The Zacks Analyst Blog Highlights: Pfizer, Biogen Idec, Elan, Novartis and Roche

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Feb 01, 2012, 09:30 ET

CHICAGO, Feb. 1, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Pfizer Inc. (NYSE: PFE), Biogen Idec (Nasdaq: BIIB), Elan Corp. (NYSE: ELN), Novartis (NYSE: NVS) and Roche (OTC: RHHBY).

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Here are highlights from Tuesday's Analyst Blog:

Generic Lipitor Hits Pfizer

Pfizer Inc. (NYSE: PFE) posted fourth quarter earnings of 50 cents per share, 3 cents above the Zacks Consensus Estimate and the year-ago earnings of 47 cents. Revenues, however, fell 4% to $16.7 billion, in-line with the Zacks Consensus Estimate. Despite a decline in revenues, a lower share count and cost control helped earnings increase from the year-ago period.

Full-year earnings came in at $2.31 per share, 4% above the year-ago earnings and 3 cents above the Zacks Consensus Estimate. 2011 revenues increased 1% to $67.4 billion, above the Zacks Consensus Estimate of $66.9 billion.

Including one-time items, fourth quarter earnings fell 47% to 19 cents.

The Quarter in Detail

While foreign exchange favorably impacted fourth quarter revenues by $157 million or 1%, operational factors impacted revenues negatively by $765 million or 5%. International revenues increased 3% to $10.4 billion, reflecting 1% operational growth and a 2% favorable foreign exchange impact. Meanwhile, US revenues declined 12% to $6.3 billion.

Biopharmaceutical products delivered fourth quarter revenues of $14.1 billion, down 6%. All units in the Biopharmaceutical segment posted a decline in sales.

The Primary Care unit recorded an 8% decline in revenues. Despite favorable currency movements and strong performances by products like Celebrex, Lyrica, Pristiq and Spiriva, Primary Care revenues fell due to the genericization of Lipitor and Caduet in Nov 2011. Generic competition for Lipitor, Caduet and Aricept impacted revenues by $775 million or 13%. King legacy products boosted revenues by $93 million, or 2%.

Lipitor, which posted revenues of $7.6 billion in the first nine months of 2011, was hit hard by the loss of exclusivity in the US. Despite making significant efforts to reduce the impact of generic competition, Pfizer saw Lipitor sales falling 42% to $816 million in the US after facing just a month of generic competition.

Biogen Beats, but Outlook Weak

Biogen Idec (Nasdaq: BIIB) reported fourth-quarter earnings per share of $1.51, well above the Zacks Consensus Estimate of $1.46 and the year-ago earnings of $1.41. Fourth quarter results were boosted by higher revenues which came in at $1.3 billion, up 9%. Revenues were in-line with the Zacks Consensus Estimate.

Full-year earnings came in at $5.85 per share, 3 cents above the Zacks Consensus Estimate and well above the year-ago earnings of $5.03 per share. Excluding the impact of stock-based compensation expense, full year 2011 earnings came in at $5.90 per share, up 14.6%.

Full-year revenues increased 5% to $5 billion, in-line with the Zacks Consensus Estimate.

The Quarter in Detail

Fourth quarter performance was driven by Biogen's multiple sclerosis (MS) franchise. Fourth quarter Tysabri revenues came in at $269 million, up 11.5% from the prior-year period. Global in-market net sales of Tysabri, which is partnered with Elan Corp. (NYSE: ELN), came in at $380 million (up 14%) in the fourth quarter of 2011. Tysabri global sales consisted of US sales of $196 million and ROW (Rest of the World) sales of $183 million.

Biogen estimates that as of the end of December 2011, about 64,400 patients were on commercial and clinical Tysabri therapy worldwide. This represents an increase from the 63,500 patients reported by the company in the third quarter of 2011.

We note that there was a slowdown in new patient additions on a sequential basis. This could be due to the penetration of the anti-JC virus antibody assay.

Tysabri's label was updated so as to include anti-JC virus antibody status as one potential factor that could help stratify the risk of progressive multifocal leukoencephalopathy (PML) occurring in patients treated with Tysabri. The inclusion of the anti-JCV virus antibody status in the product label should help drive patient growth.

Meanwhile, Biogen's lead MS product Avonex posted fourth quarter sales of $703 million (up 7.5%). Biogen has been working on driving Avonex sales. Avonex Pen gained approval in the EU for use in patients with relapsing multiple sclerosis and patients with a single demyelinating event. The availability of Avonex Pen should help improve convenient administration. The rollout of Avonex Pen should increase patient and physician interest in Avonex.

We note that both Avonex and Tysabri are facing additional competition in the form of Novartis' (NYSE: NVS) Gilenya which was launched in early Oct 2010. Results from a study comparing Gilenya with Avonex showed that Gilenya reduced relapse rates by 52% at one year compared with Avonex. Being an oral therapy, Gilenya could find quick acceptance as currently available therapies require injection or infusion.

However, Biogen is looking to bring BG-12, its oral MS candidate, to market. The company reported impressive data on the candidate and expects to file for approval in the first half of 2012. BG-12 could become a leader in the oral MS market once launched.

Rituxan revenues remained flat at $258 million in the fourth quarter. Biogen and partner Roche (OTC: RHHBY) have been working on driving Rituxan growth by expanding the label for additional indications.

In January 2011, Rituxan gained FDA approval for the maintenance treatment of patients with advanced follicular lymphoma who responded to initial treatment with Rituxan and chemotherapy. Rituxan also gained approval as a combination treatment (with corticosteroids) for adults with Wegener's granulomatosis and microscopic polyangiitis.

Revenues from other products increased 71.4% to $24 million. Royalties increased 16% to $53 million.

2012 Outlook Disappoints

Biogen provided its outlook for 2012. The company earnings of $6.10 - $6.20 per share on low to mid-single digit revenue growth. The company's outlook for 2012 was disappointing – the Zacks Consensus Estimate already stands well above the company's guidance range at $6.27 per share.

Biogen's guidance for expenses was higher than expected. While the company expects to spend 24% to 25% of total revenue on R&D, SG&A spend is expected to be about 22% to 23% of total revenue.

We currently have a Neutral recommendation on Biogen, which carries a Zacks #3 Rank (short-term Hold rating).

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