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Valeant Reports Positive Results on Psoriasis Drug Siliq

Valeant Pharmaceuticals International, Inc. VRX announced that one of its divisions, Ortho Dermatologics, announced results from the long-term phase III extension study, AMAGINE-2.

The study demonstrated that Siliq injection provided sustained high levels of skin clearance (PASI 100) over more than two years in patients with moderate-to-severe psoriasis.

The results from a phase III multicenter, randomized, double-blind, placebo-controlled study (AMAGINE-1) which evaluated the efficacy of brodalumab in a subset of patients with prior exposure to ustekinumab, demonstrated that Siliq was similarly efficacious with improved skin clearance in patients both with and without prior ustekinumab exposure.

We note that Siliq is approved for the treatment of moderate-to-severe plaque psoriasis in adult patients who are candidates for systemic therapy or phototherapy and have failed to respond or have lost response to other systemic therapies. 

The drug was approved in February.  However, weakness in the dermatology segment persists and is expected to impact the top line.

Valeant entered into a collaboration agreement with AstraZeneca plc AZN granting the former an exclusive license to develop and commercialize Siliq globally, except in Japan and certain other Asian countries where the rights are held by Kyowa Hakko Kirin Co., Ltd.  The agreement was amended in July 2016 to entitle Valeant the right to develop and commercialize brodalumab in Europe.

Valeant’s stock has lost 7.2% in the year so far compared to gain of 1.4% for the industry.

Once an acquisition giant, Valeant has been caught up in various controversies since October 2015. Following a substantial decline in Valeant’s share price in the first quarter of 2016, Bill Ackman and Steve Fraidin joined the board in March 2016 as part of Pershing Square’s effort to stabilize the company. Thereafter, Joseph C. Papa took charge as the new CEO. The new management took various efforts to turnaround the company.

Even though it is still early to comment on the rebuilding process but the company’s efforts to sell non-core assets and lower debt is commendable. The divestiture of non-core assets is expected to help the company streamline its product portfolio and focus on core areas of dermatology and lower debt.

Although the approval of new drugs brings some hope, we believe it is still a long road ahead for Valeant before investors faith can be restored in the stock. Earlier in the year, Bill Ackman, chairman of Perishing Square Holdings, Ltd stated that investing in Valeant was a big mistake on his part.

Zacks Rank & Key Picks

Valeant currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the health care sector are ACADIA Pharmaceuticals Inc. ACAD and Celgene Corp. CELG. Both carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ACADIA’s loss per share estimates have narrowed from $2.82 to $2.57 for 2017 and from $2.07 to $1.90 for 2018 over the last 60 days. The company delivered positive earnings surprises in two of the trailing four quarters with an average beat of 7.97%.

Celgene’s earnings estimates for both 2017 and 2018 have inched up 0.7% in the past 90 days. The stock has rallied 18.4% this year, outperforming the industry.

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