Tag Archives: bax

Biogen Spinning Off Hemophilia Business As Competition Heats Up

Big biotech Biogen ( BIIB ) said Tuesday that it will spin off its hemophilia business into an independent company in a move much anticipated by Wall Street. Biogen, which focuses mainly on neurological diseases, got into hemophilia with the 2014 launch of its two long-acting infusion treatments, Eloctate and Alprolix, for hemophilia A and B, respectively. It carved out some market share from leader Baxter International ( BAX ), but in mid-April press reports relayed rumors that Biogen was thinking of selling or spinning off the business. Baxter had already made a similar move when it spun off its hemophilia-focused biopharma arm as Baxalta ( BXLT ) last July. Baxalta was quickly snapped up by Shire ( SHPG ) in a $32 billion deal. Both Baxalta’s and Biogen’s infusion therapies are under potential threat from new gene therapies that might be able to cure the disease with a one-time treatment, or at least manage it with far fewer treatments. BioMarin Pharmaceutical ‘s ( BMRN ) early-stage trial results for its hemophilia gene therapy , reported last month, supported the method’s potential. Biogen’s press release mentioned that investment in research was one rationale for the spinoff. “The new company, to be named at a later date, will focus on the discovery and development of therapies for the treatment of hemophilia,” said the release. “The new company plans to bring longer-acting therapies utilizing the XTEN technology into clinical development in the first half of 2017 and to accelerate the development of bispecific antibodies and hemophilia-related gene therapy programs.” It added that the spinoff will also enable the remaining portion of Biogen to focus on its core multiple-sclerosis business, which has been struggling lately as shown in Biogen’s Q1 earnings  last month. Still, RBC Capital Markets analyst Michael Yee found the decision a bit puzzling. “Why would Biogen want to remove a growing and profitable, long-IP-duration biologics business that diversifies  Biogen and ‘dilutes’ the EPS when it’s removed?” he asked in a research note. “In addition, Biogen is not selling the business and bringing in cash (approximate $4 billion to $6 billion valuation), and prior to today, the question was what would they do with that cash and who would they buy (they aren’t getting cash in this deal). So this seems odd and perhaps implies the valuation is not what the Street perceives if a buyer was not willing to pay up.” Biogen stock was up a fraction in early trading on the stock market today , near 275. The stock has found support above its 50-day line.

Baxter Raises Guidance As Hospital Market Rebounds; Stock Hits High

Shares of medical-product maker Baxter International ( BAX ) hit an all-time high Tuesday after the company beat Q1 estimates and raised its guidance. Baxter’s earnings, excluding one-time items, rose 6% over the year-earlier quarter to 36 cents a share, beating analysts’ consensus by seven cents, according to Thomson Reuters. Sales declined 1% to $2.38 billion, beating Wall Street’s number by about $22 million. Excluding the foreign-exchange impact, sales rose 4%. Baxter added 13 cents to its full-year EPS guidance, now $1.59 to $1.67, up from $1.36 last year. The company said that its constant-currency sales growth should be 3%; it had previously guided 2% to 3%. For the second quarter, Baxter forecast earnings of 38 to 40 cents a share, topping analysts’ average estimate of 35 cents. It said that sales should grow 2% — even including the FX impact — where the Street had expected a slight decline. Baxter stock hit a new high of 44.75 in early trading on the stock market today . In afternoon trading, shares were up less than 1%, near 44. Baxter’s products, which include IV systems, dialysis machines and surgical equipment, are sold mainly to the hospital market, which has been looking strong this earnings season, according to Leerink analyst Danielle Antalffy. “This — now the third consecutive growth quarter in the U.S. after two consecutive quarters of low-single-digit declines — could serve as another encouraging data point, in addition to Johnson & Johnson ( JNJ ), St. Jude Medical ( STJ ) and Abbott Laboratories ( ABT ) (Q1 reports) last week, that supports a potential trend for improving U.S. procedure volumes overall,” Antalffy wrote in a research note. The fortunes of hospital stocks supports her view: The Medical-Hospitals group has been among the fastest-rising of IBD’s 197 industry groups, leaping from No. 191 to six weeks ago to No. 39 at present.

