US mid-caps Biogen, Forest and Gilead post in-line or better-than-expected three-month results

With the US third-quarter financial results reporting season building up steam, there were some positive figures coming out from mid-cap drugmakers, such as Biogen Idec, Forest and Gilead Sciences.

Biogen Idec reported third quarter earnings per share of $1.12, beating the Zacks Equity Research's consensus estimate of $1.02, compared with 98 cents in the year-ago period. Revenues increased 3% to $1.12 billion, with Tysabri (natalizumab) being the primary growth driver.

Tysabri sales came in at $207 million, up 21% from the prior period. The company estimates that, as of the end of September 2009, about 46,200 patients were on commercial and clinical Tysabri therapy worldwide. This represents an increase from the 43,300 patients reported in the second quarter of 2009. Tysabri is an important growth driver and the Zacks analysts expect the product, which is partnered with Ireland's Elan to cross $1 billion in worldwide sales in 2009.

Meanwhile, Biogen's lead multiple sclerosis product Avonex (interferon Beta-1a) posted sales of $580 million (up 1%) with US turnover growing 8% to $348 million. However, Avonex rest of world sales decline 8% to $232 million.
Biogen recognized $284 million in Rituxan (rituximab) revenues, which is co-promoted with Swiss drug major Roche in the USA. US net sales of Rituxan increased 2% to $670 million. Revenues from other products came in at $15 million, as compared to $14 million in the year-ago period. Royalty revenues remained unchanged at $35 million.

Pipeline setbacks

However, during its 3rd-quarter earnings call Biogen disclosed a number of pipeline setbacks for ocrelizumab, lumiliximab and galiximab. The company has placed the Phase III FILM trial of ocrelizumab to treat methotrexate-naive rheumatoid arthritis patients on clinical hold based on a safety review concerning an "apparent imbalance" in opportunistic infections among RA and lupus patients treated with the second-generation humanized mAb against CD20. Biogen, which also closed the Phase III BELONG study in lupus nephritis, said the reason for the imbalance is unknown at this time. Other trials in relapsing-remitting multiple sclerosis (RRMS) and RA remain ongoing. The company also disclosed that it stopped recruitment in the Phase II/III LUCID trial of lumiliximab to treat chronic lymphocytic leukemia (CLL) and ended the Phase III TARGET trial of galiximab to treat non-Hodgkin's lymphoma (NHL) after a strategic review of the programs determined that the trials would not support registration of the anti-CD23 mAb or the primatized mAb against B7-I (CD80), respectively.

Forest reports in-line numbers

Another to report yesterday was Forest Laboratories, which said that profit in the three months ended June (its second fiscal quarter) dropped to $186.66 million, or $0.61 per share, from $244.09 million, or $0.80 per share, in the same quarter a year ago. Excluding items, mainly due to the payment of $100 million to Nycomed to acquire the marketing rights of the chronic obstructive pulmonary disease drug Daxas (roflumilast) in the USA, earnings were $0.85 per share for the quarter, compared to $0.80 per share recorded in the prior-year quarter. On average, 25 analysts polled by Thomson Reuters expected earnings of $0.86 per share for the quarter.

Product sales increased 4% to $962.7 million. Although Lexapro (escitalopram oxalate), an SSRI for the initial and maintenance treatment of major depressive disorder in adults and adolescents and generalized anxiety disorder in adults, saw turnover decline 3.1% to were $566.0 million, Namenda (memantine HCL), which is approved for the treatment of moderate and severe Alzheimer's disease, delivered turnover of $275.3 million, recording a growth of 11.9% from the year-ago period. Improved patient access and increased promotional efforts should help keep Namenda sales strong, say analysts at Zacks.

Bystolic (nebivolol), Forest's beta blocker for the treatment of hypertension, posted sales of $40.7 million. This was significantly higher than the year ago sales of $14.2 million. Contract revenue, consisting primarily of Benicar (olmesartan) co-promotion income, increased 7.2% to $50.6 million.
Forest's most recent product launch, Savella (milnacipran HCl), a selective serotonin norepinephrine dual reuptake inhibitor (SNRI) for the management of fibromyalgia, which was launched in late April 2009, recorded sales of $10.2 million. Zacks' analysts believe Savella may have multi-hundred million dollar potential.

Selling, general and administrative expense was $324.9 million, reflecting the company's promotional activities in support of its currently marketed products, especially the recently launched Bystolic and Savella. R&D spending increased 11.4% during the quarter.

The company updated its guidance for fiscal 2010. Forest now expects earnings in the range of $3.40 to $3.50, down from the earlier guidance of $3.45-$3.55. However, Forest maintained its revenue guidance of $4.1 billion.

Gilead boosted by Tamiflu royalties

Meantime, Gilead Sciences, posted revenues for the third quarter of 2009 of $1.80 billion, up 31%. Net income was $673.0 million, or $0.72 per diluted share. Non-GAAP net income for the reporting period, which excludes after-tax acquisition-related expenses, restructuring and stock-based compensation expenses, was $730.3 million, or $0.78 per diluted share.

Royalty, contract and other revenue surged to $152.4 million from $32.8 million a year earlier, mainly as global swine flu (H1N1) preparations drove higher sales of the drug Tamiflu (oseltamivir). Gilead received $113.5 million in Tamiflu royalties from Swiss drug major Roche, compared with just $8.6 million in the like 2008 period. Roche itself posted nine-month 2009 turnover of Tamiflu at around $1.9 billion (The Pharma Letter October 15). The Tamiflu royalties boosted Gilead company's bottom line by about 9 cents per share in the third quarter.

Product sales increased 23% to a record $1.65 billion. This increase in sales was driven primarily by Gilead's antiviral franchise, including the strong growth in sales of Atripla (efavirenz/emtricitabine/tenofovir disoproxil fumarate) and continued growth in sales of Truvada (emtricitabine/tenofovir disoproxil fumarate), as well as the addition of Ranexa (ranolazine) to the firm's commercial portfolio.