While some biopharma companies beat expectations, others fell short for various reasons, with some deciding to return or axe assets.
The second quarter of 2024 saw some pharmaceutical companies pass with flying colors, with players such as Novartis and Gilead beating Wall Street estimates and even Pfizer rebounding after a tumultuous period. Still, other companies hit a rough patch in Q2.
Here, BioSpace rounds up what you need to know from this latest earnings season.
The Weight-Loss Drug Race
Two of the most watched companies over the past few quarters have been Novo Nordisk and Eli Lilly, the producers of the blockbuster weight-loss drugs Wegovy and Zepbound, respectively. While both companies have previously racked up sizable results from the sales of these drugs, Q2 2024 showed that potentially Lilly will soon overtake Novo for the first time.
Novo Nordisk netted sales of nearly $10 billion for the quarter, up 25% at constant exchange rates from its sales of almost $8 billion during the same period in 2023. However, the sales of Wegovy and type 2 diabetes drug Ozempic were disappointing. Wegovy had sales of $1.7 billion, far below the $2 billion forecasted, while Ozempic also missed expectations at $4.23 billion in sales .
According to Jefferies analyst Peter Welford, the Q2 dynamics around Wegovy were “not surprising.” He said in a note to investors that the U.S. drug supply “will remain dynamically managed” for the year by controlling the supply of the 0.25-mg starter dose to allow for the “continuity of patient care.”
Meanwhile, Lilly beat Wall Street expectations for sales of Zepbound, netting $1.24 billion in the quarter, a stark increase from $517 million in Q1. Meanwhile, the company’s type 2 diabetes drug Mounjaro raked in $3.09 billion in Q2, soaring above the estimates of $2.39 billion.
“[Eli Lilly] was surprised on the upside with strong sales of Mounjaro and Zepbound in 2Q24, and we could see ongoing growth for the remainder of the year given the FY2024 guidance raise,” an analyst report from Truist Securities said. “Given competitor’s recent results and [Eli Lilly] results from today, recent announcement regarding cessation on FDA shortage list, we see the potential for [the company] to be the leader in this space.”
Vaccine Issues
Vaccine makers were among those companies that faced a harder Q2. While Merck continued to see billion-dollar sales figures from its HPV vaccine, Gardasil, management noted a “step down” in shipments from its distributor for the Chinese market, Chongqing Zhifei Biological Products. The company said the distributor had “above normal inventory levels” remaining vaccines. While the exact nature of the issues at its China-based distributor hasn’t been confirmed and is currently a mystery to analysts, Merck CEO Robert Davis said sales may be affected by a wide-scale corruption investigation.
Meanwhile, several companies continue to face the COVID-19 cliff. BioNTech was perhaps the hardest hit, with the German biotech incurring over $850 million in losses for the quarter, a fourfold increase from an estimated $208 million in losses in the same period last year. It also found itself dropping over $1 billion into the red.
A Jefferies report said that BioNTech aims to release data on its flu and coronavirus combination vaccine this year and is investing more in its cancer vaccines. Still, those will take time to materialize as the virus mutates. “As the COVID-19 virus evolves quickly and immune-evasive new variants are rolling out constantly, we need to pay special attention to the pace at which variant-specific boosters or multivalent vaccines are developed,” the Jefferies analyst report said.
Another COVID-19 vaccine maker who had a rough quarter was Novavax. The company had less-than-stellar results, cutting its revenue forecast by $225 million as it anticipates lower sales of its COVID-19 vaccine and only bringing in around $415.5 million, about $43 million short of analysts’ estimates. However, the future may be brighter as Novavax and Sanofi inked a potential $1.2 billion deal to create flu-coronavirus combo vaccines, which has “significantly de-risked” Novavax’s stock and removed any concerns around liquidity, Jefferies analyst Roger Song said in a note to investors.
Novavax will also be prioritizing partnerships for the near future, as to not incur large R&D expenditures, as well as to generate cash from these deals, Song told BioSpace in a separate interview.
Moderna also cut its full-year guidance due to low COVID-19 vaccine sales in Europe and tighter competition in the U.S. The company reported $241 million in COVID-19 vaccine sales, which while above analyst expectations was a drop from $344 million in the prior year.
Jefferies analyst Michael Yee said in a note to investors that Moderna’s “key disappointment” is that there has been another significant cut in the company’s guidance for the second year despite the high management confidence. “Investor frustration with guidance credibility combined [with] consistent bullishness. . . . on COVID and other vaccine areas which once again did not play out,” Yee wrote. He added that the management had “walked back confidence” for the RSV vaccine mRESVIA as it expected a larger ramp-up but will now face competition and fewer contracts.
On a broader scale, companies investing in RSV vaccine development hit a setback in June, when the CDC’s Advisory Committee on Immunization Practices (ACIP) recommended using the RSV vaccines for adults 75 years and older, limiting the use for high-risk adults between the ages of 60 and 74. This guidance impacted GSK, which lowered full-year guidance for its vaccine business and said it expects revenues to grow by a low- to mid-single-digit percent this year, down from its previous guidance of a high-single-digit to low-double-digit percent. Welford said in an investor note that the ACIP recommendation for RSV vaccines has “dented belief” in GSK’s RSV vaccine, Arexvy.
TIGIT Trouble
On the oncology front in Q2, companies were also feeling the heat with their anti-TIGIT oncology candidates. The asset class, which aims to suppress T cell proliferation and activation, has seen some speedbumps in later-stage trials in recent months, and issues have continued in recent weeks.
Massachusetts-based biotech Agenus announced in an SEC filing that Bristol Myers Squibb is returning a proprietary anti-TIGIT antibody, AGEN1777, as it enacts a broader pipeline change. Agenus and BMS forged a deal in 2021, with the biotech able to receive up to $1.3 billion in milestone payments, but to date it has only received $45 million.
“As part of ongoing portfolio prioritization efforts to develop a rich and diversified pipeline, we made the difficult but thoughtful decision to end our agreement with Agenus to license AGEN1777,” a BMS spokesperson wrote in an emailed statement to BioSpace.
Merck has also been having trouble with its own TIGIT antibodies. In May, the pharma halted a Phase III trial of a combination of Keytruda and the anti-TIGIT vibostolimab after high rates of dropouts due to adverse events. Late last week, Merck announced it was ending a late-stage trial of a vibostolimab-Keytruda combo in extensive-stage small cell lung cancer following the recommendation of an independent data monitoring committee.
