Wednesday, February 9, 2011

Cephalon Inc. (NASDAQ: CEPH): Q4 Earnings Preview 2010

Cephalon Inc. (NASDAQ: CEPH) is scheduled to release its fourth-quarter earnings after the closing bell on Thursday, February 10, 2011. Analysts, on average, expect the company to report earnings of $1.92 per share on revenue of $731.02 million. In the year ago period, the company reported earnings of $1.66 per share on revenue of $575.12 million.

Cephalon, Inc., a biopharmaceutical company, engages in the discovery, development, and commercialization of products for central nervous system, inflammatory disease, pain, and oncology therapeutic areas.

In the preceding third-quarter, the Frazer, Pennsylvania-based company's net income was $132.5 million or $1.66 per share for the third-quarter, compared with $102.7 million or $1.31 per share in the prior-year quarter. Excluding amortization expense and certain other items, adjusted net income attributable to the company was $170.7 million or $2.14 per share, up from $126.7 million or $1.62 per share in the year-ago quarter. Revenue increased to $716.99 million from $549.41 million.  Analysts, on average, expected the company to report earnings of $1.80 per share on revenue of $721.38 million. 

At its last earnings call in October, the company lifted its guidance for the full year 2010 and initiated guidance for the full year 2011. Adjusted net income guidance for 2010 was increased to $617-$632 million or $8.20 - $8.40 per share from $562 million - $577 million or $7.45 - $7.65 per share provided earlier. Full year sales are expected to be in the range of $2.69 billion - $2.73 billion, compared to previously provided range of $2.63 billion - $2.71 billion.

Cephalon also said that it expects full year 2011 sales in the range of $2.96 billion - $3.04 billion and adjusted net income in the range of $652 million - $668 million or $8.45 - $8.6 per share. Segment-wise, the company expects CNS franchise sales of $1.39-$1.43 billion, pain franchise sales of $540-$570 million, oncology franchise sales of $570-$600 million, and other product sales of $420-$450 million. With Cephalon focusing its development efforts on late-stage clinical candidates, R&D spend is expected to increase to $505-$525 million in 2011. The company has five phase III programs planned or ongoing in 2011 including the label expansion for Treanda.

Cephalon made its first profit in the third quarter of 2001, driven by sales of Provigil, a narcolepsy drug. In 2009, Provigil generated $1.02 billion, or about half of Cephalon’s revenue. However, Provigil is slated to face generic competition from 2012.

Cephalon has been looking to maximize market penetration ahead of the entry of generic versions of Provigil in 2012. Several generic players including Mylan Labs (NASDAQ: MYL) and Teva (NASDAQ: TEVA) are seeking to launch generic versions of Provigil. 

In order to prepare for the impending revenue loss due to the entry of generic competition for Provigil, Cephalon has been shifting market share from Provigil to Nuvigil (armodafinil), which has patent protection until 2023. Cephalon received FDA approval for Nuvigil in June 2007 for the treatment of excessive sleepiness associated with obstructive sleep apnea/hypopnea syndrome (OSAHS), narcolepsy and shift work sleep disorder (SWSD). The company launched Nuvigil in June 2009 and is promoting the product aggressively. Cephalon’s efforts to expand Nuvigil’s label have not met with much success. Recently, the company decided to discontinue the development of Nuvigil for the jet lag disorder indicatio. Earlier, Cephalon discontinued the development of Nuvigil for excessive sleepiness associated with traumatic brain injury due to poor enrolment. Moreover, generic companies like Teva, Watson Pharma (WPI - Analyst Report), Mylan, Sandoz, Lupin Pharma and Actavis are also looking to market a generic version of Nuvigil.

The company has continued to look towards in-licensing deals and acquisitions to boost its pipeline and reduce its dependence on the CNS franchise. In December, the company entered into an agreement with Australia-based Mesoblast Limited for the development and commercialization of stem cell therapeutics. With this deal, Cephalon is looking to establish a foothold in the stem cell therapeutics market. The deal broadens the company’s pipeline and positions it to become a major player in the emerging field of regenerative medicine.

Full Disclosure: None.
Related Posts with Thumbnails

Wikinvest Wire