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conference date: October 31, 2006
for quarter ending: September 30, 2006 (3rd quarter)
Overview: Outstanding quarter, increased full-year guidance, plus a new stock repurchase program. Analysts' questions were focussed on Tysabri launch.
Basic data:
Revenues of $703 million were up 6.5% sequentially and 18% over Q3 2005.
Net income was $157 million. GAAP earnings were .45 per share, up from a loss of .50 per share sequentially and way up from the .08 per share year-earlier. Non-GAAP earnings were put at 60 cents per share, up 63% from Q3 2005. Employee stock options were $13 million or .03 per share.
Guidance:
Increasing full year 2006 guidance is GAAP EPS to exceed .65, non-GAAP EPS of $2.20.
Conference Highlights:
Avonex revenues increased 19% to $445 million. Zevalin revenues $4 million. Fumaderm $6 million. Rituxan revenues up 12% to $204 million. Tysabri revenues were $19 million (this was launched this quarter), but $14 million was deferred sales, a unique event, with $1.4 million deferred costs. Royalties hit $22 million.
Believe Tysabri will gain momentum, adding to the top line; 22,000 patients dosed so far, with 45,000 enrolled in U.S. More than 1000 fusion sites established. Many European companies have launched, but numbers of patients is not large yet, and are waiting for reimbursement approvals in some companies. U.S. payer coverage has been favorable.
Now has broadest MS (multiple schlerosis) portfolio in the industry. Acquisitions and in-licensing deals going well, and will continue to invest in them. 3 pipeline programs pushed into late stage trials.
Rituxan RA launch doing well. Tysabri for Crone's moving along. Aviptadil licensed for development for hypertension.
Share buy-back of up to 20 million shares authorized.
Q&A:
Liability for Tysabri adverse reactions? Physicians responsible to explain risks and benefits; Touch program helps with this.
End of September v. current numbers for Tysabri? Launched in July, but only 45 days of real selling in Q3.
Tysabri conversions? Great acceptance of Touch to assure correct patients are getting drug. Does reject applications that are innappropriate. Most payers not imposing additional conditions. PML has not been much of an issue so far. Queue size depends mostly on payment processing.
Tysabri in Europe? 70% of German patients are coming off high-dose interferons. Almost all patients so far are in Germany.
Tysabri inventory is now normal, if Elan sells more they will be ordering more.
Competition for new products in deals? Late stage asset market has become intense, which is driving up pricing, especially in certain sectors like oncology.
Avonex inventory and price? Slight build in inventory to 2 weeks. Has made 2 price increased of about 9% in last year.
R& D expenses for Tysabri? Depends on if launched in other indications like Crone's. Does not break out R&D versus commercial spending.
Anti CD80 therapy? Does not have a complete understanding yet, but initial infusion reactions don't seem to be a big problem.
Zevalin losses? Don't break out profit and loss. Probably not enough in Q3 to make it a profitable position.
Avonex impact by Tysabri? Long-term safety of Avonex means it is seen as a first-line drug.
Q4, as guidance indicates could be down sequentially? Does not see any significant increase in expenses. Wildcard is what happens with sales.
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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. We try not to make errors, but it's possible. Before making or terminating an investment you should always verify any factual basis of your decision.
Copyright 2006 William P. Meyers