Is Novartis an Up-and-Coming Oncology Powerhouse?
Novartis Beats Estimates in 1Q15 Earnings (Part 4 of 5)
Recent oncology deals
Novartis’s (NVS) recent deals bode well for robust growth in its oncology business.
Novartis acquired oncology products from GlaxoSmithKline (GSK). The deal completed on March 2, 2015.
Novartis entered into a strategic alliance with Aduro Biotech (ADRO) on March 30, 2015.
Aduro is a biotech company that focuses on cancer immunotherapies that enhance the immune system to destroy cancer cells. This will be a natural extension of its existing cancer portfolio.
Novartis recruited Glenn Dranoff, M.D. from the Dana-Farber Cancer Institute to head its research group that focuses on cancer immunotherapies. This further provides impetus to its oncology business.
Other leading companies
Merck & Co. (MRK) and Bristol-Myers Squibb (BMY) are the first movers in developing cancer immunotherapies with the launch of the following drugs:
Keytruda from Merck
Opdivo from Bristol-Myers
Like Novartis, Roche Holding and AstraZeneca (AZN) are also enhancing their oncology product portfolios with the addition of cancer immunotherapies.
Glaxo product portfolio
Mekinist, Tafinlar, Promacta, and a few new growth products generated net sales of $2 billion for Novartis in 2014. Mekinist and Tafinlar are the first and only combinations approved for melanoma. Melanoma is a skin cancer that occurs in melanocytes, the cells that produce pigment in the skin. Submissions in the European Union and Japan are expected in the first half of 2015. The US submission of Arzerra for chronic lymphocytic leukemia (or CLL) is expected in the second half of 2015.
Novartis oncology approvals
In 1Q15, Novartis had following approvals in oncology:
Jakavi, EU approval for polycythemia vera
Farydak, US approval for multiple myeloma
Jadenu, US approval for chronic iron overload
Polycythemia vera is a type of blood cancer in which a large number of red cells is formed in the bone marrow. Myeloma is a cancer in plasma cells, a type of white cells produced in bone marrow.
Zykadia got a positive opinion from the CHMP (Committee for Medicinal Products for Human Use) for ALK (anaplastic lymphoma kinase) and lung cancer. ALK is a gene that undergoes mutation to develop a cancer.
As an alternative to investing directly in Novartis, you might consider pharmaceutical funds such as the iShares U.S. Healthcare ETF (IYH).
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