Biotech's Burning Questions for Q3 Earnings

BOSTON ( TheStreet) -- Thoughts and burning questions as the biotech sector heads into third-quarter earnings season:

Perhaps the best thing that can be said for Dendreon ( DNDN) is that investors are unlikely to be surprised by anything in the third-quarter report following the shocking Provenge blow-up this past summer.

Current consensus calls for Provenge to post $64 million in June quarter sales, or 28% quarter-over-quarter growth, according to Bloomberg.

Investors will be listening for an update from Dendreon management on progress being made to resolve Provenge's reimbursement issues. Also important will be disclosure of Provenge monthly sales for September and October to see if month-over-month gains recorded during the summer are continuing into the fall.

Vertex Pharmaceuticals ( VRTX) is poised to report its first profitable quarter following the boffo launch of its hepatitis C drug Incivek, but can the company maintain its momentum as competition looms?

Analysts have Vertex earning 18 cents per share in the third quarter on an adjusted basis, according to Bloomberg. For a company known for big losses and heavy spending during Incivek's clinical development, positive earnings in the June quarter will be a noteworthy accomplishment.

As for Incivek, Bloomberg data pegs third-quarter sales consensus at $267 million but that appears to be quite low based on current prescription trends suggesting the drug's sales will be closer to $400 million. Incivek sales in the second quarter totaled $75 million.

Expect Vertex to receive a lot of questions about recent Incivek prescription trends, which suggest a flattening of the drug's growth rate. Is this just a short-term aberration or an indication that the Incivek launch is running out of steam? Weakness in Vertex's stock price lately is attributable, at least partially, to worries about Incivek's long-term outlook.

Human Genome Sciences ( HGSI) shares, at $12, have been cut in half since the company reported in-line sales of its lupus drug Benlysta during the second quarter. Blame the steep decline on a drug launch having trouble meeting even reduced expectations. The bear market isn't helping either.

Benlysta sales in August showed 33% month-over-month growth, raising hopes that that Human Genome can deliver an equally strong September and meet current third-quarter consensus of $20 million in Benlysta sales, according to Bloomberg.

On its second quarter conference call, Human Genome executives acknowledged doctors were having difficulty identifying the right lupus patient for Benlysta. Reimbursement hurdles were also hindering the drug's uptake, the company said. Listen on the third-quarter call to what management says about the Benlysta launch.

The key to every Celgene ( CELG) quarter is sales of its multiple myeloma cancer drug Revlimid. The current consensus for Revlimid sales in the June quarter is $817 million.

Recall that Celgene turned in a stellar "beat and raise" second-quarter earnings report bolstered by stronger-than-expected Revlimid sales. A repeat performance in the third quarter could prompt Celgene to raise earnings and sales guidance for the year again.

Unfortunately, Celgene shares don't seem to move higher when the company reports strong earnings or Revlimid sales. Getting the stock to move appreciably higher may require European approval to move Revlimid use into earlier stages of multiple myeloma.

Gilead Sciences' ( GILD) third-quarter performance appears to rest largely on whether HIV drug sales are given a boost by state HIV drug assistance programs (ADAPs).

Retail prescription data available to date suggest lower U.S. quarter-over-quarter growth for Gilead's key HIV drugs than the current third-quarter consensus of $968 million. That means purchases by state ADAP programs -- not picked up in the retail prescription data -- needs to make up the difference in order for Gilead to meet expectations for U.S. HIV sales in the quarter.

Additional upside could come from the first report of Complera sales. Gilead just launched the new HIV drug, which combines its Truvada with Johnson & Johnson's ( JNJ) Edurant. At this point, expectations for Complera sales are low at just $5 million for the quarter.

--Written by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.