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April 2007 »
Lilly First-Quarter Profit Falls on Icos Purchase
Monday April 16, 2007
Eli Lilly & Co. said profit fell 39 percent on costs from buying Icos Corp. The results beat estimates, and the company raised its full-year forecast on stronger than expected sales of its psychiatric medicines.
First-quarter net income fell to $509 million, or 47 cents a share, Lilly said today in a statement. Excluding charges from Icos, bought so that Lilly could gain full control of the Cialis impotence pill, earnings were 84 cents a share. This beat the 79-cent average estimate of analysts, sending its shares higher.
Lilly said sales jumped 10 percent for the schizophrenia drug Zyprexa, its top seller, and 89 percent for the Cymbalta antidepressant. The Indianapolis-based company raised prices on those drugs this year, is spending more on marketing and has sought approval for new indications. Lilly also doesn't face generic competition on a major product this year.
"It was a solid quarter across the board on the top-line and we expect to see more of the same, given that there is minimal potential patent expiration risk," said Robert Hazlett, an analyst with BMO Capital Markets in New York, in a telephone interview today.
Lilly raised its full-year earnings forecast excluding certain charges to $3.30 to $3.40 from $3.25 to $3.35. The company also declared a second-quarter dividend of 43 cents a share, the same amount it paid out in the first quarter.
Revenue in the quarter increased to $4.2 billion from $3.7 billion.
Shares Rise
Lilly shares rose $1.52, or 2.7 percent, to $58.40 as of 4:02 p.m. in New York Stock Exchange composite trading. The shares have gained 10 percent in the past 12 months. That trails a 17 percent gain in the Standard & Poor's 500 Pharmaceutical, Biotechnology and Life Science Index, which has 25 members.
"Looking ahead for the next nine months, we feel good enough about our business prospects to raise our guidance by a nickel," said John Lechleiter, Lilly president and chief operating officer, in an interview. "Clearly there are a lot of things we are excited about with regards to our existing products and new products. We're going to continue to expect to see good solid growth from Cymbalta."
Lilly, the seventh-largest U.S. maker of prescription drugs, acquired Icos for $2.3 billion in January, aiming to benefit from full ownership of the world's second-biggest- selling impotence drug, Cialis, which the companies had shared. Lilly also paid $385 million in the first quarter to license an experimental diabetes medication from OSI Pharmaceuticals Inc.
Zyprexa
Zyprexa sales rose 10 percent to $1.1 billion, in part because of a 5 percent price increase. Cymbalta sales surged 89 percent to $442 million.
Zyprexa sales are benefiting from an increase in price, a push to put patients on higher, more expensive doses and fewer discounts under the Medicare Part D drug benefit program for the poor, disabled and elderly, said BMO's Hazlett.
Sales of Zyprexa and other drugs making up the $15 billion market for antipsychotics have also been helped by an increased use by adolescents and the elderly, analysts and doctors have said. The elderly are being prescribed the drugs for the unapproved use of treating dementia from Alzheimer's disease and teenagers are given the medicines for depression, autism and hyperactivity.
Lilly said it will ask U.S. regulators this year to approve a four-week injectable version of Zyprexa.
Lilly has been sued by at least six states, including Louisiana, West Virginia, Alaska, Mississippi, New Mexico and Pennsylvania, on behalf of Medicaid programs, seeking reimbursement of money spent on Zyprexa. All the lawsuits allege that the drugmakers failed to disclose the risks of side effects caused by the drug and promoted their use to treat conditions for which they weren't approved.
Byetta
Revenue from Byetta, Lilly's injectable treatment for Type- 2 diabetes, rose 7 percent to $147 million from the fourth quarter of 2006. Sales are growing at a slower rate than last year because Lilly has had difficulty producing enough to meet demand, and it has new competition from Merck & Co.'s Januvia, on the market since October, Oppenheimer's Henry said.
"One of the bigger issues there is, how much Byetta do they have there to sell?" Henry said. "They have been having supply issues. It is starting to clear up finally and the product is still growing. Just not as fast as it was."
Cialis
The impotency pill Cialis brought in $193.1 million. Revenue was negatively impacted by a new policy where Medicare, the U.S. health insurance program for the elderly and poor, stopped paying for the drugs this year, said Tim Anderson, an analyst with Prudential Equity Group in Menlo Park, California, in a note to clients last week.
Lilly will have data from a large-scale trial of its most promising experimental drug prasugral, which is designed to prevent blood clots, by the second half of the year, Lechleiter said.
Prasugrel would be 10 times as potent as Bristol-Myers Squibb Co.'s Plavix at preventing blood clots, Lilly says. Plavix generated $6 billion in 2006 revenue for Bristol and its marketing partner Sanofi-Aventis SA, and was the world's second- biggest-selling medicine behind Pfizer Inc.'s cholesterol pill Lipitor.
Lilly also plans to ask U.S. regulators this year to approve Cymbalta for fibromyalgia, which causes muscle weakness and fatigue, Lechleiter said.
Source: Bloomberg |
