Plans for New Cancer Drug Help Raise Idec's Estimates

Analysts are tweaking earnings estimates for Idec Pharmaceuticals (IDPH Quote) Tuesday after the biopharmaceutical firm held a conference call Monday night to discuss launch plans for its new cancer drug, Zevalin.

The Food and Drug Administration approved Zevalin on Feb. 20 for the treatment of patients suffering from advanced cases of non-Hodgkins lymphoma. The drug is a new type of cancer fighter -- a monoclonal antibody with an extra kick of radiation attached, which increases its tumor-killing power.

Idec did not give specific sales guidance on its Monday night conference call, but the company did say Zevalin will be sold for about $17,000 for the estimated amount needed for a patient's treatment and that the drug's margins will approach the level of small molecule drugs, which many analysts took to mean a robust 90%.

Zevalin's pricing structure was in the $15,000 to $20,000 range forecast by most Wall Street analysts, but its high margins were an upside surprise, especially because Idec doesn't have a marketing partner so it captures 100% of the drug's profits.

U.S. Bancorp Piper Jaffray analyst Peter Ginsberg raised his 2002 sales estimate for Zevalin to $45 million from $40 million as a result of the Idec guidance. He also raised his 2002 earnings estimate for the company to 88 cents per share from 86 cents per share. He rates Idec a strong buy and his firm doesn't have a banking relationship with the company.

SG Cowen analyst Eric Schmidt also raised his 2002 earnings estimate for Idec to 88 cents per share because of higher-than-expected Zevalin pricing and estimated sales of $55 million. Schmidt rates Idec a buy and his firm doesn't have a banking relationship with the company.

As of Monday, analysts were expecting Idec to earn 88 cents per share this year, according to consensus figures compiled by Thomson Financial/First Call.

Because Zevalin is a new type of cancer drug that involves radiation medicine, the concern has been that the drug's usage will grow slowly as doctors and hospitals learn new procedures. On its conference call, Idec said about 200 oncology centers are using the drug now on a compassionate-use basis. That number should grow to about 340 centers when the drug is launched in the next 30 to 60 days.

Idec plans on offering more specific guidance on Zevalin's exact launch date and the number of oncology centers trained to use the drug in the next couple of weeks.

Shares of Idec were up 14 cents, or 0.2%, to $67.70 in recent trading.