Earnings season is in full swing, and several biotechnology companies reported financial figures for the second quarter ended June 30.
Three of the biggest in the business posted their fiscal statements after the market closed Wednesday - Chiron Corp., MedImmune Inc. and Serono SA.
In spite of increased sales and higher revenue, earnings fell at Emeryville, Calif.-based Chiron.
It reported pro-forma income of $48 million, or 25 cents per share, a drop from last year's second quarter in which it earned $67 million, or 35 cents per share. Still, product sales grew 20 percent over last year's corresponding quarter, contributing to a 12 percent increase in revenue. Net product sales totaled $295 million, and revenues reached $394 million.
Chiron attributed the earnings-per-share decrease to two factors: its acquisition of PowderJect Pharmaceuticals plc and a decline in its royalty rate for Betaseron, an interferon beta-1b product for multiple sclerosis.
Chiron said its purchase of the Oxford, UK-based company has a seasonal impact on earnings as revenues from the primary product acquired in the transaction, the flu vaccine Fluvirin, are recognized primarily in the second half of the year. In fact, the company expects to deliver beyond initial estimates for the upcoming flu season, bringing an additional 2 million doses of Fluvirin to the U.S. market as well as contributing to a government stockpile. But costs associated with PowderJect are incurred throughout the year. Because of that seasonality, Chiron expects second-half earnings, as a proportion of earnings for the year, to be substantially higher than they were for the second half of last year.
In total, the impact of the acquisition and lower royalties resulted in an approximate 11 cent decrease in pro-forma earnings per share, or a 16 cent decrease in GAAP earnings per share. On a GAAP basis, Chiron reported $32 million in income, or 17 cents per share, compared to $61 million in income, or 32 cents per share, a year ago.
The company's vaccines division generated net sales of $101 million in the quarter, up from $86 million a year earlier. The increase primarily was due to increased sales of travel, flu, pediatric and other vaccines, but partially offset by a decrease in sales of Menjugate conjugate vaccine against meningococcal C disease.
Its biopharmaceutical division's net sales and Betaferon royalties were $139 million, ahead of $124 million last year. Included in the figures were $51 million in sales of TOBI tobramycin solution for inhalation, up from $39 million.
Chiron's blood testing unit produced revenues of $115 million.
Chiron ended the quarter with about 191 million shares outstanding, as well as about $831 million in cash and short-term investments. On Thursday, its stock (NASDAQ:CHIR) gained $1.02 to close at $43.73.
Seasonal Sales Also Impact MedImmune
Gaithersburg, Md.-based MedImmune flipped to the red, posting a second-quarter loss a year after reporting income.
It reported a net loss of $100 million, or 40 cents per share, compared to net earnings of $13 million, or 5 cents per share, a year earlier. Excluding charges associated with the termination of agreements with Wyeth, MedImmune's net loss was $29 million, or 12 cents per share.
Nevertheless, during the quarter, MedImmune product sales grew by 13 percent over last year to $91 million, primarily due to a 10 percent increase in sales of Synagis (palivizumab) for respiratory syncytial virus to $56 million.
But total revenues fell to $94 million from $113 million. The year-ago quarter included $32 million in other revenues, primarily from one-time milestone payments surrounding the June 2003 approval of the FluMist influenza vaccine and for exceeding $100 million in end-user sales of Synagis outside the U.S. MedImmune conceded that its quarterly results are heavily impacted by the seasonal use of the two products, both of which are prescribed to help prevent respiratory viruses that most commonly occur in the fall and winter months. Quarterly sales of its two other marketed products, Ethyol (amifostine) and CytoGam (cytomegalovirus immune globulin intravenous [human]), grew by 4 percent to $25 million and 123 percent to $8 million, respectively.
Research and development expenses increased to $57 million in the quarter, up from $30 million a year ago because of a larger number of new and ongoing clinical and preclinical studies for FluMist, CAIV-T, Numax and Vitaxin.
Going forward, MedImmune projected its loss per share to range from 26 cents to 29 cents, and expects revenues to range from $85 million to $90 million.
Cash and marketable securities totaled $1.8 billion as of June 30, at which time the company had about 249 million shares outstanding.
On Thursday, its stock (NASDAQ:MEDI) gained 68 cents to close at $23.18.
Serono's Earnings Climb On High Sales
Net income jumped during the second quarter, driving earnings growth at Geneva-based Serono.
Income grew 26 percent to $135.8 million compared to the year-earlier quarter, driven by a 15.6 percent gain in total revenues to $587.6 million and a 15.2 percent increase in product sales to $538.6 million. Basic earnings per share were up 28.5 percent to $8.75 per bearer share and 22 cents per American depositary share.
Serono's neurology sales totaled $266.2 million, up from $205.5 million a year earlier. Underlying the growth was a corresponding increase in sales of Rebif, which climbed 29.2 percent to $257.1 million. In the U.S., the multiple sclerosis drug's sales jumped 65 percent to $69.6 million, while outside the U.S., the company said Rebif remains the market leader, with sales increasing by 19.6 percent to $187.5 million.
In its reproductive health division, the company reported Gonal-F sales of $150.9 million, an 8.1 percent gain. Its metabolic endocrinology unit generated sales of $65.8 million for its recombinant growth hormone products; $44.2 million for Saizen and $21.5 million for Serostim.
In its dermatology unit, Serono said North American sales of Raptiva for psoriasis grew by 21 percent to $208.8 million. The drug, which is partnered with Genentech Inc., of South San Francisco, and XOMA Ltd., of Berkeley, Calif., last month received a unanimous positive opinion from a European Union committee recommending approval.
As of June 30, Serono had about 16.1 million outstanding equivalent bearer shares. On Thursday, its stock (NYSE:SRA) dropped 26 cents to close at $14.82.