Idec's Cancer-Drug Sales Propel Second-Quarter Prospects Higher

Two analysts raised their earnings estimates for the firm Monday, but its stock remains pricey.
By Adam Feuerstein ,

Idec Pharmaceuticals

(IDPH)

looks to be well on its way to a blowout second quarter on surging sales of the cancer-fighting drug

Rituxan

.

Rituxan's sales in April reached $62.4 million, according to drug-market research firm

IMS Health

. That's stronger than expected and was enough for two Wall Street firms to raise earnings estimates for the San Diego-based biopharmaceutical firm.

On Monday,

Morgan Stanley Dean Witter

biotech analyst Caroline Copithorne raised her second-quarter Rituxan sales forecast to $216 million from $180 million, and second-quarter earnings estimates for the company to 15 cents a share from 13 cents a share. (Copithorne rates Idec a strong buy, and her firm hasn't done banking for the company.)

Copithorne's new call follows

Banc of America Securities

analyst Eric Ende, who on Friday raised his second-quarter Rituxan sales estimate to $184 million from $174 million and earnings estimate for the company to 14 cents from 13 cents. (Ende rates Idec a buy, and his firm has done underwriting for the company.)

Idec is expected to earn 13 cents a share in the second quarter, according to consensus figures tallied by

Thomson Financial/First Call

.

Shares in Idec rose $3.79, or 6%, to $65.39 in Monday trading.

Rituxan was originally developed to treat patients suffering from certain forms of non-Hodgkins lymphoma. The

Food and Drug Administration

recently gave Idec and its marketing partner

Genentech

(DNA)

the green light to market the drug for use in other forms of the blood-borne cancer. The two companies also are conducting studies to expand Rituxan's use even further in patients suffering from chronic lymphocytic leukemia.

Rituxan's effectiveness, combined with its expanded use, has doctors flocking to the drug in droves, say the analysts.

"Our analysis of dollar revenue data for the second quarter, as reported by IMS Health, supports another blowout quarter for Rituxan," Copithorne writes in a research note. "If sales for the remainder of the second quarter continue at this pace or higher, as we would anticipate, Idec should blow past our

second-quarter end-market revenue estimates of $180 million."

Copithorne doesn't see a slowing in Rituxan sales soon. In addition to raising second-quarter estimates, she bumped up 2001 Rituxan sales to $843 million from $739 million and Idec's 2001 earnings to 62 cents a share from 56 cents a share.

Ende raised similarly his 2001 revenue and earnings estimates for Rituxan and Idec, respectively.

Under the comarketing agreement, Genentech gets a larger portion of Rituxan sales than Idec. But Rituxan is Idec's sole source of revenue -- unlike Genentech, which has many drugs on the market -- so higher Rituxan sales have a larger impact on its bottom line.

As previously reported by

TheStreet.com

, Idec is expected to gain

FDA approval for its second cancer-fighting drug,

Zevalin

, by the end of the year, or early in 2002.

Idec is widely considered to be one of the strongest firms in the biotech sector. It's expected to grow earnings between 35% and 41% over the next five years, depending on various Wall Street forecasts, which to some sell-side analysts makes Idec a must-own stock.

But the stock is pricey. At today's close, it trades at 118 times 2001 earnings and 76 times 2002 earnings, making it one of the most expensive stocks in the sector.

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