Vytorin Weighs on Schering's Profit Beat - TheStreet

Vytorin Weighs on Schering's Profit Beat

The drugmaker beats Wall Street earnings estimates by 3 cents a share, but shares continue to fall on today's cholesterol drug trial data.
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Schering-Plough

(SGP)

reported a second-quarter beat on both the top and bottom lines, but it did so in a delayed report just after the market close Monday and only hours following the release of more eyebrow-raising trial data for cholesterol drug Vytorin.

Shares gave up 11.6% in the regular session, only to drop another 95 cents, or 5%, to $18 in recent post-market, post-earnings trading Monday evening.

Schering-Plough posted earnings of $398 million, or 24 cents a share, on a GAAP basis, vs. $517 million, or 34 cents a share, in the same quarter a year ago.

On an adjusted basis, the company said it earned 45 cents a share, vs. 41 cents a share the year prior.

GAAP revenue rose 55% to $4.9 billion, benefitting from sales in light of its Organon BioSciences acquisition and also a favorable impact from foreign exchange.

Analysts, on average, were looking for earnings of 42 cents a share on revenue of $4.7 billion, according to Thomson Reuters consensus estimates.

Global cholesterol joint venture net sales, including the controversial Vytorin and Zetia, fell 9% year over year to $1.1 billion. Schering-Plough doesn't record sales of its cholesterol joint venture with

Merck

(MRK) - Get Report

-- it is accounted for under equity income. But the company said that including an adjustment of an assumed 50% of the global cholesterol joint venture net sales, its adjusted sales for the quarter would have been $5.5 billion.

Sales of cholesterol drugs Vytorin and Zetia have been under fire ever since controversial results of the so-called ENHANCE study showed Vytorin (a combination of Zetia and a traditional statin) was no better at reducing the plaque in arteries than a statin alone.

The Vytorin Effect

On Monday,

results from a study called SEAS

showed Vytorin was no better than placebo at lowering the risk of major cardiovascular events in patients suffering from aortic stenosis, a condition that blocks blood flow to part of the heart. The drug also didn't improve aortic valve disease events, such as valve replacement surgery, hospitalization due to heart failure and death related to the heart.

Moreover, there were more cancer deaths in the Vytorin arm of the study than in the placebo arm -- although the companies said any relationship is inconclusive because of the small sample size in the study.

Despite the new seemingly daunting news, CEO Fred Hassan said, "We remain confident in Vytorin and Zetia and the ability of these medicines to help patients get to lower LDL cholesterol goals."

Indeed, in the SEAS trial, Vytorin did manage to lower so-called "bad" cholesterol by 60%.

Individual Drug Sales

Back to sales, global pharmaceutical sales totaled $3.7 billion, including $921 million from the 2007 acquisition of Organon.

"While the overall U.S. prescription market continues to get tougher, we achieved good sales growth internationally, with strong results for Remicade, Nasonex and Temador," said Hassan.

Sales of inflammatory diseases treatment Remicade increased 41% to $557 million. Nasonex sales increased 6%, with rising international sales offsetting a decline in U.S. revenue. Sales of brain tumor treatment Tremador increased 16% to $251 million.

Sales in the women's health franchise, including fertility and contraception products, exceeded $500 million, led by fertility treatment Follistim and contraceptive product Nuvaring, which were both obtained through the Organon aquistion in 2007.

Animal Health sales totaled $818 million, and consumer health sales contributed $401 million, a 2% rise year over year.

The company did not give guidance with its earnings release.