pivotal diabetic cardiomyopathy read-out in 2021,and significant optionality around OUS rights to both programs.Our five Equal Weight-rated names are Bristol-Myers Squibb(BMY,$69 PT),where we are skeptical on near-term Opdivo lung and kidney cancer datasets moving the needle commercially;were positive on pivotal Tyk2 data,but that dataset isnt expected until late 2020;AbbVie(ABBV,$97 PT),where the strong Skyrizi launch is now priced in,and Humira erosion in 2023 still looms and could be more severe than Street estimates;Amgen(AMGN,$235 PT),where we could see meaningful erosion headwinds in 1H,offset by potential KRAS data at ASCO and a compelling 2H catalyst(omecamtiv,tezepelumab);Pfizer(PFE,$36 PT),where abrocitinib data is a near-term upside risk,but we dont see the stock breaking out without additional business development or Ibrance data(2021).For Neurocrine Biosciences(NBIX,$105 PT),near-term Ingrezza headwinds and lack of meaningful clinical catalysts keep us somewhat cautious.Our Underweight-rated names are Gilead Sciences(GILD,$62 PT),where stock appreciation on remdesivir(coronavirus)seems overdone to us,and Allakos(ALLK,$36 PT),where we doubt the size of the commercial opportunity across the gastrointestinal eosinophilic disorders is large enough to interest strategic players,particularly given competitive headwinds and ahead of any de-risking data on the subcutaneous formulation.INITIATING COVERAGE U.S.Biopharmaceuticals POSITIVE from N/A For a full list of our ratings,price targets and earnings in this report,please see table on page 2 U.S.Biopharmaceuticals Carter Gould+1 212 526 0865 BCI,US Andrew Ang+1 212 526 5692 BCI,US Barclays|U.S.Biopharmaceuticals 26 February 2020 2 Summary of our Ratings,Price Targets and Earnings Estimates in this Report Company Rating Price Price Target EPS FY1(E)EPS FY2(E)Old New 21-Feb-20 Old New%Chg Old New%Chg Old New%Chg U.S.Biopharmaceuticals NR Pos AbbVie Inc.(ABBV)N/A EW 94.96 N/A 97.00-N/A 9.66-N/A 10.48-Acceleron Pharma,Inc(XLRN)N/A OW 94.51 N/A 107.00-N/A-2.16-N/A-3.85-Alector,Inc.(ALEC)N/A OW 30.47 N/A 36.00-N/A-0.87-N/A-1.67-Allakos Inc.(ALLK)N/A UW 65.62 N/A 36.00-N/A-1.89-N/A-2.59-Amgen Inc.(AMGN)N/A EW 222.79 N/A 235.00-N/A 15.71-N/A 16.54-Applied Therapeutics,Inc.(APLT)N/A OW 42.78 N/A 64.00-N/A-2.88-N/A-3.03-Biogen Inc.(BIIB)N/A OW 336.71 N/A 389.00-N/A 32.92-N/A 30.95-Bristol-Myers Squibb Company(BMY)N/A EW 65.63 N/A 69.00-N/A 6.15-N/A 7.40-Eli Lilly&Co(LLY)N/A OW 142.04 N/A 160.00-N/A 6.79-N/A 7.80-Gilead Sciences,Inc.(GILD)N/A UW 69.70 N/A 62.00-N/A 6.31-N/A 6.22-Gossamer Bio,Inc.(GOSS)N/A OW 14.99 N/A 21.00-N/A-3.50-N/A-4.63-Merck&Co.,Inc.(MRK)N/A OW 82.34 N/A 93.00-N/A 5.66-N/A 6.00-Molecular Templates,Inc.(MTEM)N/A OW 17.83 N/A 22.00-N/A-1.81-N/A-1.53-Neurocrine Biosciences Inc.