Merrill
Updating oncology, Lucentis product models
We are updating our oncology product models for Avastin, Herceptin & Tarceva,
as well as for Lucentis. Our revenue estimates remain essentially the same,
except Tarceva, which was reduced due to slower price increases and more
modest capture of market share. However, we believe significant upside remains
for our US Tarceva sales if 1st-line lung cancer use and/or combo use with Avastin
in 2nd-line lung cancer increases. Our 2007 EPS estimates do not change based
on our updated models. Maintain BUY.
Avastin - $5 B by 2010, still not including adjuvant
We project Avastin sales could exceed $5 B by ‘10, including $1.4 B in colorectal
cancer, $1.1 B in lung cancer, and $1.3 B in breast cancer. We also assume $60
MM in other cancer sales in ’07, rising to $1.35 B in ’10. Other sales are primarily
related to ovarian, pancreatic & kidney cancer, as well as use in the adjuvant
setting. Our new model factors in the new cost cap, which will disproportionately
affect lung and breast cancer sales. However, we remain very conservative with
our adjuvant estimates, which could create $3 - $5 B of upside if positive data
emerge for adjuvant colorectal, lung or breast cancer starting late ’08.
Tarceva – more conservative with US estimates for now
We recently lowered our Tarceva sales estimates for OSI, based primarily on
more conservative projections for uptake in front-line lung cancer and more
conservative price increases. However, our new estimates do not affect EPS.
Herceptin & Lucentis: updating models, no change to ests
We also update out working models for Herceptin and Lucentis, but did not
change our estimates for either drug. Our new models better reflect patient
populations, penetration and discontinuation rates for use for each drug |
