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Johnson & Johnson Earnings Could Send the Dow Higher Still

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By Dan Caplinger, The Motley Fool

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Earnings season has begun, and next Tuesday Johnson & Johnson will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed, knee-jerk decision.

Johnson & Johnson is a behemoth in the health care space, with a business that includes not only its well-known consumer health and personal-care products, but also a thriving pharmaceutical business and an extensive line of medical devices. The breadth of its offerings has given it a place among the Dow Jones Industrials . However, with so much going on at J&J, can the company hold itself together and take advantage of new growth opportunities? Let’s take an early look at what’s been happening with Johnson & Johnson over the past quarter and what we’re likely to see in its quarterly report.

Stats on Johnson & Johnson

Analyst EPS Estimate

$1.40

Change From Year-Ago EPS

2.2%

Revenue Estimate

$17.46 billion

Change From Year-Ago Revenue

8.2%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Will Johnson & Johnson make investors feel healthy this quarter?
In recent months, analysts have had mixed views on Johnson & Johnson’s earnings prospects. They’ve raised their consensus on the just-finished quarter by a penny per share, but they’ve pulled back on their full-year 2013 EPS outlook by $0.08 and cut 2014 estimates even more sharply. Yet the stock continues to perform well, rising more than 15% since early January.

Lately, Johnson & Johnson has presented two different faces to investors. On one hand, the company has faced the challenge of dealing with a weak consumer-products business, as multiple recalls and close regulatory oversight of its production facilities have exacerbated J&J’s problems. With its more focused consumer-goods business, Colgate-Palmolive has worked harder at taking advantage of international growth opportunities than many of its rivals, and Colgate’s strong overseas sales, in comparison to J&J’s international weakness, show the effectiveness of that strategy. In particular, Asia has been a focus point for Colgate, with revenue from the region having risen 9% year over year compared with less than 3% growth overall. Moreover, Latin America represents Colgate’s biggest region for sales, with more than half again the revenue its U.S. segment produces.

Yet in the pharmaceutical space, J&J has had great success. The approval of its Invokana treatment for type 2 diabetes bodes well for the company, as Invokana’s approach to treating the disease is completely different from that of competing products. In particular, Merck‘s Januvia appears to have some substantial disadvantages compared to the drug, and with Januvia’s patent set to expire in a few years, Invokana could have an even clearer path to success in the future. J&J

From: http://www.dailyfinance.com/2013/04/11/johnson-johnson-earnings-could-send-the-dow-higher/

Business, Finance, Occupation & Industry

The Next-Generation Therapy to Treat Type 2 Diabetes Has Arrived

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By Sean Williams, The Motley Fool

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OK, so it’s not nearly as dramatic as Captain Kirk beaming up from a planet’s surface to The Enterprise, but the approval of Johnson & Johnson‘s Invokana is a revolutionary breakthrough for those who suffer with Type 2 diabetes, or T2D.

A new pathway to glycemic balance
On Good Friday no less, the Food and Drug Administration approved J&J’s Invokana, ushering in a completely new method by which T2D can be treated. You see, Invokana is an SGLT2 inhibitor and works by a completely different pathway than oral DPP-4 inhibitors, which are the current hot thing in T2D care. DPP-4 inhibitors like Merck‘s Januvia work by reducing glucagon and blood glucose levels through hormones in the pancreas and liver. However, they’ve also been linked with potentially serious side effects like pancreatitis, kidney problems, and severe allergic reactions. But that hasn’t stopped Januvia from racking up annual sales in excess of $4 billion.

J&J’s Invokana — which was developed by its subsidiary Janssen Pharmaceuticals – is an oral drug that works in the kidneys by blocking the reabsorption of glucose and allowing the body to rid excess glucose through the urine. The end result is a more normalized glycemic balance, with the added benefit of weight loss even though Invokana isn’t indicated for weight loss. This is a welcome change since the majority of previous T2D treatments actually induce weight gain in patients.

Improvement seen one step at a time
The approval of Invokana itself wasn’t a guarantee even though the clinical trials suggested it would breeze through an FDA approval. Invokana effectively reduced A1C levels, lowered systolic blood pressure, and provided modest weight loss, all at the expense of the placebo, which, in this case, was Merck’s Januvia.

However, a gray cloud overhung its PDUFA meeting in the form of a complete response letter for Forxiga, an SGLT2 inhibitor from AstraZeneca and Bristol-Myers Squibb that was denied approval in Jan. 2012. Although Forxiga has found success in Europe, where it was approved in November — and became the first SGLT2-inhibiting drug approved in the world – it was denied a U.S. approval due to concerns about elevated breast and bladder cancer risks from taking the drug.

