Here's more on Evista sales:
February 19, 1998
Wall Street Finds 'Scrip Sales'
As New Drug-Stock Obsession
By SUSAN PULLIAM and THOMAS M. BURTON
Staff Reporters of THE WALL STREET JOURNAL
Wall Street has a new obsession when it comes to drug
stocks: Scrip sales.
Never heard of them? Don't worry. Investors'
fascination with weekly sales data for prescription sales
-- or "scrip sales" -- of new drugs has soared recently,
helping propel some drug stocks higher and cause others
to crash and burn.
Bad scrip sales were behind Eli Lilly's tumble on
Tuesday, when news surfaced that sales of its new drug
for osteoporosis and women's health, Evista, have
started off more slowly than expected.
Forget that the compound, which is used to help
prevent, rather than treat, osteoporosis, was launched
only five weeks ago. Lilly shares took a beating on the
news, anyway, falling 1 3/4 Wednesday to 60, after
shedding 1 15/16 Tuesday.
Eli Lilly
Business: Pharmaceuticals
Year ended Dec. 31 1996 1995
Revenue (millions): $8,517.6 $7,346.6
Net Income (millions): -$385.1* $1,523.5
Share earnings: -$0.36* $1.36
Latest quarter (Dec. 31, 1997):
Diluted per-share earnings: $0.40 vs. $0.33
Average daily volume: 2.8 million shares
Shares outstanding: 1.1 billion
*Includes gain of 28 cents a share on sale of company's
stake in DowElanco and charge of $2.21 a share for
writedown of PCS
Note: Per-share data and average number of shares
reflect a 2-or-1 split effective September 1997
The big tumble followed a run-up above 71 in early
January, fueled in large part by Evista fever, as well as
by sales and expectations for Lilly's new antipsychotic
drug, Zyprexa.
Schroder analyst Jami Rubin says she believes high
hopes for Evista helped push Lilly's price/earnings
multiple at its peak to almost 37, compared with the
drug group's average P/E of 31, the level where Lilly has
now returned.
Lilly's wipe-out isn't the first time in recent weeks that a
drug stock has been hit by disappointing prescription
sales. It happened in November to Bristol-Myers and its
hypertension drug, Avapro. Since then the stock has
gone sideways, while the rest of the group has soared on
news of industry mergers.
More wipe-outs could materialize. Hopes are high for
Pfizer's male-impotence drug, Viagra, which has helped
push its multiple to 40 times current-year earnings. And
shares of Monsanto Co. have been bolstered by high
expectations for its arthritis drug, Celebra, for which
Food and Drug Administration approval won't be sought
until later this year.
Why the sudden focus on prescription sales? Some
investors say attention sharpened last year, when
Warner-Lambert's cholesterol-lowering drug, Lipitor,
generated much better sales right off the starting block
than were expected. "That in a way spoiled it for
everybody," says Schroder's Ms. Rubin, "because it
defined a new paradigm for what a successful launch
should be."
Indeed, the initial data for Lilly's Evista weren't all that
bad. During its first five weeks on the market, Evista
generated sales of about one-third the level of a
competitor, Merck's Fosamax, according to Plymouth
Meeting, Pa., market-research firm IMS America, a unit
of Cognizant Corp., which tracks "scrip sales."
But comparing Evista to Fosamax, which investors
immediately did, probably is a poor comparison.
Fosamax is a one-disease drug, used for treatment of
osteoporosis and its bone fractures.
Evista has several disease targets. Part of a new class of
hormone-replacement drugs for older women, it is aimed
at prevention of several diseases. Clinical data suggest
Evista has beneficial effects against cardiac disease, and
even possibly against breast cancer. So it will be a while
before its sales can be sorted out.
That said, Lilly still "would consider this a
disappointment," says J.P. Morgan analyst Carl Seiden.
"I think they're promoting it very aggressively." He still
predicts Evista will hit $1.8 billion in sales by 2002.
Alan S. Clark, president of Lilly's U.S. operations, says
five-week sales mean little. The company so far has
marketed only to doctors "to make sure they understand
the drug," he says. Lilly is just now beginning a
direct-to-consumer advertising campaign focused on
Evista. "We believe we're on track with our
expectations" of $200 million to $400 million in sales
during Evista's first year, he says.
Morgan's Mr. Seiden had better be right in forecasting
huge sales of Evista, for Lilly's sake. While Lilly's
Zyprexa has had astonishing early success -- $730
million in sales last year, its first year -- the company still
is very dependent on Prozac, the antidepressant drug
which accounts for about one-third of company sales but
goes off patent early in the next century.
Evista sales also will depend on whether breast cancer
data continue to hold up. Early clinical trials showed
fewer new breast cancers than in a control group, but so
far the company is saying only that the drug doesn't
increase breast cancers.
So some investors feel it is too early to judge Evista. "It's
a slow takeoff, but I believe eventually this drug will
generate $1 billion in revenue," says Larry Feinberg of
Oracle Partners.
Nonetheless, he sold his Lilly holdings three weeks ago
and has "significantly lightened up" on the drug group.
"We've had three consecutive up years and we could be
in for a breather," he says. |
