Tuesday September 12, 2:01 PM
Celltech reports first profit but shares fall
(Adds analyst downgrade, latest shares)
By Ben Hirschler
LONDON, Sept 12 (Reuters) - Celltech Group Plc (LSE: CCH.L - news) , Britain's biggest biotechnology company, reported its first
ever profit on Tuesday, bolstered by last year's acquisition of established drug maker Medeva.
But its highly rated shares fell six percent, reflecting profit-taking on the expected news and overnight weakness in United States
biotech shares.
First half net profit -- before exceptional restructuring costs of 9.3 million pounds -- was 10.1 million pounds ($14.31 million), after
interest and before goodwill amortisation. Analysts had forecast a profit of 7-10 million.
"We feel we have achieved escape velocity," Chief Executive Peter Fellner said of the move into profit, which is still a rare occurrence for biotech firms.
Celltech acquired Medeva in 1999 to secure a salesforce and revenue stream from established -- if unexciting -- products with which to finance its development
pipeline.
It is that pipeline, including novel drugs to treat cancer, rheumatoid arthritis and asthma, that has fuelled interest in Celltech this year, helping its shares outperform
the European drugs sector this year by 135 percent up to Monday.
Merger cost savings were some eight million pounds in the period and Celltech forecast further savings in the second half.
Steve McGarry, biotech analyst at Goldman Sachs, said the figures underpinned his projections for full-year profits of 18.5 million pounds.
But Eva Haas of Old Mutual (LSE: OML.L - news) Securities said she had hoped for greater cost savings and downgraded her recommendation on the stock to
"hold" from "add".
"It's a classy business...It's worth having but it's not stunningly good value at the moment," she said.
EARLY MYLOTARG SALES STRONG
Celltech's Mylotarg antibody product for acute myeloid leukaemia, approved for use among over-60s in the United States in May, got off to a good start with sales
up to June 30 of $3.8 million via licensing partner American Home Products .
Fellner said Mylotarg was continuing to sell well and he agreed with analyst forecasts that it could have peak sales of $200-250 million, assuming a successful
European launch.
Anaesthetic Chirocaine, however, had a slow start following its recent launch. Sales could eventually reach $100-150 million but Fellner said it was likely to be a
slow process.
Among nine products in development, most interest is focused on CDP 870, an anti-TNF antibody product in Phase II trials for rheumatoid arthritis, for which
Celltech is seeking a marketing partner. The drug could reach the market in late 2003.
Humicade for Crohn's disease, an intestinal complaint, which is a year ahead of CDP 870 and on the brink of final Phase III trials, will be marketed by Celltech
itself.
Sales of the old products inherited from Medeva were mostly stable, declining marginally in the six months to June 30 to 101.8 million pounds from 104.8 million.
The exception was methylphenidate, for the treatment of attention deficit and hyperactivity disorder (ADHD) in children, sales of which fell 17 percent to 12.8
million pounds in the face of increased generic competition.
BUILDING PHARMA UNDER NEW BOSS
Celltech announced the appointment of Simon Cartmell, 40, from Vernalis (LSE: VGD.L - news) as chief executive of the Celltech Medeva business, replacing
Garry Watts who is leaving the company.
Fellner said he was keen to build up this traditional pharmaceuticals business inherited from Medeva and would be eyeing potential acquisitions.
Any deals in the high-tech area would be smaller in scale.
"If we did any acquisitions (in technology areas) they wouldn't massively change the shape of the company, whereas in the pharma area we might look at some quite
significant acquisitions," he said.
Last week, Celltech announced the long-awaited sale of the Medeva Vaccines business to Powderject Pharmaceuticals Plc (LSE: PJP.L - news) for 55 million
pounds, delivering on a promise to clear out non-core businesses inherited from Medeva.
It remains in talks to sell Medeva's U.S. businesses, Inhalon and Armstrong, which Fellner said he expected to sell by the end of the year for a combined 10-15
million pounds. |