Gilead Q4 Earnings Beat Estimates; Guidance In Line With Street

Big biotech Gilead Sciences ( GILD ) beat analysts’ Q4 estimates Tuesday but its guidance was soft, sending the stock up more than 1% in after-hours trading, in a day when several large drugmakers reported. Gilead’s earnings rose 37% over the year-earlier quarter to $3.32 per share, topping analysts’ EPS consensus by 32 cents, according to Thomson Reuters. Revenue increased 16% to $8.51 billion, vs. analysts’ expectation of $8.13 billion. For the full year, EPS rose 56% to $12.61 while revenue gained 31% to $32.64 billion. Gilead guided 2016 product sales, which covers nearly all revenue, at $30 billion to $31 billion. Analysts had expected $30.68 billion in product sales and total revenue of $31.68 billion. Gilead does not provide total revenue or EPS guidance, but it did provide guidance on expenses, which were slightly above expectations on the R&D and sales, general and administrative lines. Evercore ISI analyst Mark Schoenebaum calculated that the implied EPS guidance for 2016 is $10.48 to $11.92, which would miss consensus of $12.23. In Q4, the hepatitis C drugs Sovaldi and Harvoni both beat estimates, though entirely due to sales outside the U.S., where analysts have less visibility. Next year’s expected revenue decline is due to an anticipated decline in U.S. HCV market, which had an enormous lift-off when the two drugs were approved but has flattened as ever-larger numbers of patients have been cured of the disease. On the conference call with analysts, commercial-operations chief Paul Carter said that they could expect the HCV market in 2016 to behave similarly to how it did in the second half of 2015, essentially flat in the U.S. while growing in foreign markets where it is still being launched. He said that it might see some growth as payers seem to be loosening their restrictions on the drugs, which initially strained their finances due to their high prices and the enormous volume of patients. However, he acknowledged that revenue per patient was likely to fall as less-sick patients came aboard, requiring shorter treatments. Carter also sounded confident about Gilead’s ability to fend off competition, which got a new entrant last week when Merck ‘s ( MRK ) Zepatier was approved last week and priced well below both Gilead’s and AbbVie ‘s ( ABBV ) HCV drugs. “We’re confident our label is very strong, and we’re very much supported by the real-world data we’ve seen since the launch of Harvoni,” Carter said. Earlier in the day, big pharma  Pfizer ( PFE ) said Q4 revenue rose 7% over the year-earlier quarter to $14.05 billion, beating analysts’ consensus by about $45 million. Earnings, excluding one-time items, slipped 2% to 53 cents a share, beating estimates by a penny. For the year, EPS declined 3% to $2.20, while sales slid 2% to $48.85 billion. However, Pfizer’s 2016 profit guidance missed Wall Street’s expectations of $2.20 to $2.30 a share. Analyst Schoenebaum blamed foreign-exchange headwinds. “Excluding a roughly negative $2.3 billion top line ($0.8 billion of top line FX impact due to Venezuela currency impact alone) and $0.16 bottom line impact due to FX, both 2016 top and bottom line guidance would have bracketed the Street,” Schoenebaum wrote in an email. “We spoke with Pfizer, and they believe that the Street underestimated the FX impact in 2016.” S&P Capital IQ analyst Jeffrey Loo raised his rating on Pfizer to buy from hold, saying the valuation has become attractive after it, like almost every other drug stock around, has sold off in recent months. “We view growth within its Global Innovative Products unit positively, driven by Prevnar 13 and Ibrance,” Loo wrote in a research note. “We expect its pending acquisition of Allergan ( AGN ) to be completed in the second half of 2016.” Pfizer stock closed down 0.1% at 30.14. Mallinckrodt ( MNK ) rose 5.7% to close at 65.71, after the specialty drugmaker reported fiscal-first-quarter earnings of $2.09 a share, up 17% from the year-earlier quarter and topping consensus by 31 cents. Sales climbed 19% to $914.8 million, some $25 million above the Street’s average estimate. Mallinckrodt raised its full-year EPS guidance to $7.85 to $8.30, up from $7.70 to $8.20. Baxter International ( BAX ), a leader in dialysis products, also beat expectations in the most recent quarter, pulling off a sharp increase in earnings despite a decline in sales. Fourth quarter profit from continuing operations jumped 54% to 43 cents a share, 11 cents past Wall Street’s consensus. Revenue dropped 7% to $2.6 billion. Baxter stock rose 1.8% Tuesday to close at 37.95. Baxter said it expects EPS this year of $1.46 to $1.54, beating consensus of $1.42. Its forecast for the current quarter was below the Street, however, at 28 to 30 cents.