It’s also not hard to understand why the FDA is more stringent when it comes to safety concerns in T2D treatments as GlaxoSmithKline‘s T2D drug Avandia resulted in one of the largest recalls in U.S. history. All told, GlaxoSmithKline settled in 2012 for $3 billion and it’s estimated that Avandia could have resulted in 50,000 to 100,000 deaths due to increased heart attack risks associated with the drug.

Invokana, despite the approval, won’t get a free pass. It was shown to cause yeast infection and urinary tract infections (which is expected given the excess sugar being secreted by a patient), but will also need to follow up with five additional longer-term safety trials. Specifically, J&J will be tracking cases of heart …read more
Source: FULL ARTICLE at DailyFinance

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Should AstraZeneca and Bristol-Myers Squibb Get Married?

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By Keith Speights, The Motley Fool

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It’s been quite a while since we had a big wedding in the pharma world. Sure, there have been plenty of small acquisitions, but no really big merger has happened over the past few years. One potential pharmaceutical friendship often rumored to possibly develop into something more serious involves AstraZeneca and Bristol-Myers Squibb . Would a marriage between these two companies be a match made in heaven? Let’s take a look.

Going to the chapel
If AstraZeneca and Bristol-Myers were people, we could easily spot one good reason for them to get married: They have a lot in common. Just look at the two companies’ portfolios.

Both organizations boast a strong presence in the cardiovascular market. AstraZeneca’s Crestor stands as a leading cholesterol drug with sales over $6.2 billion in 2012. Bristol-Myers’ blood thinner, Plavix, brought in $2.5 billion in sales.

Neuroscience stands out as another strong area for both companies. AstraZeneca made $2.8 billion last year from Seroquel IR and Seroquel XR schizophrenia and bipolar disorder drugs. Bristol-Myers’ Abilify treats the same indications and likewise brought in around $2.8 billion in 2012 sales.

Of course, it’s also important that married couples have differences that complement each other. That’s true for our two potential lovebirds. While sales for AstraZeneca’s Nexium and Losec/Prilosec are slowing down, they’re still contributing significantly. Bristol-Myers doesn’t count any gastrointestinal products among its leading drugs.

However, Bristol-Myers Squibb can claim success in at least one area that isn’t strong for AstraZeneca — treatment of HIV and AIDS. Combined sales for the company’s Reyataz and Sustiva HIV drugs topped $3 billion last year.

Another argument in favor of AstraZeneca and Bristol-Myers getting hitched is that they have children together. Well, sort of. Bristol-Myers Squibb bought Amylin Pharmaceuticals last year for around $7 billion. Nearly half of that amount was financed by AstraZeneca. Both companies share in the profits from Amylin’s diabetes drugs, including Bydureon and Byetta.

This wasn’t the first time AstraZeneca and Bristol-Myers collaborated in the diabetes arena. The two companies previously developed Onglyza together. However, sales for Onglyza weren’t as strong as hoped for as Merck‘s Januvia won greater market share. They also partnered on Forxiga, which has encountered its own difficulties.

Staying single
Cupid might need to shoot his arrows in another direction, though. There are at least a couple of reasons why a marriage between AstraZeneca and Bristol-Myers could be unlikely to happen.

First, both companies like to play the field quite a bit. While AstraZeneca’s relationship with Bristol-Myers has been close, the British drugmaker’s ties with Merck have been even closer in some ways. The company has also forged alliances with smaller companies, including a deal with Isis Pharmaceuticals for developing cancer drugs using Isis’ antisense technology. But the real merger prospect for AstraZeneca most frequently mentioned of late is Forest Labs. Several analysts see the company as an ideal fit for AstraZeneca.

Meanwhile, Bristol-Myers and Pfizer are joined at the hip …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Johnson & Johnson Invokana PDUFA Preview

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By Maxx Chatsko, The Motley Fool

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It’s almost here! Johnson & Johnson is eagerly awaiting a decision on its type 2 diabetes drug Invokana (canagliflozin) by the end of the month. The novel small molecule inhibits the SGLT2 protein, which is responsible glucose retention in the kidney, thus allowing diabetes patients to maintain healthy glucose levels. Invokana has blockbuster potential as the first SGLT2 diabetes drug to (potentially) hit the market. Here’s what investors need to know. 

Pass or fail?
It looks like Invokana should have no problem gaining approval. The only thing that could put a lid on investor enthusiasm is the cautious outlook on the new class of drugs by the FDA. Bristol Meyers Squibb and AstraZeneca failed to get their SGLT2 inhibitor Forxiga (dapagliflozin) approved in November of last year, although the drug did gain approval in Europe.

