Updated from Friday, Oct. 10
Third-quarter results that will begin to roll in from biotech companies Tuesday have taken on new importance, as investors look to see if drug stocks will be a safe haven in the panic-stricken market.
Large-cap names are expected to perform at least in line with expectations, with some showing upside despite seasonality and pushback from a strengthening dollar.
According to the Credit Suisse biotech team, prescription data suggest that the large-cap biotech sector isn't due to repeat the strength seen in the second quarter, in part due to seasonality, raised expectations, and the foreign exchange rate.
"That said, we expect some companies to beat and with the economic outlook increasingly dim, we believe investors will again turn to biotech as a defensive sector," Credit Suisse writes.
are among the names most likely to beat for the quarter.
Keep in mind, the Street predicted a beat for
in the second quarter, but it missed by 4 cents a share. Now, the stock has been pegged as a potential weak spot in the third quarter, based on prescription data and charges.
Here are the consensus estimates for earnings per share (which typically factor out one-time items) and revenue:
Genentech, Oct. 14
Analysts expect Genentech to earn 88 cents a share, on revenue of $3.36 billion. However, investors will likely focus on the potential buyout by
. The biotech bellwether in July rejected a bid from Swiss pharma company, which has yet to respond.
Third quarter consensus are $694 million in U.S. sales of Avastin, $648 million to $651 million for Rituxan, $344 million for Herceptin and $214 million for Lucentis. Although, analysts caution that IMS data suggests third-quarter sales for the company's lead products may be below consensus.
Rituxan sales were stronger than expected in the second quarter. Thus, a flatter-looking third quarter is possible, because the company has said the drug's sales grow in a step-like fashion.
Notably, Deutsche Bank analyst Mark Schoenebaum pointed out on a pre-earnings call earlier in the week that Genentech will have two one-time items -- an employee retention plan and the GlyCart acquisition -- which he estimates could affect EPS by roughly 10 cents a share.
Analysts are looking for $3.45 a share on revenue of $13.14 billion for the year, according to Thomson Reuters.
Data are due out any day on Genentech's RIBBON1 study , which if successful will be submitted with other data to convert the company's accelerated FDA approval of Avastin for metastatic breast cancer to full approval.
Gilead, Oct. 16
In the second quarter,
pro-forma earnings missed analysts' consensus by 2 cents a share.
This time, analysts expect Gilead to meet and possibly beat expectations, driven by stronger than expected sales in its HIV franchise. Consensus is for profit of 49 cents a share on revenue of roughly $1.32 billion, according to Thomson Reuters.
Wall Street expects $644 million from the HIV franchise in the U.S., including $244 million in U.S. sales from Truvada and $335 million from Atripla. Worldwide sales consensus targets are for $523 million from Truvada, $402 million from Atripla, and $150 million for Viread.
Based on IMS sales data, Barclays' biotech team projects better than expected Truvada sales, and weaker than expected Atripla sales in the U.S. Although, analysts point out that negative data on GlaxoSmithKline's Abacavir could be aiding the European launch of Atripla.
Consensus targets are $91 million for Hepsera, $70 million for Ambisome, and $30 million for Letairis.
Gilead previously upped total 2008 sales guidance by about $200 million to a range of $4.9 billion to $5 billion.
The company raised its forecast for operating expenses by about $50 million for the remainder of the year, primarily in research and development and selling general and administrative expenses, noting spending on R&D as a percentage of revenue is likely to increase in the future. That caused some analysts to adjust their models and added to recent pressure on the stock.
For 2008, analysts expect $1.98 a share, on revenue of $5.25 billion.
Biogen Idec, Oct. 21
Biogen made some analysts' likely-to-beat list this for the third quarter. It would be a repeat performance after a strong
bolstered by better than expected sales of Rituxan and Tysabri.
On average, analysts expect 89 cents a share on revenue of roughly $1 billion. They expect $652 million in total U.S. sales of Biogen and Genentech's Rituxan, with $273 million of that going to Biogen.
The consensus is for $308 million in U.S. sales and $532 million worldwide sales from Avonex. And analysts, on average, expect $111 million U.S. and $223 million worldwide sales of Biogen and Elan's Tysabri with $147 million of that going to Biogen.
