Novartis stock tumbled Thursday after the Swiss drugmaker dropped out of a key cancer treatment race vs. big players Amgen and Bristol Myers Squibb.
The company said in its second-quarter earnings presentation that it discontinued development of opnurasib in order to "prioritize other key programs." Opnurasib attempts to block a form of KRAS, a gene that drives numerous cancers.
Amgen and Bristol already sell approved KRAS blockers for lung cancer patients who worsened while undergoing another treatment. The companies are now running studies of their drugs in previously untreated patients. Merck, Eli Lilly and Roche are also testing drugs in this class.
But Novartis was testing opnurasib in patients whose cancer worsened while undergoing another treatment — a market that wouldn't exist if Amgen, Bristol and crew gain approval for their KRAS blockers for previously untreated patients. Last month, Novartis scrapped enrollment in a study of opnurasib when it only recruited 95 out of a planned 360 patients, ClinicalTrials.gov shows.
On today's stock market, Novartis stock skidded 4.1% to 107.22. Shares broke out of a cup-with-handle base with a buy point at 103.55 in early June, MarketSurge data shows. The move Thursday sent shares back into the buy zone.
Novartis Stock: Earnings, Sales Beat
Despite the disappointing KRAS drug update, Novartis beat second-quarter forecasts. The firm reported core earnings of $1.97 per share, up 21% in constant currency. Sales also climbed 11% to $12.51 billion. Analysts predicted a respective $1.85 EPS and $12.37 billion revenue.
Revenue from Novartis' biggest moneymakers — blood thinner Entresto, and Cosentyx which treats immunological conditions — jumped a respective 28% to nearly $1.9 billion and 22% to $1.53 billion. Both narrowly beat Novartis stock analysts' forecasts, according to FactSet.
The best growth came from Kesimpta, a treatment for multiple sclerosis. Kesimpta sales launched 65%, excluding the impact of exchange rates, to $799 million, easily beating forecasts for $725.2 million.
Novartis raised its expectations for core operating income this year, and now calls for mid- to high-teens growth. The company still expects sales to grow by a high-single to low-double-digit percentage. Novartis stock analysts predicted $49.57 billion in full-year sales, up more than 9%.
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