Immunex Unruffled Even as Prescription Growth Slows

Also, BioTime's blood product gains approval, but questions remain about its viability.
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New

Enbrel

prescriptions have flattened out.

New prescriptions for the would-be blockbuster rheumatoid arthritis drug, which is sold by

Immunex

(IMNX)

and

American Home Products

(AHP)

, broke the 2,000-a-week level in the middle of January but have since failed to move higher. For instance, new scrips fell to 2,228 in the week ended March 26 from 2,297 a week earlier.

Total scrips, meanwhile, have mostly continued to grow, breaking the 5,000-a-week level in early March. Total scrips slipped slightly to 5,094 last week, according to

IMS Health

data cited by Immunex, from 5,130 the week before. A competing drug,

Hoechst Marion Roussel's

Arava

, has experienced a similar trend.

As total prescriptions grow, sales grow. But new prescriptions are important because data on them can indicate a sales force's success in enlisting new patients. Otherwise, the growth is just coming from patient reuse, which can dwindle for any number of reasons, such as patients not completing treatment.

The bearish argument on Immunex is that Enbrel will fall short of Wall Street's sales and profit projections. Enbrel's spectacular launch had many bulls thinking that the drug could reach $500 million or even $1 billion per year in U.S. sales. Many drugs take a breather after their launch, whose success is often based on seriously ill and needy patients seizing on a new therapy. The challenge is to find the patients who aren't as desperate for the drug.

Immunex, whose market cap is around $6.5 billion, isn't concerned. "The robust growth in total RXs is telling us that people who go on the drug have good experiences and continue to stay on the drug," says a spokesman. "Enbrel had quick acceptance, and we continue to have consistently over 2,000 people switching to Enbrel each week."

Immunex is expected to report earnings for its first quarter -- its first full quarter of Enbrel sales -- on April 20. The company estimates Enbrel sales at $40 million for the quarter. Most analysts' sales estimates for the year fall in the range of $250 million to $300 million. Immunex, which foresees Enbrel as a $500 million-plus drug annually in three years, retains a majority of the profits on the drug's U.S. sales in its deal with American Home. American Home has all rights outside the U.S. and doesn't pay Immunex a royalty.

Analysts expect the company to report that it lost 6 cents a share in the first quarter, according to

First Call

. Immunex is comfortable with that estimate. Wall Street still expects Immunex to earn 3 cents a share in the second quarter, despite the fact that the company has said it will lose money then. The company is supposed to earn 39 cents this year, reflecting last week's stock split. That means Immunex is trading at 211 times projected 1999 earnings and 69 times the 2000 estimate of $1.19 a share. Compared to other Seattle-area companies, it's cheap.

What BioTime Is It?

BioTime

(BTIM)

has arrived.

The little Berkeley, Calif., company that could, did. Biotime won

Food and Drug Administration

approval last week for

Hextend

, its solution of starch, electrolyte and water meant to maintain blood pressure in surgery patients who've lost a lot of blood.

The bulls contend that the market for Hextend is a multihundred million-dollar opportunity for BioTime and its marketing partner,

Abbott Laboratories

(ABT) - Get Report

. Funny thing is,

Gensia Sicor

(GNSA)

, a small Irvine, Calif., company, got approval for a generic hetastarch product in mid-November. Hextend is a hetastarch with electrolytes.

In a press release, Gensia said the market for hetastarches in 1997 was $29 million. It

shrank

in 1998 to $28 million, the company said.

BioTime fans think that Hextend's added goodies, like calcium, potassium, magnesium and salts, will win over doctors to Hextend's higher price and allow it to compete with real-blood products, like albumin. The company has argued that the additional electrolytes may make Hextend safer. And this could mean the drug competes not only with the other hetastarches but also albumin.

"They're going to have to be so significantly better to justify charging more," says Laura Little, a Gensia spokeswoman. Little says the albumin market was $200 million in 1998. Gensia hasn't been focused on BioTime's Hextend. "I don't think it's of large significance, only because hetastarch for us is a small product," she says.

Biotime didn't return calls seeking comment.

BioTime has suggested in the

past that doctors want to use high volumes of hetastarches but don't out of concern for side effects. Unfortunately for the company, the product's label doesn't discuss any of the advantages of its additional ingredients and recommends a similar dose of either Hextend and hetastarch, according to a doctor who consults with a hedge fund that is short BioTime. In fact, the doctor says, the label only mentions possible side effects due to the additional ingredients, in a variety of patients, including those with heart failure or diminished kidney function.

Here's a reference point: Hextend is BioTime's first product, and the company will get a small royalty on initial sales. Its market cap is about $170 million. Gensia had $178 million in revenue last year. (Its market cap is about $260 million, but that's because the company lost money last year.)