What was the holdup? Forxiga showed a possible link to increased cancer risk. Invokana data has steered clear of a similar link thus far, but that didn’t stop a panel from voting 8-to-7 over long-term cardiovascular safety concerns. Johnson & Johnson is conducting a trial evaluating the long-term effects of Invokana, which is expected to wrap up in 2015. That should appease the FDA panel for the upcoming PDUFA and lead to a thumbs-up for the new drug.

Market competition: SGLT2 inhibitors
There are big advantages for a first-in-class drug such as Invokana. Pfizer’s ertugliflozin and Eli Lilly’s empagliflozin are the next SGLT2 inhibitors that will be thrust upon the market. Both drugs are in phase 3 trials at the moment, which pegs approval to late 2014 or 2015 and gives Johnson & Johnson a sizable window to get comfy with doctors and patients.

The FDA is also expected to reconsider Forxiga later this year after reviewing additional safety data. Should it gain approval in its second attempt, will doctors be able to overlook previous safety concerns and prescribe it over Invokana? 

Market competition: The field
Being first in class doesn’t automatically make a drug king, but being first to market sure helps. Merck’s Januvia was the first DPP-4 inhibitor approved for type 2 diabetes and is now the most well-established therapy. The franchise recorded $5.75 billion in worldwide sales in 2012. And despite Forxiga’s woes, the alliance between Bristol Meyers and AstraZeneca isn’t exactly out of the race, either. The Byetta franchise, acquired from Amylin Pharmaceuticals last August, brought in $227 million in 2012.

Usually, doctors hesitate to prescribe new drugs as first-line therapies in light of a smaller body of safety data. That would seem to bode well for Januvia and Byetta, except for a recent study that found patients taking either drug were twice as likely to develop pancreatitis, a potentially lethal condition. The study puts a smudge on Januvia’s squeaky-clean safety and side-effect profile and creates an interesting opportunity for Invokana.

Invokana’s blockbuster potential
Will doctors prescribe Invokana over well-established therapies with new safety data in hand? I think it’s …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

8 Wasn't Enough for These Dow Stocks

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By Dan Caplinger, The Motley Fool

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Lately, the stock market has seemed to look for any excuse to rise, and today was no exception. Positive news on the weekly jobless claims number isn’t usually all that earth-shattering, but it helped vault the Dow Jones Industrials to an 84-point rise, breaking through the 14,500 level, and setting an eighth-straight record on its tenth consecutive day of gains. Skeptics grow increasingly concerned about the euphoria of this record run, but today’s advance was broad based, with small-cap stocks actually rising a more substantial 1% on the day.

But many stocks missed out. Merck was the Dow’s biggest loser, dropping the better part of 1% today on news that the FDA is investigating diabetes drugs to see if there might be a link to potential pancreatic inflammation and pre-cancerous changes. Although many companies make such drugs, Merck’s Januvia has been particularly successful, stepping up to provide a much-needed revenue boost when the company lost patent protection on its Singulair asthma medication. Any threat to that success could pose a big problem for Merck going forward.

Home Depot fell three-quarters of a percent. Yesterday’s retail sales number seemed like a reasonably strong one, but reading into the details revealed some concerns about the strength of the consumer-led recovery. Home Depot’s stock has climbed so substantially based on the belief that strength in the housing market would provide leadership for the overall economy, but anything that puts that theory in jeopardy could lead to a rapid reversal of Home Depot’s gains.

Outside the Dow, E*TRADE Financial fell 8%, as hedge fund Citadel announced it would sell off more than 27 million shares that it owns. Investors had hoped that Citadel might put together a bid to take over the brokerage company outright, but the sale signals that those hopes aren’t going to come to pass. Brokers have had a tough time, given low interest rates and overall investor apathy and, barring new interest from investors chasing record highs, it’s hard to see the environment getting much better for E*TRADE soon.

Finally, SandRidge Energy fell 2.4% as it announced that directors nominated by activist investors at TPG-Axon Capital would take their places on the board immediately. With CEO Tom Ward having come under fire for alleged conflicts of interest from personal oil-and-gas land deals involving family members, the move could lead to Ward’s ouster, which TPG-Axon has sought for some time. The controversy is a distraction from the need for the oil and gas producer to focus on maximizing efficiency in a tough pricing environment, especially on the natural-gas side of the business.

Merck has battled patent expirations and pipeline problems before, but losing Januvia would be a huge additional blow. Is Merck still a solid dividend play, or should investors be looking elsewhere? In a new premium research report on Merck, the Fool tackles all of the company’s moving parts, its major market opportunities, and reasons …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Pick Your Poison: Diabetes or Pancreatic Cancer

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By Brian Orelli, The Motley Fool

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The Food and Drug Administration warned Thursday that diabetes drugs might be elevating the rate of pancreatic cancer.

Investors shouldn’t be surprised. Nor particularly worried.

