Biotechs See Strong 1st Quarter, But Confidence Eludes Investors (writeup about CNTO and other Biotech co's)
Dow Jones Online News, Monday, April 14, 1997 at 18:56
By Jesse Eisinger
Staff Reporter
NEW YORK -(Dow Jones)- New products drove strong earnings at up-and-coming biotechnology companies in the first quarter, but concerns about continued growth dampened some investor enthusiasm.
Centocor Inc., with its heart drug ReoPro; Biochem Pharma Inc., with its AIDS drug Epivir; and Biogen Inc., with the multiple sclerosis drug Avonex, all had continuing sales success, with predictable earnings growth.
But skittish investors and analysts have turned on some of the firms. Biogen Thursday reported strong net income of $17 million, or 22 cents a share in its first quarter, compared with a loss of $3.7
million, or 5 cents a share, a year earlier. The company had revenue of $99.7 million, including $52.6 million from Avonex sales. Year-ago
revenue was $38.8 million for the Cambridge, Mass. company. However, concerns about possible competition to Avonex hurt Biogen's
stock, which dropped 15% Friday to close at $32.875. Centocor, of Malvern, Pa., is expected to earn $4.1 million, or 6 cents a share, in the first quarter, according to David Molowa, an analyst for Bear Stearns & Co. That compares with a loss of $9.7 million, or 16 cents a share, a year earlier. ReoPro, an anticlotting drug used in angioplasty procedures, should bring in sales of about $59 million, the analyst predicts. Of that, about $34 million should go to Centocor, and the rest will go to Eli Lilly & Co., the biotech's partner.
Despite the fact that Centocor reported strong results for its
Crohn's disease drug CenTNF in early April, the stock closed Friday
lower than where it finished 1996. The stock has fallen 17% in the
quarter, and was selling Monday for about $31.625. One reason for the stock drop is that Merck & Co. has reported promising results for a ReoPro rival, Aggrestat, for the treatment of patients with shooting chest pains. Also, some analysts see the angioplasty market as saturated. The company could get a boost if the Food and Drug Administration decides to expand the approved uses for ReoPro.
Interneuron Pharmaceuticals Inc., of Lexington, Mass., faces concerns
because of its controversial drug Redux. Redux is sold by American Home Products Inc., which pays Interneuron a royalty. The drug, once expected to be a blockbuster, had flat sales in the quarter, compared with the fourth quarter's $55 million, according to David Crossen, an analyst for Montgomery Securities Inc.
The drug is facing criticism because some doctors are allegedly
prescribing it for patients who aren't dangerously obese. And another
FDA hearing on safety concerns about the drug was postponed.
Crossen expects the company to lose $9 million, or 22 cents a share, in its fiscal second quarter, compared with a loss of $12 million, or 34 cents a share, a year earlier. Interneuron's revenue should reach $18 million, compared with about $1.5 million a year earlier.
Biochem Pharma Inc. is expected to make 11 cents a share in Canadian dollars, compared with 2 cents a share a year ago, according to C. Anthony Butler, an analyst for Lehman Brothers Inc. For the year, he expects the Laval, Quebec, company to make 73 cents a share.
Biochem continues to be driven by strong sales of its AIDS drug Epivir, or 3TC. The drug is being sold by its partner, Glaxo Wellcome
PLC, which pays Biochem a royalty of about 12%. Royalties on Epivir from sales in the U.S. and Europe are projected to be $24.3 million,
according to Crossen.
For the large, established biotech companies, the first quarter was a mixed bag.
Amgen Inc. is expected to report a "boringly consistent" quarter, according to Molowa. He expects the company to earn $172 million, or 62 cents a share, compared with $144 million, or 51 cents a share, a year earlier. The company's two blood-cell boosting products, Epogen and Neupogen, continue to grow for the Thousand Oaks, Calif., giant.
Two stalwart biotechs that have been hard-pressed to log solid
earnings growth - Chiron Corp., of Emeryville, Calif., and Genzyme
Corp., of Cambridge, Mass. - should post flat earnings.
Molowa said that Genzyme should post net income of $21.9 million, or
28 cents a share, on revenue of $146 million, compared with $19 million, or 27 cents a share, on revenue of $111 million, a year earlier. The first-quarter revenue figure includes $27 million in revenue from the company's surgical products division, Deknatel Snowden Pencer Inc., acquired in July.
Chiron is expected to earn $14.8 million, or 8 cents a share, compared with $12.7 million, or 7 cents a share, according to Oppenheimer & Co.'s Matthew Geller. He sees revenue of $328 million, compared with $306 million a year earlier.
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