Pharma Insight

Saturday, October 07, 2006

Analysts expect biotechnology companies to report mixed third-quarter earnings with several pointing out that revenue increased but the sector still lagged in growth compared with the rest of the market.

Without any sweeping industrywide factors hampering or boosting stocks, companies faced a divergent mix of issues during the quarter, but sales of key drugs will help most companies to meet or beat expectations, several analysts said in forecasts for the quarter.

The sector itself held steady. The American Stock Exchange's biotechnology index posted a 6 point gain between June 30 and Sept. 30, marking a leveling out after a losing 46 points in the previous quarter.

Analysts cited industry sales data in giving a mixed assessment on company returns. But overall they thought sales from several key drugs would mark profitable quarters for companies like Genentech Inc. and Gilead, and many are expected to match Wall Street expectations. Also, higher enrollment figures in the Medicare Part D prescription drug program could be a sales-boosting factor for several companies.

Drug developer Genentech Inc. kicks off earnings season Oct. 10. Based on sales data for its cancer drugs analysts expect the company to post another strong quarter. Also, the company received approval for its age-related blindness drug Lucentis just before the start of the quarter and is tracking ahead of sales expectations.

Morgan Stanley analyst Dr. Steven Harr expects Genetech's Avastin sales to meet Wall Street expectations in the mid-to-high $440 million range, but said sales could be higher, reaching his estimate of $460 million. Other drugs, including Rituxan and Lucentis, are also poised to meet estimates.

Analysts polled by Thomson Financial expect the company to earn 50 cents per share on revenue of $2.31 billion.

Genzyme Corp. is expected to post revenue and earnings in line with Wall Street. Analysts expect earnings of 71 cents per share on revenue of $819.6 million.

Sales of its kidney disease treatment Renagel likely received a boost from more patient enrollment under the Medicare D prescription drug plan, said Merrill Lynch analyst Eric Ende. He's expecting worldwide sales of Renagel to total $130 million for the quarter, making it the company's best-selling drug.

Genzyme will report results Oct. 12.

Gilead Sciences Inc. plans to post third-quarter results Oct. 18, with high expectations for its once-a-day HIV pill Atripla. The drug is a combination pill that includes two Gilead drugs. Sales were moving above estimates as of August, according to Rodman & Renshaw analyst Michael King Jr.

Jefferies & Company analyst Eun Yang expects the company to post results in line with or slightly above Wall Street expectations. Analysts on average forecast profit of 56 cents per share on revenue of $705.2 million.

"We expect Gilead to deliver a solid quarter driven by continuing strong sales in its HIV franchise," Yang wrote in a note to investors.

Cubist Pharmaceuticals Inc. will also report its third-quarter results Oct. 18, and analysts expect profit of 4 cents per share on revenue of $54.3 million. The stock will likely see a boost from on-target sales of its staph infection drug Cubicin, Yang said.

posted by pharma-insight @ 1:37 PM

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