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Gilead Sciences rides Sovaldi launch for strong first quarter; Amgen falls short

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By Jennifer Boggs
Managing Editor

The eagerly awaited earnings season kicked off this week, but investors hoping for first-quarter sales data to restore stability to the selloff-plagued biotech sector are unlikely to see a quick fix as the drug pricing debate continues to garner headlines. But promising pipeline opportunities should keep the top four big biotechs on steady ground in the year ahead.

With three of the four big biotechs reporting – Celgene Corp.'s first-quarter numbers are expected Thursday before market open – results were mixed. Biogen Idec Inc., though missing revenue expectations due to a hefty payment to Alzheimer's disease collaborator Eisai Inc., encouragingly raised its guidance for the full year, while Amgen Inc. fell short of estimates due largely to inventory weakness for the quarter.

But Gilead Sciences Inc. was the star, thanks to a stunning launch for hepatitis C virus (HCV) drug Sovaldi (sofosbuvir). For its first full quarter on the market, Sovaldi recorded a whopping $2.3 billion in sales.

"Not only was revenue ahead of all but the most bullish of projections, but we believe it was also higher than any other drug during its first full quarter on the market," Cowen and Co. analyst Phil Nadeau wrote in a research report. And there's plenty of room to grow, with Nadeau adding that Gilead's estimates put about 30,000 people in the U.S. prescribed Sovaldi so far, out of about 1.7 million patients.

Cowen increased its 2014 Sovaldi projections to $4 billion, while Wells Fargo analyst Brian Abrahams suggested full year 2014 sales could reach up to $9.4 billion.

With Sovaldi leading the way, Foster City, Calif.-based Gilead blasted past consensus estimates for the quarter, posting total revenue of $5 billion, which nearly doubled the revenue figures for the same period in 2013, and net income reaching $2.23 billion, or $1.48 per share vs. consensus estimates of 91 cents per share.

Gilead's potential in the overall HCV market could grow further if its Sovaldi-based ribavirin-free therapy gains approval later this year. The FDA designated an Oct. 10 PDUFA date for the fixed-dose combination of the approved nucleotide analogue polymerase inhibitor with NS5A inhibitor ledipasvir, which demonstrated sustained viral response rates of 95 percent to 98 percent at week 12 in phase III studies. (See BioWorld Today, Dec. 19, 2013.)

In fact, the only storm cloud on the horizon is the debate on drug pricing. Since Sovaldi's launch, Gilead has come under fire for its costly price tag – treatment comes to about $1,000 per day – and investors have worried that payers will balk at an even higher cost for the Sovaldi/ledipasvir combo. Gilead executives, however, have maintained that the drugs offer significant benefits – a shorter treatment duration, the elimination of side-effect-causing interferon and better overall cure rates – to justify the pricing. (See BioWorld Today, Jan. 15, 2014.)

The company is currently in negotiations with payers and "everything is pretty much in line with our expectation and our experience with HIV and other drugs," Paul Carter, executive vice president of commercial operations, told investors on the quarterly call, adding that, "We're making good progress."

Beyond Sovaldi, Gilead recorded about $2.2 billion in sales for the rest of its antiviral franchise. HIV combo drugs Stribild (elvitegravir/cobicistat/emtricitabine/tenofovir disoproxil fumarate) and Complera/Eviplera (emtricitabine/rilpivirine/tenofovir disoproxil fumarate) saw the biggest increases, with Stribild jumping 134 percent over the same period in 2013 for total sales of $215.3 million and Complera/Eviplera sales reaching $250.7 million, up 69 percent year over year.

Cardiovascular product sales increased to $234.5 million for the first quarter, driven largely by sales of angina drug Ranexa (ranolazine), which jumped 16 percent to $111.6 million. Sales of Letairis (ambrisentan) for pulmonary arterial hypertension reached $122.9 million, up 4 percent from the same quarter in 2013.

In addition to the upcoming HCV regulatory decisions, 2014 may mark Gilead's market entrance into oncology. The FDA accepted for review the new drug application for idelalisib, an oral PI3K delta inhibitor, for use in relapsed chronic lymphocytic leukemia. The drug has priority review in that indication, with a PDUFA date of Aug. 6. The agency is expected to make a decision on a second indication, refractory indolent non-Hodgkin's lymphoma, by Sept. 11.

As of March 31, Gilead had about $6.9 billion on its balance sheet.

The company's stock (NASDAQ:GILD) gained $1, to close Wednesday at $73.86.

AMGEN MISSES Q1, REMAINS ON TRACK

Biotech's biggest company didn't fare as well for the first quarter, missing earnings estimates by 7 cents. Thousand Oaks, Calif.-based Amgen posted total revenues of $4.5 billion and earnings per share (EPS) of $1.87.

Total sales increased 5 percent year over year but dropped 9 percent quarter over quarter, with Amgen attributing that decline largely to inventory drawdowns, much of that from Enbrel (etanercept), which fell 18 percent compared to the fourth quarter of 2013, pulling $988 million for the first three months of 2014.

The good news is that Amgen – and most analysts – see the drop as a seasonal blip. The company reiterated its guidance for the full year, projecting total revenues to be in the range of $19.2 billion to $19.6 billion and adjusted EPS to fall within the range of $7.90 to $8.20.

Also good news is the company's growth potential. "Amgen's pipeline may not feature any single candidate capable of revolutionizing the company's revenue prospects," noted Cowen and Co. analyst Eric Schmidt in a research report. "However, the pipeline's breadth is substantial and likely underappreciated by the Street."

