John, I relied once to this note and after posting a big note on CNTO, Softy's internut explorer crashed on me. Essentially I cut and psted a bunch of stuff on CNTO with some of my commentary. On and off, I followed CNTO from those Biotech boom days, through a crash from 20s to penny status through an FDA approval through now. Based on the last 2 Q performance, I am convinced that this company is for real and there is promise in the pipeline.
The company:
-----------
Centocor, Inc. is a biopharmaceutical company that creates, acquires, and markets therapies that yield long-term benfits for patients and the healthcare community. For the FY ended 12/31/98, revenues rose 68% to $316.7M. Net income totalled $192.3M, up from $11.1M. Revenues benefitted from increased RETAVASE and REMICADE sales. Earnings also reflect a $278.4M income tax benefit and an $18.6M gain on the sale of diagnostic related assets.
Centocor makes drugs for cancer, cardiovascular problems, and other diseases. Its ReoPro prevents blood clots during angioplasty. Another drug Remicade treats the bowel disorder Crohn's disease and is being tested for efficacy against rheumatoid arthritis. Its Panorex treats cancer. ReoPro is sold in the U.S. and Europe by Eli Lilly & Co.
Latest sales figures:
--------------------
Centocor [CNTO-news] Q1 sales jump 78 pct
MALVERN, Pa., April 19 (Reuters) - Centocor Inc. sales jumped 78 percent to $100.5 million in the first quarter, led by a 27 percent rise in sales of ReoPro, the company's anti-clotting agent, to its marketing partner, Eli Lilly and Co. [LLY-news].
Centocor reported first quarter operating earnings, before special items, of $0.10 a share, compared to $0.02 a share the previous first quarter. Product sales were $100.5 million versus $56.5 million, which included $7.5 million in sales from the company's diagnostics business that was sold in November 1998.
"Revenue growth over the first quarter of last year was driven by new clinical findings that support the use of ReoPro, the leading product in its class, the expansion of our cardiovascular sales force and our efforts over the past 12 months to expand our product portfolio," said David Holveck, chief executive officer, in a statement.
First quarter end sales to customers by Eli Lilly were $101.0 million in 1999, compared with $70.0 million in 1998, a gain of 44 percent. Centocor sales to Lilly were $58.0 million, versus $45.7 million in the first quarter of 1998.
Sales of Retavase, the company's heart attack drug, were $20.4 million for the first quarter. This compares to $12.2 million last year, which included sales of $9.8 million recorded by Boehringer Mannheim prior to Centocor's acquisition of Retavase on March 13, 1998.
Remicade sales were $21.1 million for the first quarter of 1999 compared with $23.9 million for the 1998 fourth quarter. Remicade was approved by the U.S. Food and Drug Administration to treat Crohn's disease last year.
One analyst opinion
-------------------
BancBoston Robertson Stephens Upgrades CNTO to a Strong Buy
Rating [CNTO-news]
BancBoston Robertson Stephens Upgrades CNTO to a Strong Buy Rating SAN FRANCISCO, April 20 /PRNewswire/ -- The following is being issued by BancBoston Robertson Stephens, a member of the National Association of Securities Dealers, CRD number 41271: BancBoston Robertson Stephens managing director and senior biopharmaceuticals analyst Jay B. Silverman today upgraded Centocor [CNTO-news] to a Strong Buy rating from a Long-Term Attractive. Centocor, headquartered in Malvern, Pa., is focused on the development, acquisition and commercialization of therapeutic products for serious, unmet medical needs. "We are raising our rating on Centocor to a Strong Buy, with a one-year price target of $55, based on several factors: expectations for Remicade sales to grow sequentially from now on, fundamentals that should provide meaningful evidence that the projected corporate growth is real and sustainable, and valuation," said Silverman. "We also believe the company's cardiovascular franchise is second to none. "Expectations, in general, appear extremely low, making Centocor, in our view, the most undervalued top-tier biotech stock," said Silverman. "Despite lowering our estimates, our confidence in Remicade growth is higher than ever, with what is ostensibly the worst quarter out of the way, higher projected growth than its peers' and the stock trading at a meaningful discount to the top-tier biotech group." Clients interested in receiving more information should contact their salesperson at 415-781-9700.
Merger talk
-----------
Centocor [CNTO-news] rises on merger talk - analysts
CHICAGO, April 21 (Reuters) - Shares of Centocor Inc. [CNTO-news] rose Wednesday as talk circulated that the biopharmaceutical company might be a takeover candidate.
"I'm hearing there is a smattering of takeout rumors on the Street, and there also have been rumors...about a potential co-promotion deal" to team Centocor's anti-clotting treatment ReoPro with a stent manufacturer, said Robert Toth, biotechnology analyst, Vector Securities International.
"I've had plenty of people mention to me today that they've heard Centocor being mentioned as an acquisition candidate," said Mario Corso, research analyst, ABN AMRO. "It would account for the (stock) price increase."
Centocor shares traded on the Nasdaq market up 6-7/16 at 41-1/2 on turnover of more than 5.5 million shares.
No specific names of suitors emerged.
A Centocor spokesman Wednesday afternoon declined comment on the rumors.
"Is it (takeover) possible? Sure," said Corso, who has had a buy rating on Centocor for about six months. "I could see Centocor being attractive for purchase. It's one of the few profitable biotech companies. The industry is often talked about as consolidating...so it wouldn't be surprising if that were to happen...." "Those are the rumors 'du jour' that are coming across today," said Toth, who has had buy rating on Centocor for over a year. "One is that Centocor is begin taken over and two, is a potential deal that would team up Centocor...."
"Both could actually be positive for the stock," Toth added, noting that Centocor is trading at a much cheaper multiple than other biotech companies.
Activity in Centocor options also swelled on Wednesday, with volume and implied volatility in the Chicago Board Options Exchange options sharply higher than typical, options analysts and traders said.
MOre merger talk
----------------
"Apparently, Centocor has been talking to a few companies, but it's my understanding that the company is not in formal discussions with anyone yet," von Emster said.
He declined to estimate the value of a potential merger, but said it would be a "multi-billion" transaction. Centocor is "open to suggestions" regarding potential partners, von Emster said. Eli Lilly & Co. is a potential partner, he said. "Lilly would make the most sense," as a merger partner, because it's the marketing partner for ReoPro." With Centocor's market capitalization of almost $3 billion, the purchase "would be dilutive to anyone but Lilly," von Emster said.
Dominic Caruso, Centocor's chief financial officer, declined to comment on the speculation about Johnson & Johnson or say whether Centocor is in talks with any other potential partners. "We won't comment on discussions with anybody," Caruso said.
Jeffrey Leebau, a Johnson & Johnson spokesman, also declined to comment.
BancBoston Robertson Stephens analyst Jay Silverman said he'd heard the talk of a possible Centocor takeover, but expressed skepticism. "It's possible, but I don't think it's true," he said.
On Wednesday, Silverman raised his rating on Centocor stock to a "strong buy" from a "long-term attractive.""We are raising our rating on Centocor to a "strong buy, with a one-year price target of $55" Silverman said. He expects sales of Remicade to grow sequentially, and said he sees fundamentals that should provide evidence that the projected corporate growth rate is "real and sustainable." "Expectations, in general, appear extremely low, making Centocor, in our view, the most undervalued top-tier biotech stock," Silverman said.
"Despite lowering our estimates, our confidence in Remicade growth is higher than ever, with what is ostensibly the worst quarter out of the way, higher projected growth than its peers' and the stock trading at a meaningful discount to the top-tier biotech group," he said. |
