Biotech financial results

Results in Brief: Vertex, Varian, Watson, Chiron, Alcon, Eyetech, Elan, NicOx, MorphoSys, Actelion, AstraZeneca, Shire, GSK, Bristol-Myers Squibb, QLT, Millennium, Celgene, Invitrogen, InterMune, Charles River, Ranbaxy, Takeda, Sankyo, Daiichi, Solvay

Vertex Pharmaceuticals has narrowed its second-quarter loss, following the credit for a restructuring charge. It lost US$41 million, or 50 cents per share, compared with a loss of $44.3 million, or 56 cents per share, in the year-ago period. Vertex said its revenue in the quarter rose 75 per cent to $32.3 million, primarily due to higher research contributions from partner drugmakers. But the revenue gains were largely offset by the company's increased spending on research and development.

Varian Medical Systems' quarterly profit rose 19 per cent on sales of its radiation and X-ray imaging equipment. Fiscal third-quarter net income rose to $51 million, or 37 cents per share, from $43 million, or 30 cents per share, a year ago. For fiscal 2006, the company expects earnings to grow at a rate in the mid-teens and revenue to grow by 13 per cent.

Generic drugmaker Watson Pharmaceuticals'second-quarter profit rose 4 per cent to US$416 million. Sales of generic drugs, including oral contraceptives, edged up 2 per cent to $312 million. Revenue from branded medicines jumped 19 per cent to $101 million. Results were helped by a 26 per cent decline in spending on research and development, and a 14 per cent drop in selling, general and administrative expenses. The company said its revenue this year will be about $1.65 billion, little changed from revenue seen in 2004.

Chiron has barely broken even in the second quarter as it struggled to produce flu vaccine in time for the coming winter amid contamination problems at plants in England and Germany. It reported net income of US$49,000, less than 1 cent per share, compared with $23 million, or 12 cents per share, in the year-ago period. Second-quarter revenue rose 10 per cent to $419 million, due mainly to higher sales of travel vaccines, meningitis vaccines and blood testing products, Chiron said.

Alcon's second-quarter net profit rose more than 8 per cent, helped by double-digit growth in pharmaceuticals and surgical sales. It posted a net profit of $325 million, or $1.04 per share, compared with a net profit of $299.2 million, or 96 cents per share, in the year-ago quarter.

Eyetech Pharmaceuticals its second-quarter net loss narrowed to $7 million, or 16 cents a share, from a loss of $31 million, or 77 cents a share, a year ago.

Elan has reported further losses in the second quarter but revenues continued to increase despite the suspension of its multiple sclerosis drug Tysabri (natalizumab). The company, which reaffirmed its hopes of relaunching Tysabri, had losses of US$142.6 million (118 million euros) compared with $117.6 million (98 million euros) in the same period of 2004. However revenues rose 9% to $118.6 million (98 million euros).

French based NicOx has narrowed its net loss in the first half as it prepares for the key trial for a key compound despite an FDA "black box" warning for similar products. NicOx said revenues were 1.2 million euros in the first 6 months of 2005, compared to 0.3 million in the same period of 2004 while the net loss was 6.9 million, compared to 7.2 million for the same period in 2004.

German based MorphoSys has reported a 72 per cent rise in second-quarter sales and a net profit, helped by milestone payments. Sales rose to 7.93 million euros from 4.61 million euros in the second quarter.

Swiss biotech drugmaker Actelion has met market expectations with a 69 per cent increase in first-half net profit. The firm increased its full-year net revenue guidance to between 600 million and 615 million francs, from 580 million to 600 million francs previously, as Tracleer gains market share and goes on sale in Japan.

AstraZeneca has posted a forecast-beating 55 per cent increase in second-quarter earnings per share to 75 cents, driven by tight cost controls and strong sales of schizophrenia drug Seroquel and gastric acid treatment Nexium. For the current year AstraZeneca raised its EPS forecast to above $2.75 a share, from a previous range of $2.35-2.50, following the strong start to the year, and predicted good earnings growth in 2006 and 2007. Pre-tax profit in the second quarter jumped 67 per cent to $1.75 billion, while sales rose 16 per cent from a year ago to $6.13 billion.

AstraZeneca has also named head of US operations David Brennan as chief executive-designate, ending speculation about the management succession at Europe's third-biggest drugmaker. Brennan will take over the top job in January when current CEO Tom McKillop retires.

Britain's Shire Pharmaceuticals Group has posted a better-than-expected 25 per cent rise in second-quarter underlying profits. Earnings per share rose to 23 cents in the three months to June 30 from 18.4 cents in the same period of 2004.