Filings in both the U.S. and Europe are expected this year for evolocumab, Amgen's anti-PCSK9 antibody drug, which met its endpoints in phase III cholesterol-lowering studies and is stacking up well so far to alirocumab, another PCSK9 drug in late-stage development from Regeneron Pharmaceuticals Inc. Amgen also awaits data from the ASPIRE and FOCUS trials for Kyprolis (carfilzomib), with the former designed as a confirmatory trial to support the 2012 accelerated approval in multiple myeloma and the latter to expand Kyprolis' use in relapsed or refractory patients. (See BioWorld Today, April 1, 2014.)

Amgen also is working with regulators for possible filing of its immunotherapy talimogene laherparepvec, commonly known as T-vec, which just barely missed – posting a "p" value of 0.051 – in melanoma earlier this year. The company also is expected to report pivotal phase II data for blinatumomab in refractory acute lymphoblastic leukemia at the upcoming American Society of Clinical Oncology meeting.

For the first quarter, sales growth was driven by Kyprolis (acquired in last year's buyout of Onyx Pharmaceuticals Inc.), which totaled $68 million, as well as denosumab, which pulled in $279 million as cancer drug Xgeva and $196 million as osteoporosis drug Prolia, representing a year-over-year increase of 25 percent and 38 percent, respectively.

Combined sales of G-CSF drugs Neulasta (pegfilgrastim) and Neupogen (filgrastim) increased 3 percent to $1.4 billion, while sales of erythropoiesis-stimulating agents Aranesp (darbepoetin alfa) and Epogen (epoetin alfa) totaled $460 million and $462 million, respectively. Sales of hyperparathyroidism drug Sensipar/Mimpara (cinacalcet) grew 2 percent to $270 million. And combined sales of Vectibix (panitumumab) and Nplate (romiplostim) jumped 18 percent to $216 million for the first quarter.

Shares of Amgen (NASDAQ:AMGN) fell $5.99 to close Wednesday at $113.32.

HIT AND MISS FOR BIOGEN'S 1Q

Cambridge, Mass-based Biogen bested revenue estimates, posting $2.1 billion vs. the $2 billion analysts had predicted, though the firm's EPS fell short, coming in at $2.47 vs. estimates of $2.56. That shortfall was attributed to the up-front payment to Eisai for a broad alliance aimed at developing drugs for Alzheimer's disease. (See BioWorld Today, March 6, 2014.)

The company's multiple sclerosis franchise, however, continued to post strong numbers, even as the Street looks ahead to the launch of Biogen's first hemophilia product.

First-quarter sales of Avonex (interferon beta-1a) jumped 2 percent year over year to $761 million, while Tysabri (natalizumab) totaled $441 million, marking a 41 percent increase as Biogen recorded 100 percent of Tysabri revenues after acquiring full rights last year. But Tecfidera (dimethyl fumarate) continued to be the big-seller, pulling in revenues of $506 million for the quarter, well above consensus estimates of $439 million.

Meanwhile, Biogen execs said they expect to launch Alprolix (coagulation factor IX [recombinant], Fc fusion protein) in May following FDA approval last month for controlling and preventing bleeding episodes, perioperative management and routine prophylaxis in adults and children with hemophilia B. Another product, Eloctate (recombinant factor VIII Fc fusion protein) is expected to launch later this year in hemophilia A.

"Biogen has set itself up for becoming a dominant player in the space," said analyst Robyn Karnauskas, of Deutsche Bank, though she added that the company's hemophilia franchise is "underappreciated."

As of March 31, Biogen had cash, equivalents and marketable securities of about $2 billion. Shares of Biogen (NASDAQ:BIIB) gained 55 cents to close Wednesday at $306.75.

In other earnings news:

Cubist Pharmaceuticals Inc., of Lexington, Mass., posted Cubicin (daptomycin) sales of $212.2 million for the first quarter, missing consensus estimates by about $24 million, though the company maintained its full-year guidance for the drug at $970 million to $1.02 billion. Total sales for the quarter reached $261.2 million and also includes net revenues of $13.9 million for Entereg (alvimopan) and $14.4 million for Dificid (fidaxomicin). Cubist has filed a new drug application for antibiotic Sivextro (tedizolid phosphate) for the treatment of acute bacterial skin and skin structure infections, with a PDUFA date of June 20. It also has submitted a new drug application for ceftolozane/tazobactam in complicated urinary tract and complicated intra-abdominal infections. Earnings per share for the quarter totaled 30 cents. As of March 31, Cubist had about $566 million in cash. Shares of Cubist (NASDAQ:CBST) fell $1.82 to close Wednesday at $66.38.

The Medicines Co., of Parsippany, N.J., posted total first-quarter revenue of $177.2 million, just shy of the $175.6 million in consensus estimates. Net loss also missed, totaling $5 million, or 8 cents per share. Analysts had predicted a net loss of 7 cents per share. Sales of anticoagulant Angiomax/Angiox (bivalirudin) jumped 9 percent over the first quarter of 2013 for sales of $155.7 million, while sales of Recothrom Thrombin topical (recombinant), a drug-device product for non-arterial bleeding during surgery, were $13.5 million. The company had about $378.4 million on its balance sheet as of March 31. Shares of Medicines (NASDAQ:MDCO) closed Wednesday at $25.01, down 52 cents.