After a downward start to the year, biotech stocks have begun to kick it back into gear, just in time for first-quarter earnings season.
In particular, stocks of profitable, larger biotech companies outperformed development-stage biotechs and the broader indices during the first quarter, according to the Cowen biotech research team. "Our analysis suggests that in addition to holding up better during the sector or market downturns, large-cap biotechs are also first to recover as market conditions improve," they wrote in a Monday report, suggesting we keep our eye on the favorable impact of aggressive price hikes and also foreign-exchange rates as earnings season gets underway.
Here are the sales targets and earnings estimates to keep an eye on for the biotechs
as we get ready for Genentech to kick things off Thursday.
Genentech: April 10
Biotech giant Genetech, with arguably the biggest biotech milestone of the first quarter, won U.S. regulatory approval for
in February, despite a panel's vote for a negative recommendation last December.
Wall Street is looking for Genentech to earn 82 cents a share on $3.1 billion in revenue for the quarter, including an expected $624 million in U.S. sales of the cancer drug Avastin. Merrill Lynch's Eric Ende and Lazard's Joel Sendek are among those expecting a per-share beat. Sendek expects 85 cents a share.
However, on the basis of recent sales data, Ende expects U.S. Avastin sales of $615 million (below the abovementioned consensus). Ende expects that safety concerns before the Food and Drug Administration approval may have hurt sales early in the quarter -- although he expects that the trend reversed with the agency's ultimate decision.
Wall Street is looking for $329 million in Herceptin sales, $202 million in Lucentis sales and $603 million from Rituxan in the U.S. Ende expects Herceptin sales will come in above the consensus estimate but says Lucentis and Rituxan sales will fall shy.
Analysts surveyed by Thomson Financial are expecting earnings of $3.43 a share on revenue of $13.05 billion for the year.
Gilead: April 16
Gilead may well continue to impress investors with its first-quarter HIV drug sales, according to some analysts who say the franchise is tracking above consensus targets. On average, the Street is looking for first-quarter earnings of 48 cents a share on revenue of $1.2 billion, according to Thomson First Call.
Breaking down HIV drug sales, the consensus targets are $147 million for Viread, $455 million for Truvada and $309 million for Atripla. However, Merrill Lynch's Ende wrote in a note on Monday that, according to data he's seen, HIV drug sales should be higher than consensus estimates.
The Street is looking for $919 million total in HIV sales, as well as $79 million from Hepsera, $67 million in sales of antifungal AmBisome and $25 million from the hypertension drug Letairis.
Merrill Lynch's Ende expects the Letairis numbers to be telling because the figures represent the second quarter since the drug's approval that Letairis was sold without large numbers of patients receiving the drug for free.
Punk Ziegel's Sharon Seiler raised her estimate for Gilead's HIV full-year 2008 product sales to more than $4 billion from $3.97 billion previously, excluding the Sustiva component of Atripla. Seiler reined in her total sales estimate to about $4.83 billion from $4.93 billion, but her estimate still exceeds Gilead's guidance.
Analysts surveyed by Thomson Financial are looking for full-year 2008 earnings of $1.89 a share on revenue of roughly $5.05 billion.
Genzyme: April 23
On average, analysts surveyed by Thomson Financial expect Cambridge, Mass.-based Genzyme to earn 93 cents a share on revenue of roughly $1.08 billion in the first quarter.
Wall Street is looking for $301 million from the Gaucher disease drug Cerezyme, $118 million from Fabry disease treatment Fabrazyme, $68 million from the Pompe disease treatment Myozyme and $171 million from the kidney disease drugs Renegal and Renvela.
Genzyme launched Renvela for patients with end-stage renal disease in the end of February and is in discussion with the FDA with regard to expanding the label to include chronic kidney disease patients with hyperphosphatemia, or high phosphate levels in their blood, who are not on dialysis. The company said it will not have to submit a supplemental new-drug application in order to do so as it previously anticipated.
"Admittedly, Genzyme is lacking a potential blockbuster in its pipeline, and longer term there is potential for competition against some of its major franchises," wrote the Cowen biotech team in Monday's report. "Nonetheless, trading at just 19 times 2008 earnings, with 15% year-over-year earnings-per-share growth expected between 2007 and 2012, Genzyme is not expensive and we expect the stock to appreciate in line with EPS growth over the next six to 12 months."
