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conference date: April 26, 2006
for quarter ending: March 31, 2006 (1st quarter)
Overview: Good earnings growth, slow revenue growth, some regulatory hurdles overcome.
Basic data:
Revenues of $611 million are up 4% over year-earlier. GAAP earnings were $123 million or .36 per share, up 200% from year-earlier. Stock-related non-cash expense was $13 million or .03 per share.
Non-GAAP net income was $189 million or .55 per share largely because of amortization of intangibles included in the GAAP income.
Guidance:
Non-GAAP earnings per share for 2006 are expected to be $1.95 to $2.10. Q1 performance is strong for this, but capital spending to be $190 to $270 million, so standing by earlier guidance.
Conference Highlights:
Patients testified to FDA on unmet MS needs for Tysabri. Does increase risk of PML; working on risk management plan. Expects to have Tysabri available to MS patients later this year.
Reviewed prior announcements: FDA approval of Rituxan combined with MTX for certain rheumatoid arthritis (RA) patients; FDA committee recommended reintroduction of Tysabri; other Rituxan and Tysabri clinical developments; and sale of rights for Amevive. Phase II MS trial for VG12 met primary endpoints.
European approval of Tysabri expected this summer. MS trials are world-wide.
Several other drugs are in Phase I or Phase II studies.
Main reason for lack of revenue growth was that they were selling Tysabri in the comparable 2005 quarter; so they made up that loss with other sales. Soft MS market in US during Q1. Avonex revenue steady; most used MS international therapy.
No fluctuations on individual drug revenues were outside of the normal expected fluctuations.
Q&A:
Tysabri sales immediately on approval? Possibly not because of complexity of risk-management plan and patient identification. But working closely with FDA. However, did not expect revenues to be very material this year because of ramp up.
Avonex volume? Two price increases last year, US volume down 10%. Possibly due to patients waiting for Tysabri reintroduction.
Asked about acquisitions, would not speculate.
R&D and SG&A run rate? Q1 is representative. Additional for external growth charges going forward.
Costs for admin of Tysabri registry? Won't be material. Goal is to make it high quality. Tysabri in Europe? No guidance on risk maps. Despite unified approval, some differences between nations.
M200 pace? If data is compelling, should be able to move quickly.
$200 million planned for licensing? Yes, will flow through P&L (profit & loss). If acquisition, would not be in P&L. In Q1 no new major business development costs. So $200 million is neither spent nor earmarked.
Chrones drug demand? Not focusing on Chrones until complete with MS launch.
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Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and our own analysis. They are not covered by any warranty. We cannot guarantee anything said by company representatives is true. Before making or terminating an investment you should always verify any factual basis of your decision from multiple independent sources.
Copyright 2006 William P. Meyers