Subject: Second quarter report and conference call
Date: Tue, Jan 13, 1998 00:24 EST
From: LMoss
Message-id: <19980113052400.AAA04582@ladder01.news.aol.com>
Agouron reported 2Q earnings today, and followed up with a conference call. I'll summarize some of the points I think are particularly significant.
After-tax earnings, fully diluted, were reported as $.15/share. (Because of NOL carry-forwards, Agouron does not currently pay any tax; under the old reporting system, it would have reported $.25/share.) (Note also that Agouron spends about $1/share each quarter on R&D, which, according to accounting rules, is reported as an operating expense, but which can also be viewed as an investment in future products.)
Total revenues were $104.7 million. Viracept revenues were $91.8 million, of which $84.5 million were U.S. sales, an increase of 12% over the previous quarter. Viracept now accounts for 36% of the revenues for all PIs in the U.S. and leads the field in that respect. It will be tough for any future PI competitor to match, much less exceed, in that it has unsurpassed potency, tolerability, safety profile, and ease of use (and BID dosing studies look
quite favorable).
Agouron estimates that U.S. sales of Viracept in FY98 will be in the range of $350 to $360 million. I think this may be conservative if the acceleration in growth I previously estimated would take place beginning in late 3QF98 indeed occurs. This delay in growth is, I believe, a natural consequence of delays in the system: Informing health care providers of the superiority of Viracept, with clinical data to back this up; the three to four month
interval between viral load tests recommended in the guidelines before starting most asymptomatic HIV patients on antiretroviral therapy; and delays in making money available for therapy.
Despite all this, the Viracept launch to date is the most successful in the history of the biotechnology industry, surpassing the launch of Amgen's Epogen.
Viracept gross margins on U.S. sales were 63% in the quarter. Agouron expects an increase to about 68 to 69% by the end of the year, with an average for the (fiscal) year of 64%.
Cash and cash equivalents increased to $117 million.
EU approval of Viracept is expected later this quarter. By the end of the fiscal year, approval in Japan, Brazil, Canada, and New Zealand is expected.
Agouron estimates that currently 8 to 13% of patients are now receiving 2PI combination therapy. These are mostly people who have experienced failure with initial therapy. Agouron estimates that over the next year 20 to 25% of patients will be on 2PI combination therapy, with a greater proportion of them using it for initial therapy.
There will be at least 15 papers presented at the Chicago meeting starting Feb. 1 relating to Viracept. Favorable results on BID dosing will be presented, but an even larger sample size will be needed to satisfy new FDA criteria before submitting an application for a label change (estimated by the end of the calendar year). (Note that a label change is not required for health care providers to use BID, but it is necessary if Agouron is to promote
this change.)
A long-term followup of Study 511 will be presented, using an ultrasensitive assay, showing unsurpassed potency.
Data on various PI combinations will be presented. I expect the data on some of the Viracept combinations to be very positive.
Data on resistance and cross-resistance will be presented. I expect this to be favorable to Viracept, but final proof of its superiority in this respect will take longer to demonstrate to statistical satisfaction.
With respect to other drugs, AG3340, the MMP inhibitor for cancer, is expected to advance to Phase ll/lll trials later this quarter. This is most encouraging, as it has the potential to be another blockbuster drug. A rhinovirus PI candidate should be identified and enter clinical trials by the end of the calendar year. The GART inhibitor for cancer is currently in dose-ranging studies. (A key issue for any GART inhibitor is the avoidance of
cumulative toxicity, and studies to determine this must be done with great care.)
While I think of it, there has been speculation on some of these boards that Agouron might develop a successor PI to Viracept. I think this most unlikely, because Viracept is such a good PI. More likely is the development of an integrase inhibitor which can attack HIV DNA in resting T-cells. I would not be surprised if in two to three years Agouron developed, tested, and submitted for approval such an inhibitor.
In summary, it was a good quarter, and the best is yet to come.
LMoss
|