Within the quarter, Biogen reported the first two confirmed cases of brain infection progressive multifocal leukoencephalopathy - a known risk of the drug -- since its relaunch in 2005.
has since expanded the label to include the risk of progressive PML with Tysabri when it's used alone.
As of the end of June 2008, there were more than 31,800 patients on commercial and clinical Tysabri therapy worldwide -- the rate of new patient additions had increased to 438 per week in the second quarter. Wall Street will listen for an update on new-patient additions.
Biogen last guided for adjusted EPS to at or above $3.50, in line with its goal of 20% non-GAAP EPS growth through 2010.
Analysts surveyed by Thomson Reuters peg $3.55 a share on $3.98 billion in revenue.
Genzyme, Oct. 22
sales -- and thus its quarter -- are hard to predict, given a lack of comprehensive prescription and sales data. But, the consensus is for the company to report $1 a share on revenue of $1.18 billion for the third quarter, according to Thomson Reuters.
Foreign exchange added 6 percentage points of growth to Genzyme's revenue in the first half of the year, according to the Deutsche Bank biotech team. Thus the strengthening dollar stands to negatively affect the company's third quarter, although it may be partially offset by price increases.
Analysts expect $173 million from Renegel, Renvela in the recent quarter. The consensus view is for $317 million from Cerezyme, $126 million from Fabrazyme, and $78 million from Myozyme.
The company will likely give an update for how many patients are now taking Pompe disease treatment Myozyme. Production of the larger-scale version of the drug has been stymied by an FDA delay. An FDA advisory panel will meet on Oct. 21, and the company expects the agency to make a decision by Nov. 29.
Earlier this year, because of the delay, Genzyme scaled back its 2008 adjusted profit guidance by 10 cents a share to $3.90 a share.
Investors seemed concerned when
didn't raise that guidance with second quarter earnings. Wall Street is expecting the company to earn $3.95 a share, on $4.65 billion in revenue in 2008.
Amgen, Oct. 22
Depleting sales in
anemia drug franchise -- marred by safety concerns -- have in recent years been the bane of Amgen's quarterly revenue. But last quarter Amgen beat earnings expectations, fueled by better-than-expected sales of anemia drugs Aranesp and Epogen.
The FDA since announced label changes for the class of drugs that includes
Johnson & Johnson's
This quarter, the Street expects $1.08 a share on $3.697 billion, supported by $799 million in worldwide sales from Aranesp ($397 million in the U.S. and $392 million outside of the U.S.) and $610 from Epogen.
Analysts caution that the Aranesp sales likely haven't hit a bottom. Moreover, IMS data indicate they may come in below consensus for the quarter.
Other products to watch: the Street view sees $335 million in revenue from Neupogen, $856 million from Neulasta, and $855 million from Enbrel.
According to the Deutsche Bank team, IMS data suggest that Neupogen and Neulasta sales may also come in below consensus targets, while Epogen sales may come in slightly higher than expectations.
A focus for the earnings call may be updates on Amgen's
, bone-drug denosumab - possibly the timing of data on cancer patients, timeline for an FDA filing, and more on its marketing strategy.
Amgen guided to profit of between $4.25 and $4.45 a share on revenue of between $14.6 billion and $14.9 billion for 2008. Analysts expect $4.37 a share on revenue of $14.82 billion.
Celgene Oct. 23
provided an all-around earnings beat in the first two quarters. Barclay's Jim Birchenough, who named Celgene as one of the big-cap biotechs most likely to beat, expects more of the same. His team has an overweight rating on the stock.
Consensus is 39 cents a share on revenue of $592 million in the third quarter: $348 million from multiple myeloma drug Revlimid, $129 million from Thalomid, and $65 million from myelodysplastic syndromes (MDS) drug Vidaza.
Toward the end of the second quarter, competitor
said its Vidaza rival Dacogen failed a late-stage trial, increasing expectations for Vidaza sales in the second half of the year.
The company increased guidance to $1.50 a share and upped revenue expectations to $2.2 billion. The changes, however, only brought guidance up enough to meet Street expectations at that time. The Street is now looking for $1.54 a share for the year on revenue of $2.26 billion -- once again, ahead of guidance.