(NBIX)N/A EW 104.12 N/A 105.00-N/A 2.80-N/A 3.88-Pfizer(PFE)N/A EW 35.72 N/A 36.00-N/A 2.95-N/A 2.92-Regeneron Pharmaceuticals,Inc(REGN)N/A OW 403.15 N/A 530.00-N/A 29.78-N/A 32.22-Source:Barclays Research.Share prices and target prices are shown in the primary listing currency and EPS estimates are shown in the reporting currency.FY1(E):Current fiscal year estimates by Barclays Research.FY2(E):Next fiscal year estimates by Barclays Research.Stock Rating:OW:Overweight;EW:Equal Weight;UW:Underweight;RS:Rating Suspended Industry View:Pos:Positive;Neu:Neutral;Neg:Negative Barclays|U.S.Biopharmaceuticals 26 February 2020 3 CONTENTS Executive Summary.5 Large Cap Biopharma.9 Abbvie(ABBV)Equal Weight.10 How Will the AbbVie-Allergan P&L Evolve Over 2020-22?.13 Will the Growth Assets Offset Humira Erosion Post-2023?.15 Amgen(AMGN)equal weight.22 Is There a Path to 5%Revenue Growth in 2020-22?.25 Will the Late Stage Pipeline Drive a Re-Rating?.31 Biogen(BIIB)Overweight.40 Will the FDA Approve Aducanumab?.44 When Will Spinraza Annual Sales Fall Below$2bn?.47 Are Tecfideras IP Issues Behind It?.50 Bristol-Myers Squibb(BMY)Equal Weight.54 What Will Drive BMY Shares in the Near Term?.57 Will the Seven Launches Contribute$2.6bn by 2022?.62 Eli Lilly(LLY)Overweight.68 Will the Endocrinology Franchise Reach$16bn by 2025?.71 Will Updates Across the Immunology and Oncology Franchises Drive Incremental Value Over the Next Year?.77 Gilead Sciences(GILD)UNDERWEIGHT.80 Will Remdesivir in Coronavirus Drive Value for Gilead?.83 What is the HIV Franchise Growth Profile Over 2020-25?.84 Will the Filgotinib Launch Meet Street Expectations?.87 Merck(MRK)Overweight.91 Will Keytruda Reach Outer-Year Estimates?.94 Will Pipeline Catalysts Reduce Keytruda Concentration Risk?.98 How Will Margins Evolve Over 2020-25?.99 Pfizer(PFE)equal weight.101 What Will the New Pfizer P&L Look Like?.104 Will the Pipeline Offset the 2025-2029+LOEs?.107 Regeneron Pharmaceuticals(REGN)overweight.113 Where Will Dupixent Peak?.116 What Will the Eylea Erosion Curve Look Like?.120 What is the Optionality Value on Libtayo NSCLC Data?.123 SMid Cap Biopharma.126 Acceleron Pharma(XLRN)overweight.127 How Will Sotatercept Be Incorporated into the PAH Paradigm?.130 Can Reblozyl Surpass Peak Consensus of$2-2.5bn?.134 Alector(ALEC)OVERWEIGHT.140 Will INFRONT Mid-Year Update De-Risk the AL001?.143 Will AL002&AL003 Demonstrate Proof of Concept in 2020?.149 Allakos(ALLK)underweight.153 Barclays|U.S.Biopharmaceuticals 26 February 2020 4 Will Antolimab Achieve Consensus of$2bn+in Peak Sales?.156 Applied Therapeutics(APLT)OVERWEIGHT.164 Will FDA Approve AT-007 Based on Phase 2 Data?.167 Will the AT-001 Phase 3 DbCM Read-Out Positively?.172 Gossamer Bio(GOSS)overweight.178 Will GB001 Advance to Phase 3 in Asthma?.181 Will Phase 1b GB002 Data Justify Moving into Phase 2?.185 Will the Pipeline De-Risk Over 2020?.189 Molecular Templates(MTEM)overweight.193 Is There an Accelerated Path to Market for MT-3724 that Could Emerge Over 2020?.196 Will the Pipeline/Platform Drive Value Over 2020?.200 Neurocrine Biosciences(NBIX)equal weight.205 Will Ingrezza Sales Exceed$1bn in 2020?.208 Will the Pipeline Drive Incremental Value Over 2020?.213 Barclays|U.S.Biopharmaceuticals 26 February 2020 5 EXECUTIVE SUMMARY We are launching coverage of the U.S.Biopharmaceuticals industry with a Positive view,initiating coverage of 16 large-/smid-cap names.The past 14 months have been volatile oscillating between waves of M&A and pricing reform risk,followed by relative calm and improved performance into YE19 as policy gridlock ensued.Despite a strong 