Actelion Misses Q3 Earnings Expectation, Ups 2014 Guidance
Actelion Ltd. (ALIOF) reported third-quarter earnings of $1.36 per American Depository Receipt (:ADR), up 38.78% from the prior-year earnings of 98 cents per ADR but below the Zacks Consensus Estimate of $1.50 per share.
Third-quarter revenues rose 22.6% year over year to $540.9 million, up 15.23% from the year-ago earnings of $469.5 million beating the Zacks Consensus Estimate of $511 million.
Nine Months in Details
We note that all growth rates below are in constant exchange rates.
Product sales were up 17% from the prior-year period. Excluding the impact of U.S. rebate reversals, net product sales growth was 12%.
In the first nine months of 2014, Opsumit revenues were CHF 112 million reflecting strong impetus in all markets where the product was launched with reimbursement.
Tracleer revenues were up 5% year over year, primarily due to U.S. rebate reversal and increase in price. Tracleer sales were strong in markets where Opsumit is yet to be launched.
Veletri sales soared 93% from the year-ago period, mainly driven by strong demand in Japan, continuous gain in market share in the U.S. and recent launches in various European markets (first half of 2014) and Australia (third quarter of 2014).
Ventavis sales were up 8% year over year, mainly due to price rise and rebate reversals.
Zavesca sales were up 15% from the prior-year period. Strong sales of the drug for the Niemann-Pick type C indication in ex-U.S. markets with stable demand and positive price in the U.S. contributed to its outperformance.
Valchlor sales were CHF 7 million.
R&D expenses increased 1.1% year-over-year to CHF 290.7 million due to higher clinical development expenses. SG&A expenses increased 8% from the year-ago period to CHF 477.6 million mainly driven by costs associated with product launches of Opsumit, Valchlor and Veletri.
Pipeline Update
Actelion intends to file for selexipag’s approval for the treatment of pulmonary arterial hypertension in the U.S. and the EU in the coming months. The company will also present data from the GRIPHON study on selexipag in the next few months. Additionally, Actelion is enrolling patients in a phase III study (:IMPACT) on cadazolid for the treatment of clostridium difficile-associated diarrhea.
2014 Outlook Upgraded
For 2014, Actelion expects core earnings growth in the low-twenties percentage range (previously forecasted in the mid-teen percentage range) at constant exchange rates. Excluding rebate reversals, core earnings growth is expected in the mid-teen percentage range. Actelion said that strong performance in 2014 will set a significantly higher base for 2015.
Our Take
Actelion carries a Zacks Rank #2 (Buy). Actelion’s performance in the first nine months of 2014 was encouraging as revenues were above expectations, primarily driven by higher demand for Opsumit. We are positive on Opsumit’s performance going forward. Actelion is preparing to launch Opsumit in France, Spain and Japan among other countries in 2015. Tracleer sales were also encouraging, particularly in the markets where Opsumit is not available. Higher demand in emerging markets further boosted revenues.
Some better-ranked stocks in the health care sector are Halozyme Therapeutics, Inc. (HALO), Ligand Pharmaceuticals Incorporated (LGND) and Medivation, Inc. (MDVN). All these stocks carry a Zacks Rank #1 (Strong Buy).
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