We’ve known for years that GLP-1 drugs increase the likelihood of pancreatitis. I wrote about an FDA warning about Byetta nearly five years ago.

Last month, a study in JAMA Internal Medicine showed that Byetta — which is now owned by AstraZeneca and Bristol-Myers Squibb after they bought Amylin Pharmaceuticals — and Merck‘s Januvia double the rate of pancreatitis.

Januvia is a DPP-4 inhibitor, but GLP-1 drugs and DPP-4 inhibitors work on the same pathway to lower glucose — DPP-4 inhibits GLP-1 activity — so it’s not surprising that they would have the same effect on the pancreas.

The latest warning comes from unpublished data shared with the FDA that showed inflammation and pre-cancerous cellular changes in pancreas biopsies from patients taking DPP-4 inhibitors and GLP-1 drugs.

Since it’s believed to be a class effect, the FDA warning extends beyond Januvia and Byetta to all the DPP-4 inhibitors and GLP-1 drugs: Novo Nordisk‘s Victoza, Bristol and Astra’s Onglyza, Takeda’s Nesina, Eli Lilly and Boehringer Ingelheim’s Tradjenta, and their combination products.

If the drugs were pulled from the market, it would be devastating to the companies, especially Merck since Jaunvia is a multibillion-dollar blockbuster. But investors shouldn’t worry quite yet. This is very preliminary data and “pre-cancerous cellular changes” doesn’t necessarily lead to a large increase in the rate of cancer.

It seems possible — dare I say likely — that the FDA will find that the drugs cause a small increase in the rate of pancreatic cancer, but that the benefits outweigh the increased risk. The agency will slap a warning on the drugs, and we’ll be back to business as usual.

Can Merck beat the patent cliff?
This titan of the pharmaceutical industry stumbled into 2013 and continues to battle patent expirations and pipeline problems. Is Merck still a solid dividend play, or should investors be looking elsewhere? In a new premium research report on Merck, The Fool tackles all of the company’s moving parts, its major market opportunities, and reasons to both buy and sell. To find out more click here to claim your copy today.

var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ eventType: “TickerReportPitch”, …read more
Source: FULL ARTICLE at DailyFinance

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3 Stocks Trying to Hold the Dow Back

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By Matt Thalman, The Motley Fool

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Once again, the Dow Jones Industrial Average is pushing higher today. As of 12:55 p.m. EDT, the index has added 64 points, or 0.44%. It’s poised not only to set a new record closing high, but also to stretch its winning streak to 10 days.

The markets in general are moving higher today. The S&P 500 has gained another 0.41%, leaving it just four points away from its all-time high of 1,565, while the NASDAQ is higher by 0.33%. But even as the markets move closer to setting new highs, a few losers are attempting to hold the indexes back.

Today’s Dow downers
Shares of Merck have fallen 1% today after new reports indicated that the U.S. Food and Drug Administration is reviewing documents connecting Merck’s Januvia drug to serious health issues. The study from JAMA Internal Medicine claims to have found a link between certain diabetes medications, including Januvia, and increased pancreatic problems. The FDA‘s looking into how JAMA collected the data and what led the study’s authors to their conclusion.

At this time, the FDA has not given any official statement on whether Januvia is harmful or not. But if officials find the drug does cause further harm, it may be taken off the market. At the very least, it could come with much more severe side-effect warnings, which would likely lead doctors to prescribe it less frequently.

In the world of retail, shares of Wal-Mart are down 0.4%. The company relies on shoppers receiving and spending their tax refunds during this time of year, and so far 2013 has not been good for refunds.

First, the IRS pushed the earliest possible filing day back by more than a week because of tax code changes resulting from the fiscal-cliff compromise. In February, those claiming earned-income tax credits were hit by refund delays. Now the IRS is claiming that refunds for more than 6000,000 taxpayers who claim an education credit will be delayed for up to six weeks.

On Tuesday a Wal-Mart executive said customers had cashed in refund checks worth $2.7 billion. But at this time last year, the company had processed about $4 billion worth of refund checks, much of which was later spent in its big-box stores.

Lastly, Caterpillar is trading lower by 0.6% following reports that company employees in Europe are protesting against recent moves to cut its European workforce. The EU‘s manufacturing industry has struggled since the recession hit. Combine industry layoffs and wage cutbacks with the austerity programs many EU countries have been forced into, and it’s easy to see how further job cuts could set off protests and, possibly, strikes. If the company is hit with a strike, both its short-term and long-term costs will likely climb, lowering its profits.

Caterpillar is the market share leader in an industry in which size matters, and its quality products, extensive service network, and unparalleled brand strength combine to give it solid competitive advantages. …read more
Source: FULL ARTICLE at DailyFinance