2019 performance,biotech and pharma still underperformed the broader market(Figure 1 and Figure 2).Looking to the balance of 2020,key drivers will be competitive dynamics across the immuno-oncology(I/O)space in lung and kidney cancer,outcome of the aducanumab submission,de-risking of later-stage programs across immunology,near-term drug launches,and potential headline risk around drug pricing in the run-up to the U.S.election.FIGURE 1 Relative Performance vs.S&P 500 Performance201520162017201820193Q194Q1920 YTDDRG2%-11%13%4%15%-2%11%1%NBI11%-22%21%-9%24%-9%21%2%S&P500-1%10%19%-6%29%1%9%3%Relative Performance(bps)DRG235 (2,060)(626)1,061 (1,396)(311)283 (265)NBI1,215 (3,122)164 (309)(447)(995)1,253 (125)Source:Bloomberg,Barclays Research For 2020,while were positive on the group as a whole,we think investors will need to adopt a stock-picking mentality to the companies given their varying exposures to pricing reform concerns,significant outperformance by some stocks over the past six months,and recent strong performance across sectors other than biopharma with compelling top-line growth(Figure 3,Figure 4,Figure 5).With that in mind,we argue in favor of higher-quality growth names without near-to mid-term loss of exclusivity(LOE)risk(LLY,MRK)and binary catalyst-driven names with a favorable risk/reward(BIIB).Across the smid-cap space,our preference is for names evolving into de-risked later-stage stories with underappreciated commercial potential(XLRN,APLT).FIGURE 2 2019YTD 2020 Performance of NBI vs.S&P 500 Source:Bloomberg and Barclays Research-20%-10%0%10%20%30%40%Jan-19Feb-19Mar-19Apr-19May-19Jun-19Jul-19Jul-19Aug-19Sep-19Oct-19Nov-19Dec-19Jan-20S&P 500DRGNBIBristol acq CelgeneLilly acq LoxoNew CEO Starts(Gilead)Aducanumab Discontinued(Biogen)Pfizer acq ArrayAbbVie acq AllerganGilead collab w/GalapagosGrassley-Wyeth Plan FailsPfizer spins Upjohn to Mylan-comboAmgen acq OtezlaImpeachment StartsAducanumab Resurrected(Biogen)Amgen collab w/BeigeneNovartis acq Medicines CompanyMerck acq ArQuleSanofi acq SynthorxMerck announces Womens Health/Biosimilar SpinBarclays|U.S.Biopharmaceuticals 26 February 2020 6 FIGURE 3 Absolute Performance by Sector(2019)48%31%29%29%27%26%25%24%22%22%19%14%12%8%0%10%20%30%40%50%60%Source:Bloomberg Looking to 2020,we see a differentiated outlook across earnings growth profile vs.the broader market however,much of this appears to be driven by low comps given industry consolidation(e.g.,BMY and ABBV will show higher EPS after their acquisitions of Celgene and Allergan,respectively).Looking to 2021,we see biopharma more in the middle of the pack.To that end,a key risk to monitor in the run-up to the U.S.presidential election is whether investors use biopharma as a source of funds to avoid headline risk around drug pricing reform.This rotation happened in 2016 in the run-up to that presidential election,when biopharma underperformed the market(NBI/DRG:-21%/8%vs.S&P 500:+12%).The industry is starting from a different place now in terms of current P/E multiple,but pricing reform remains a looming risk to the space,even if we dont expect legislative progress over 2020.FIGURE 4 12-Month Revenue and EPS Growth Scatterplots by