Several tuck-in deals and licensing agreements were announced this week while healthcare giant Johnson & Johnson (JNJ - Free Report) is back in exclusive talks with Actelion regarding a possible deal.

Recap of the Week’s Most Important Stories

J&J In, Where Does that Leave Sanofi in Actelion Talks? A few days after saying that it has ended talks with Actelion regarding a potential transaction, J&J has now entered into exclusive negotiations with Actelion. J&J’s talks with Actelion had broken down last week following which French pharma giant Sanofi was rumored to be interested in acquiring the company for as much as $30 billion. J&J could very well have to top that offer in order to finalize the deal.

We note that Actelion has often been considered an attractive takeover target mainly due to its rare disease portfolio. In addition to holding a strong position in the pulmonary arterial hypertension (PAH) market, Actelion’s portfolio also has treatments approved in certain countries for specialist diseases like type I Gaucher disease, Niemann-Pick type C disease, digital ulcers in patients suffering from systemic sclerosis, and mycosis fungoides type cutaneous T-cell lymphoma.

Teva Settles Corruption Probe for $519 Million: Teva (TEVA - Free Report) has reached a settlement with the government over violations of the Foreign Corrupt Practices Act (FCPA). The company, the U.S. Department of Justice (DoJ) and Securities and Exchange Commission (SEC) have agreed to resolve previously disclosed investigations into conduct relating to three countries -- Ukraine, Mexico and a guilty plea by the subsidiary in Russia. Teva will be making a payment of $519 million.

Bristol-Myers in Oncology Deals: Bristol-Myers Squibb (BMY - Free Report) is collaborating with clinical-stage biotech company, Calithera for evaluating its PD-1 immune checkpoint inhibitor, Opdivo, in combination with Calithera’s CB-839 in patients with clear cell renal cell carcinoma.
The company also announced a licensing agreement with PsiOxus Therapeutics for NG-348, an “armed” oncolytic virus to address solid tumors. Bristol-Myers will make a $50 million upfront payment and will be solely responsible for worldwide clinical development and commercialization activities related to NG-348. PsiOxus could receive up to $886 million in development, regulatory and sales-based milestones, as well as royalties on net sales. Bristol-Myers will also provide funds to support activities related to the preclinical development of NG-348.

Allergan to Buy Regenerative Medicine Company for $2.9B: Allergan’s (AGN - Free Report) acquisition spree continues with the company now announcing that it will be buying regenerative medicine company LifeCell for $2.9 billion in cash. This acquisition will mark Allergan’s entry into regenerative medicine and will be a strategic fit with the company’s existing business. The deal, slated to close in the first half of 2017, is expected to be immediately accretive.

Novartis in NASH and Ophthalmology Deals: Swiss pharma giant, Novartis (NVS - Free Report) also announced a couple of deals. The company will collaborate with Conatus, which is focused on the development and commercialization of liver disease treatments, for the development and commercialization of Conatus’ lead pipeline candidate, emricasan, which is being developed for nonalcoholic steatohepatitis or NASH, a common but often “silent” liver disease. Conatus will get $50 million upfront, $7 million following the exercise of the license option and up to $650 million on the achievement of development, regulatory and commercial milestones as well as royalties on future sales. The agreement covers emricasan single-agent indications and future emricasan combination products.

Interest in NASH has picked up with companies like Allergan pursuing deals in this area, which represents significant commercial opportunity. By 2020, NASH is expected to become the leading cause for liver transplants in the U.S.  With no treatments currently approved for NASH patients in all stages of the disease, the market could be worth billions of dollars and many companies are hoping to cash in on this opportunity.

The second agreement announced by Novartis is focused on one of its key areas of expertise – ophthalmology. The company will be acquiring Encore Vision, Inc. and will be adding a first-in-class disease modifying topical treatment for presbyopia patients to its pipeline, targeting an area of high unmet medical need and high prevalence. Novartis is a Zacks Rank #3 (Hold) stock.

Roche’s MS Drug Faces 3-Month Delay: Roche (RHHBY - Free Report) is facing a delay in the potential approval of its experimental multiple sclerosis (MS) drug, Ocrevus. The FDA said that it has extended the action date for the drug by three months to Mar 28, 2017. The FDA will need more time to review additional data submitted by Roche on the commercial manufacturing process of Ocrevus. The delay comes as a bit of a disappointment considering Roche had snagged priority review for the drug but is now facing a 3-month delay.

Performance

Large Cap Pharmaceuticals Industry 5YR % Return

Large Cap Pharmaceuticals Industry 5YR % Return

The NYSE ARCA Pharmaceutical Index declined 0.5% over the last five trading days with Merck (MRK - Free Report) declining 4.5%. Meanwhile, Lilly’s shares continued to rise following the company’s guidance release last week. Lilly, which has underperformed the Zacks categorized Large Cap Pharmaceuticals industry year-to-date (YTD) saw its shares shooting up last week on a better-than-expected outlook for 2017. Over the last six months, Merck gained 4.5% while Bristol-Myers declined 18.7%.

What's Next in the Pharma World?

Watch out for the usual pipeline and regulatory updates as well as deals and collaborations.