GlaxoSmithKline has posted an 8 per cent increase in second-quarter earnings per share. Second-quarter EPS of 20.4 pence was equivalent to 8 per cent higher pretax profit of 1.66 billion pounds ($2.89 billion), as sales rose 6 per cent to 5.25 billion, driven by better sales of asthma drug Advair and Avandia than expected.

Bristol-Myers Squibb's quarterly profit has almost doubled, as the drugmaker was helped by tax benefits and took a smaller charge for an accounting scandal than in the year-ago period. The company reported a second-quarter profit of US$1 billion, or 51 cents per share, compared with $527 million, or 27 cents, in the year-ago quarter. Overall results were helped largely by $294 million in tax benefits that enabled the company to pay no taxes.

QLT has reported a rise in second-quarter profit on sales of its top-selling anti-blindness treatment, Visudyne, but it lowered its 2005 revenue outlook citing poorer prospects for its prostate cancer drug.

QLT now forecasts 2005 revenue of between US$245 million and $265 million. That is down from its previous forecast of $255 million to $280 million.

For the three months ended June 30, QLT said it earned $16.8 million, or 17 cents a share, compared with a year-earlier $14.7 million, or 20 cents a share, when the company had fewer shares outstanding.

Millennium Pharmaceuticals' quarterly loss narrowed on lower costs and higher sales of its bone cancer drug Velcade. The second-quarter net loss was US$44.1 million, or 14 cents a share, compared with a net loss of $53.9 million, or 18 cents a share, a year ago. Excluding one-time items, Millennium lost 11 cents a share in the latest quarter.

Celgene has reported higher second-quarter profit on strong sales of its flagship drug Thalomid, which is approved to treat leprosy but is commonly used to fight cancer. It posted a net profit of US$10.8 million, or 6 cents per share, compared with a profit of $2.6 million, or 2 cents a share, a year ago. Total revenue rose 66 per cent to $145.7 million, helped by a $20 million milestone payment for regulatory approval of Focalin XR, a treatment for attention deficit hyperactivity disorder co-developed by Novartis. Product sales increased 34 per cent compared with the year ago.

Invitrogen has reported a lower quarterly net profit due to an acquisition-related charge. But revenue for the quarter rose 21 per cent to $306.5 million, helped by acquisitions and strong demand from its biotechnology customers. It posted a second-quarter net profit of $14.9 million, or 27 cents per share, compared with a profit of $19.7 million, or 36 cents a share, in the year-ago quarter.

InterMune's second-quarter net loss widened due to lower sales of Actimmune, a drug used to spur the immune system, and litigation-related fees. It reported a net loss of US$23.7 million, or 74 cents a share, compared with a loss of $13.1 million, or 41 cents a share, a year earlier. Revenue fell 5 per cent to $34.1 million.

Charles River Laboratories has reported a lower quarterly net profit due to acquisition-related costs and amortization charges. But sales for the quarter rose 57 per cent to US$283.4 million, helped by its acquisition of Inveresk Research Group and strong demand for its preclinical services. It posted a second-quarter net profit of $31.9 million, or 44 cents per share, compared with a profit of $26.3 million, or 52 cents a share, a year ago.

Ranbaxy Laboratories' quarterly net profit fell 49 per cent on competition in the key US generic drugs market and higher R&D costs. Its April-June net profit fell to 1.01 billion rupees from 1.97 billion a year earlier. Sales in the second quarter rose 7 per cent to 13.48 billion rupees.

Japan's Takeda Pharmaceutical has posted a 10 per cent rise in quarterly recurring profit on a similar jump in domestic drug sales, but stuck to its modest annual growth forecast due to hefty research spending. Thanks also to a one-off profit of 32 billion yen, including pension-related gains, Takeda's first-quarter net profit soared 28 per cent to 115 billion yen. Takeda's unchanged full-year net profit forecast of a record 295 billion yen signals a 6 per cent rise from the previous year.

Rival Sankyo, meanwhile, raised its full-year net profit forecast by 11 per cent to 41 billion yen on strong overseas sales. That beat analysts estimates of 39.7 billion yen, but still marks a 15 per cent drop from a year ago.

Japan's fifth-ranked Daiichi Pharmaceutical, set to be acquired by Sankyo in September, increased its annual net profit estimate by 17 per cent to 21 billion yen, above the market consensus of 19 billion yen. It reported a 20 per cent jump in quarterly profit, buoyed by solid sales of its key drugs. Solvay has reported a 43 per cent rise in second-quarter operating profit. Earnings before interest and tax on a recurring basis rose 43 per cent to 210 million euros (US$253.4 million). Net group profit came in at 184 million euros on sales of 2.081 billion euros, and Solvay reiterated that both operating and net profit would again rise in 2005. Its operating profit margin in the first half of 2005 rose 11 per cent from 9 per cent last year.