) first quarter 2014 earnings (including stock-based compensation
expenses) of 23 cents per share blew past the Zacks Consensus
Estimate of 9 cents per share. Moreover, earnings in the first
quarter of 2014 compared favorably to the year-ago loss of 73
cents. Results in the quarter were boosted by the massive jump in
revenues due to the presence of oncology drug Imbruvica.
Total revenue in the first quarter of 2014 jumped to $119.4
million, well above the Zacks Consensus Estimate of $112 million.
Revenues were a mere $2.8 million in the year-ago quarter.
Revenues in the quarter included Imbruvica sales of $56.2
million. We remind investors that Imbruvica was approved by the
U.S. Food and Drug Administration (FDA) for treating mantle cell
lymphoma (MCL) patients in Nov 2013.
Accelerated FDA approval for treating chronic lymphocytic
leukemia (CLL) patients who have received at least one prior
therapy for the disease was gained by Pharmacyclics in Feb 2014.
Pharmacyclics has sought full approval for the indication from
the FDA. Pharmacyclics recorded milestone payments of $60 million
from partner Janssen (a
Johnson & Johnson
) company) during the quarter.
Pharmacyclics' net operating expenses (including stock-based
compensation expenses) for the first quarter of 2014 climbed to
$101.2 million from $55.8 million a year ago.
2014 Outlook Hurts Pharmacyclics
In spite of quarterly earnings and revenues coming in above
expectations, shares of the company declined significantly
following the earnings release. The downward movement was
attributable to the net product revenue guidance for 2014. Net
product revenue for 2014 is projected at $295 million, with an
error margin of 5% on either side. The 2014 Zacks Consensus
Estimate for total revenues currently stands at $421 million.
Pharmacyclics projects net product revenues of $80 million, +/-
5% for the second quarter of 2014. The Zacks Consensus Estimate
for total revenues for the second quarter currently stands at $78
We are not surprised by the comfortable revenue beat in the
quarter, which led to the bottom line outperformance, as
Imbruvica sales were present in the quarter unlike a year ago.
This was the first full quarter at Pharmacyclics for Imbruvica as
far as the MCL indication was concerned. Quarterly revenues
included six weeks of Imbruvica sales for CLL. We are pleased by
the sales of Imbruvica in the quarter. Sales of the drug should
increase further in the coming quarters. The drug is being
evaluated for other oncology indications as well.
Approval of Imbruvica for additional indications would increase
the drug's sales potential. Other interesting pipeline candidates
at Pharmacyclics include PCI-27483 and abexinostat. Successful
development and subsequent commercialization of these candidates
would not only boost Pharmacyclics' top line but also reduce its
dependence on a single drug for growth.
Pharmacyclics carries a Zacks Rank #3 (Hold). Better-ranked
stocks in the medical sector include
Alexion Pharmaceuticals, Inc.
Gilead Sciences, Inc.
). Both stocks carry a Zacks Rank #1 (Strong Buy).
ALEXION PHARMA (ALXN): Free Stock Analysis
GILEAD SCIENCES (GILD): Free Stock Analysis
JOHNSON & JOHNS (JNJ): Free Stock Analysis
PHARMACYCLICS (PCYC): Free Stock Analysis
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