Baxter International Inc.
) entered a global licensing agreement with
Cell Therapeutics, Inc.
) to jointly develop and commercialize JAK2/FLT3 inhibitor
pacritinib that fights against genetic mutations linked to
myelofibrosis, leukemia and some tumors. As per the agreement,
BAX gained the commercialization rights for all indications for
pacritinib outside the U.S. while it jointly commercializes with
CTIC it in the U.S. Following the announcement, shares of Baxter
rose 0.2% to $68.82 after the market closed yesterday.
According to the agreement, Baxter will provide an upfront
payment of $60 million, including a $30 million equity investment
in CTIC. Moreover, Cell Therapeutics will receive clinical,
regulatory, and commercial launch milestone payments of up to
$112 million ($40 million of which relates to clinical milestones
likely to be achieved in 2014) from BAX.
Assuming regulatory approval and commercial launch, CTIC may also
receive additional sales milestone payments. It will receive
royalties on net sales of pacritinib in ex-U.S. markets, but the
companies will equally share profits generated in the U.S. Baxter
will record a special pre-tax research and development charge of
about $30 million in the fourth quarter of the year.
Pacritinib is an oral tyrosine kinase inhibitor (TKI) having dual
activity against JAK2 and FLT3. The JAK family of enzymes is a
central component in signal transduction pathways, which are
critical to normal blood cell growth and development, as well as
inflammatory cytokine expression and immune responses. Mutations
in kinases are believed to be the cause of certain blood related
cancers including myeloproliferative neoplasms, leukemia and
lymphoma. Currently, pacritinib is in Phase III development for
patients with myelofibrosis - a chronic malignant bone marrow
Baxter posted a 4% rise in third-quarter 2013 adjusted earnings
per share to $1.19, in line with the Zacks Consensus Estimate.
The third-quarter results were also within the company's earlier
stated guidance of $1.18-$1.21.
Revenues for the quarter went up 9% to $3,774 million but
slightly missed the Zacks Consensus Estimate of $3,795 million.
On an organic basis (excluding Gambro that contributed $100
million), revenues climbed 6%. Foreign currency did not impact
revenues in the quarter. On a geographic basis, revenues in the
U.S. as well as internationally improved 9% to $1,642 million and
$2,132 million, respectively.
For the fourth quarter of 2013, BAX expects revenue growth in the
range of 14 to 15% (12 to 13% at CER). This includes the impact
of the Gambro AB acquisition, amounting to $400 million. Adjusted
earnings per share are expected to be in the band of $1.24 to
$1.26. The Zacks Consensus Estimate for revenues and earnings per
share are pegged at $4,240 million and $1.25 respectively, for
Baxter affirmed its earnings forecast for 2013, which includes
the impact of its Gambro acquisition. For 2013, the company
expects reported revenue growth of 6% (7% at CER). Excluding the
impact of foreign exchange rate and the Gambro acquisition,
Baxter continues to expect sales growth of approximately 4% (or
3% including the impact of foreign currency). The company expects
to generate revenues from the Gambro acquisition of approximately
$500 million for the year.
Moreover, the company anticipates adjusted earnings per share in
the range of $4.65 to $4.67 for 2013. The Zacks Consensus
Estimate for 2013 earnings per share of $4.66 lies within the
guided range. Baxter continues to expect cash flow from
operations to be $3,300 million for 2013.
The recent collaboration with Cell Therapeutics is expected to
benefit Baxter's oncology business. It will also strengthen its
position as a solution provider for hematology and rare diseases.
Currently, Baxter has a Zacks Rank #3 (Hold). While the stock
remains on the sideline, medical product companies such as
Bio-Rad Laboratories, Inc.
) are expected to do well. Both of them carry a Zacks Rank #1
BAXTER INTL (BAX): Free Stock Analysis Report
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