excerpts from lehman bro's post-earnings report. a wee bit dated.
fwiw, they've revised their earnings projections over the next two quarters from $0.34 and $0.36 to $0.36 and $0.39, respectively.
anyone (harold?) care to compare their own revenue estimates with these?
cheers,
-chris.
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Biogen: Reports $0.34; Increasing EPS, Maintain 1-Buy
Author: CA Butler, PhD/S. Pandya 212-526-4410
Rating: 1
Company: BGEN
Rank (Old): 1-Buy
Rank (New): 1-Buy
Price : $66 11/16
52wk Range: $68-21
Price Target (Old): $65
Price Target (New): $80
Today's Date : 07/09/99
Disclosure(s): C
Conclusion
Strong Avonex sales growth of 67.5% Y-o-Y. Increasing our FY99 & FY2000 Avonex sales estimate to $612MM & $795MM. his increases our FY99 & FY2000 EPS number to $1.38 & $1.70 from a previous $1.30 & $1.54. Maintain 1-Buy.
Highlights:
* Yesterday after the market close, Biogen reported 2Q99 operating EPS of $0.34 versus $0.20 for the same period a year ago. These results were two cents higher than our estimate of $0.32 which matched the Street consensus.
* Avonex sales grew 67.5% Y-o-Y totaling $146MM and exceeded our estimate by 5.7%. Sales in the US were $104MM (+52% Y-o-Y & 8% Q-o-Q) while sales from Europe grew 17% from the previous quarter.
* Based on the strong sales to date we are increasing our FY99 Avonex sales estimate to $612MM from $560MM. Our new estimate is based on US sales of $440MM and European sales of $172MM. We are also increasing our FY2000 sales estimate to $795MM, a growth of 30% from our new FY99 estimate.
* In addition to increasing our revenue estimate we have increased our R&D and SG&A expense estimates for FY99 and FY2000. The net effect of these changes increases our FY99 EPS estimate to $1.38 from $1.30. Our FY2000 EPS estimate moves to $1.70 from $1.54.
* The underlying thesis for Biogen remains healthy and we maintain our 1-Buy rating. As we are increasing our EPS estimates we are raising our 12-month price target to $80.
Summary:
FINANCIAL SUMMARY
Yesterday after the market close, Biogen reported 2Q99 earnings of $0.34 per diluted share "from operations" versus $0.20 for the same period a year ago. The operating EPS number was two cents higher than our estimate of $0.32 which matched the Street consensus. Earnings, as reported, were $0.28 per share and included a one-time, non-cash charge of $15.3 million related to the write-down of equity investments in three smaller biotechnology companies to fair market value. Further write-downs are not expected in the immediate future and the remaining asset valuation of these investments total an estimated $13 million, representing the worst case exposure level. Earnings were driven by a 67.5% Y-o-Y increase in Avonex, the company's drug for the treatment of multiple sclerosis, to a record level of $145.8 million. This figure exceeded our 2Q99 estimate of $138 million by 5.7%. The company's royalty stream from out-licensed products was $43.1 million, higher than our estimate of $42.0 million for the quarter. For the quarter, total revenue grew by 47% on a Y-o-Y basis (+10% Q-o-Q) and was $8.9 million higher than our estimate. Cost of good sold was 14.3% of total revenue in-line with our estimates. R&D spending was $50.9 million (27% of total revenue) compared to our estimate of $52.2 million (30% of total revenue). SG&A expense was an aggregate value of $36.9 million (19.6% of total revenue) slightly higher than our estimate of $34.2 million (19% of total revenue). Operating profit margins were 39.2% compared to our 37.7% estimate. Net income from operations was $53.6 million representing an increase of 70.5% from the prior year. Biogen ended the period with cash and cash equivalents of approximately $610 million, or $3.87 per share as the company continues its share buy-back program.
AVONEX GROWTH CONTINUES
We believe the trend towards early and aggressive treatment for multiple sclerosis continues to create market expansion driving Avonex sales. In 2Q99 Avonex sales grew 67.5% on Y-o-Y basis and an impressive 11.1% from the previous quarter. Sales in the US for the quarter were $104 million, an increase of 52% year-over-year and 8% from the previous quarter. There are currently 51,000 patients in the US on Avonex, an addition of 3,000 patients from 1Q99. The growth in the US market segment continues, and further growth could also arise from increased utilization of Avonex by the secondary-progressive MS patient (SP-MS). It is currently estimated that between 10- 15% of Avonex sales revenue in the US is from the SP-MS patient. On an aggregate basis this value could increase as we head into FY2000 sales estimates. European sales comprised 28% of total Avonex sales reaching $41 million for the quarter. Sales grew in Europe 17% from the previous quarter as 2,000 patients were added.
Based on the sales and patient accrual trends to date, we are increasing our FY99 Avonex estimate to $612 million from $560 million. This is based on US Avonex sales of $440 million (+45% Y-o-Y) and European sales of $172 million (+89% Y-o-Y). Additionally, were are increasing our FY2000 Avonex sales estimate to $795 million (+30% Y-o-Y) comprised of US sales of $576 million (+31% Y-o-Y) and European sales of $219 million (+28% Y-o-Y). We have increased our R&D and SG&A expense projections as well for both FY99 and FY2000. We now estimate R&D expense at $226 million (previous $216 million) and $307 million (previous $227 million) for FY99 and FY2000 respectively. Our new SG&A expense is now $152 million for this year from $142 million. It is important to note that while we have increased these values on an absolute basis they remain the same as our previous estimates when expressed as a percentage of revenues. The net effect of these top-line and expense changes increases our FY99 EPS estimate to $1.38 from $1.30. Our FY2000 estimate moves to $1.70 from $1.54. As we are increasing our EPS estimates we are raising our 12-month price target to $80. We maintain our 1-Buy rating.
Disclosure Legend: A-Lehman Brothers Inc. managed or co-managed within the past three years a public offering of securities for this company. B-An employee of Lehman Brothers Inc. is a director of this company. C-Lehman Brothers Inc. makes a market in the securities of this company. G-The Lehman Brothers analyst who covers this company also has position in its securities. |
