Page 4 PFE / M&A
We have promoted PFE to our "Top Global Pick", mostly on the strength of the recent rebound in ABBV shares, which have been moved to 3rd positionafter AZN (our Top European Pick, 2nd globally). We also remain very positive on Roche (ASCO), LLY (CETP) and ZTS (M&A/ Bayer spin-version). We remain cautious on ABT, GSK and BMY, though we note that we would likely be supportive of a bid for PRGO by either ABT or PFE.
Global Pharma QM: This month's edition focuses on key upcoming medical meetings
(ASCO [full preview], ADA, EULAR), other data read outs (ABT-199, solanezumab
EXPEDITION-EXT, semaglutide), Q1'15 earnings wrap-up, some key observations on script
data, as well as the latest updates to our "Order of Preference".
PFE moved to Top Global Pick; Still very bullish on ABBV: We have moved Pfizer
to our Top Global Pick based on the strong positive asymmetry around the base business
(Ibrance/ Prevnar-13), upside to GEP (EM growth/ valuation) and optionality with regards to
M&A and restructuring. AstraZeneca, our Top European Pick (2nd globally) has the best risk/
reward with regard to pipeline in our view, with the IO and RIA franchises under-appreciated
by the market and with significant catalysts over the next 6-18 months. We remain very
positive on AbbVie (3rd globally) based on the durability of Humira, pipeline and further
optionality with regard to M&A and cash deployment.
ASCO mostly known based on abstracts; BMY on the defensive: ASCO abstracts
again contained more information than expected this year, with the most notable being for
Roche with regards to PD-L1 chemo combo data in NSCLC as well as very positive data from
POPLAR in PD-L1 positive NSCLC patients. We also view the PD-L1/ treme combo in NSCLC
abstract from AstraZeneca as positive, especially given the strength of the data in PD-L1
negative patients, with further updates to this study expected at the congress. Whilst it is still
too early to be sure, ASCO 2015 looks like the meeting when investors will finally question
the durability of Bristol-Myers' "lead" over its competitors, which we do not believe exists in
combination immunotherapy. We expect the company to be on the defensive during Q&A
at the meeting, which never bodes well for a high multiple stock.
ADA looks benign; Focus on Merck & Co.: ADA is unlikely to contain any major surprises
for large cap pharma, given that Merck & Co. now appears to be able to reassure the market
with regard to the TECOS study on Januvia. Potentially the ADA meeting could serve as a
strong relaunch platform for Januvia, reigniting the growth of the brand, which has stalled
under competitive pressure in recent years