According to Thomson Financial, analysts expect $4.01 a share on roughly $4.58 billion in revenue for full-year 2008.
Biogen: April 23
For Biogen Idec, a company for sale and then not for sale, Wall Street analysts are looking for adjusted first-quarter earnings of 79 cents a share on revenue of $892 million. The Cowen team says that consensus estimate might be low, in light of price hikes, consistent demand and modest investor expectations.
Leerink Swann is also predicting a slight beat -- analyst William Tanner predicts 80 cents a share on revenue of $911 million. "Historically, earnings had been driven by strong sales of MS drug Avonex, but Tysabri appears to be positioned once again to provide additional revenue growth opportunities for the MS franchise," he wrote in a late-March report.
Consensus estimates for Biogen's lead drugs are as follows: $494 million for multiple sclerosis drug Avonex, $603 million for rheumatoid arthritis and non-Hodkin's lymphoma treatment Rituxan (with $249 million of that going to Biogen), and $157 million for MS drug Tysabri. U.S. Avonex sales in particular will benefit from a 14% price hike in mid-November, according to Cowen.
For 2008, Biogen said it anticipated adjusted earnings in the range of $3.20 to $3.35 a share, while the consensus target is now $3.30 -- up from $3.20 at the end of the last quarter.
"We continue to believe Biogen shares could be one of the best performing large-cap biotech stocks in 2008 by virtue of Tysabri results exceeding expectations," Tanner wrote in the Leerink Swann report.
Amgen: April 24
biotech company by market cap -- weathered an advisory panel that
use of its anemia drugs as well as pressures from a patent infringement dispute with
that could further hurt sales of Amgen's key drugs.
Analysts are looking for Amgen to report first-quarter earnings of $1.05 a share on revenue of $3.6 billion. The biotech implemented a 2% price hike for Aranesp in addition to raising prices for Enbrel, Epogen, Neuopogen and Neulasta during the first quarter.
Consensus sales estimates are $604 million for Epogen, $771 million for Aranesp, $1.1 billion for Neupogen/Neulasta, $868 million for Enbrel and $132 million for Sensipar.
Bear Stearns analyst Mark Schoenebaum said in a note to investors that Epogen sales are tracking closer to $600 million, which is below the consensus estimate. He noted that in the fourth quarter, wholesale inventory levels were slightly above the normal range, and that could negatively affect sales in addition to a typically weak first quarter. Also, he said that spillover payments between
Johnson & Johnson
and Amgen make calculating estimates for Epogen tough.
Schoenebaum also said that Enbrel was tracking closer to $795 million, or below the consensus. He has a $41.45 price target and an outperform rating on the stock. (Bear Stearns discloses in the report that Schoenebaum or a member of his household has a long position in Amgen shares.)
Amgen previously guided between $4 and $4.30 a share for the year on revenue between $14.2 billion and $14.6 billion -- analysts surveyed by Thomson Financial predicted $4.18 a share, on revenue of $14.5 billion. "While we think it unlikely that Amgen will raise guidance for 2008, the 2008 guidance issued in January contemplated a 'mixed outcome' from the March ESA panel and may look conservative in light of Q1 results," according to the Cowen team, which has an outperform rating and a $42 price target for the stock.
Celgene: May 8
Analysts surveyed by Thomson Financial are looking for Summit, N.J.-based Celgene to report first-quarter earnings of 34 cents a share on revenue of $441 million. Of that, the Street expects the biopharmaceutical company's multiple myeloma drug, Revlimid, to bring in $270 million.
Celgene is expected to offer new guidance taking its Pharmion acquisition into account, but JPMorgan analyst Geoffrey Meacham said in a note to investors that he doesn't expect any surprises there. However, he does expect that the Street is underestimating the impact of Revlimid's uptake in Europe -- as do analysts on the Cowen biotech team.
Upcoming catalysts include survival data from a late-stage study on Vidaza competitor, Eisai's Dacogen, and complete response-rate data for Revlimid with low-dose dexamethasone from another trial. Both are expected roughly around the time of American Society of Clinical Oncology meeting in late May.
According to Thomson Financial, Wall Street is currently looking for 2008 earnings of $1.52 a share on revenue of $2.14 billion.