Sector(2019-2020)FIGURE 5 12-Month Revenue and EPS Growth Scatterplots by Sector(2021-2022)HealthcareComm.ServicesCons.DiscretionaryCons.StaplesEnergyFinancialsIndustrialsITMaterialsReal EstateUtilitiesBiotechnologyPharmaceuticals0%5%10%15%20%25%30%35%40%45%-5%0%5%10%15%EPS GrowthRevenue Growth HealthcareComm.ServicesCons.DiscretionaryCons.StaplesEnergyFinancialsIndustrialsITMaterialsReal EstateUtilitiesBiotechnologyPharmaceuticals0%5%10%15%20%25%30%35%40%0%2%4%6%8%10%EPS GrowthRevenue Growth Source:Bloomberg Source:Bloomberg Barclays|U.S.Biopharmaceuticals 26 February 2020 7 Of note,this pressure comes despite evidence that drug pricing growth is decelerating,with prices actually down in 2018 and 2019(Figure 6 and Figure 7).However,the politics of drug pricing reform will likely keep it front-and-center during the run-up to the election,given that it has bipartisan appeal with pharma among the industries with the lowest net favorability rating and other polls indicating that 80%of Americans consider the current level of drug prices“unreasonable.”FIGURE 6 Drug Pricing Growth Has Decelerated FIGURE 7 And Net Prices Fell in 2018 and 2019-4.0%-2.0%0.0%2.0%4.0%6.0%8.0%Jan 2010Jul 2010Jan 2011Jul 2011Jan 2012Jul 2012Jan 2013Jul 2013Jan 2014Jul 2014Jan 2015Jul 2015Jan 2016Jul 2016Jan 2017Jul 2017Jan 2018Jul 2018Jan 2019Jul 2019Jan 2020Y/Y Price Change Source:Bureau of Labor Statistics Source:Drug Channels Institute analysis of SSR Health Data FIGURE 8 Net Favorability Ratings for Pharma at All-Time Lows FIGURE 9 .And a Large Majority Think Drug Prices Remain Too High Source:Gallup Source:KFF Health Tracking Poll of 1,440 adults conducted Feb.14-24,2019 13.5%13.2%10.5%8.2%7.2%4.9%4.6%4.7%4.0%1.6%-3.1%-3.1%201420152016201720182019List price growthNet price growth-35-30-25-20-15-10-505102001200220032004200520062007200820092010201120122013201420152016201720182019Reasonable17%Unreasonable79%DK4%In general,do you think the cost of prescription drugs is_?Barclays|U.S.Biopharmaceuticals 26 February 2020 8 M&A Heats Up With Mix of Defensive and Innovation-Focused Deals The past 10 years has seen a record amount of M&A in biotech and pharma with 66 deals driving deployment of$282bn in capital.Unsurprisingly,the larger deals Bristol-Myers acquiring Celgene,AbbVie acquiring Allergan got much of the attention;however,there was also a decent mix of more innovation-focused deals(LLY/LOXO,MRK/ARQL,ROG/ONCE,and BIIB/NITE).The past election cycles(2012 and 2016)saw dips in M&A deal sizes after strong years,but still an active calendar.We would expect a similar dynamic to play out again in 2020.FIGURE 10 Global Biotech&Pharma Deal Volume by Year FIGURE 11 Number of Global Biotech&Pharma Deals by Year Source:Dealogic Source:Dealogic Innovation+Flexible Regulatory Environment=Favorable Backdrop The combination of innovation(new drug classes,technologies,and continued de-risking of drug candidates)and a more accommodating FDA has been a powerful dynamic for the sector.Looking at 2019 FDA approvals(48),we see that the agency remained active even after a high-watermark the year before.Importantly,we see no sign of this trend reversing in the near term.Rather,we would argue that the poten