Merrill:
Abgenix, Inc.
Earnings Analysis/Company Update; Opts-in to Co-Promote
Panitumumab; Maintain BUY
Abgenix reported an in-line quarter. The company also announced it has
decided to co-promote panitumumab with Amgen, and as expected, a phase II
study of panitumumab in combination with chemotherapy in front-line lung cancer
failed to hit its endpoint. We maintain our BUY rating based on panitumumab’s
potential in colorectal cancer.
Abgenix reported 2Q05 EPS of ($0.49), in-line with our estimate of ($0.50).
Licensing revenues and expenses were as expected. Our 2005 EPS estimate goes
up a penny to ($1.97) from ($1.98).
The company has opted in to co-promote panitumumab with Amgen. While
the profit split remains at 50%, by co-promoting the product, Abgenix will be able
to build a sales force that it can leverage into licensing additional cancer drugs.
Also, by including the costs in the JV, Amgen will pay for approximately half of
the estimated expense of $15 MM.
A phase II trial of panitumumab in combo with chemo in front-line non-small cell
lung cancer (NSCLC) failed to hit its endpoint. The study was expected to fail
given four prior failed trials testing other EGF-receptor inhibitors with chemo in
NSCLC. Our model projected NSCLC sales of $0, $10 MM, $32 MM in ’06, ’07,
& ’08, respectively.
Abgenix and Amgen are expected to file an NDA for panitumumab in 3rd-line
colorectal cancer (CRC) by YE05 based on data from an EU pivotal study, which
should be reported in late 3Q05, supported by data from a US pivotal trial. We
project worldwide peak sales for panitumumab of $1.1 billion.
Eric Ende
Comment available.
Back To Front Page
Price $10.71
Price Objective $16.00
Price Objective Date 27-Jul-2004
Estimates (Dec) 2004A 2005E 2006E
EPS: -$2.11 -$1.97 -$1.74
P/E: NM NM NM
GAAP EPS: -$2.11 -$2.51 -$2.12
GAAP P/E: NM NM NM
EPS Change (YoY): NM NM
Consensus EPS: $-1.97 $-1.77
Mkt. Value / Shares Outstanding (mn) $953 / 89
Investment Rating Buy
Volatility Risk Rating High
Investment Opinion: C-1-9
Symbol/Exchange: ABGX / NASDAQ |
