Bristol-Myers Posts Loss;
Celgene's Profit Jumps
By DONNA KARDOS
January 31, 2008 11:59 a.m.
Bristol-Myers Squibb Co. narrowed its fourth-quarter loss as the pharmaceuticals company was hit with almost $800 million in one-time charges that offset strong sales growth. The drug maker also lowered its 2008 earnings forecast.
Separately, Celgene Corp. said its net income more than tripled as sales of the smaller drug maker's top-selling cancer drug doubled.
Bristol-Myers, which is based in New York, posted net loss of $89 million, or five cents a share, compared with a year-earlier net loss of $134 million, or seven cents a share, a year earlier. Excluding items, Bristol's earnings from continuing operations doubled to 33 cents from 17 cents. Net sales climbed 33% to $5.38 billion, one cent short of analyst expectations.
The latest quarter included charges related to restructuring, an acquisition and impairment of investments in auction-rate securities. Bristol attributed the $275 million impairment charge to the global credit crisis's effects on its short-term investment portfolio. Specifically, the company had auction-rate securities including collateralized-debt obligations -- or CDOs -- mortgages and corporate bonds.
In the second half of last year, the company was unable to sell some of the securities at auctions and the "sponsoring brokers' didn't make a market in the auction-rate securities, Chief Financial Officer Andrew Bonfield told analysts Thursday. He added there have been no defaults, and there is no impact on the company's overall financial flexibility.
Mr. Bonfield said Bristol was unlikely to face additional significant exposure to the credit crisis. "But obviously we have to be prepared to accept that if credit markets deteriorate, there may be further" adjustments, he said.
Pharmaceutical sales rose 39% to $4.39 billion, including five percentage points from favorable foreign exchange. Health-care group sales climbed 9% to $993 million, more than half due to the weaker dollar.
Bristol's top drug, anti-blood-clotting Plavix, saw sales nearly triple to $1.37 billion. Erbitux, the cancer drug Bristol sells with ImClone Systems Inc., saw sales rise 11% to $185 million.
Abilify, the company's antipsychotic, posted a 28% sales increase to $462 million. Abilify has quickly become the company's second-best-selling drug and is crucial to its plan to reduce its dependence on Plavix. However, Abilify could come under pressure from generic competition this year, and Bristol's marketing rights are currently set to expire in 2012.
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BRISTOL-MYERS PHARMACEUTICALS
Dollars, in millions; change, year over year
Drug Treatment Sales Change
Plavix Blood thinner $1,374 177%
Abilify Antipsychotic $462 28%
Reyataz HIV $334 31%
Avapro/Avalide Hypertension $328 7%
Sustiva HIV $260 17%
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Last month, Bristol-Myers became the latest big pharmaceutical company to announce a restructuring in the face of looming generic competition and shallow pipelines. The company's plan entails cutting 10% of its work force and shuttering half of its manufacturing plants.
In addition to the divestiture of its medical-imaging business, Bristol-Myers is exploring alternatives for ConvaTec, its wound-care unit. The company reportedly expected its first round of bids for the business on Monday.
Bristol lowered its forecast for 2008 earnings excluding items by a nickel a share to $1.60 to $1.70 a share, reflecting the impact from the sale of the medical-imaging business. Analysts' mean estimates were for 2008 earnings of $1.71 a share.
Celgene's Revenue Jumps
Celgene reported fourth-quarter net income of $75.3 million, or 18 cents a share, up from $22.9 million, or six cents a share, a year earlier. The results included stock-compensation costs per share of 13 cents and 12 cents, respectively.
Total revenue for the Summit, N.J., company rose 51% to $414.6 million.
Sales of Revlimid, Celgene's flagship cancer drug, doubled to $247.4 million. Earlier this month, Celgene said it projected sales of $240 million to $245 million. Over the next five years, Celgene plans to expand commercialization of Revlimid.
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