Actelion Ltd. (ALIOF) reported third quarter 2013 earnings of 99 cents per American Depository Receipt (ADR), up 18.7% from the prior-year earnings of 83 cents per ADR. Earnings surpassed the Zacks Consensus Estimate of 87 cents.
The company reported net revenues of $470.8 million, up 3.3% from $455.8 million reported in the third quarter of 2012. Revenues were above the Zacks Consensus Estimate of $463 million.
Research & development expenses (R&D) (excluding stock based compensation expenses) declined 8.65%. R&D expenses are expected to rise in the final quarter of the year because of the cadazolid phase III study and other development programs. Selling, general and administrative expenses (excluding stock based compensation expenses) were down by 1%.
We note that all growth rates below are in local currency and represent growth over the prior-year period.
The First Nine Months in Detail
Product sales were up 4% in the first nine months of 2013 from the prior-year comparable period. We note that Actelion has four marketed products – Tracleer, Ventavis, Veletri and Zavesca. Tracleer revenues were up 3% in the first nine months of 2013 mainly due to an increase in wholesaler inventory levels, rise in the shipment of units and higher prices in the U.S. Ventavis sales were down 2% from the prior year. The decline was attributable to a competitive market. Veletri, launched in 2010, did very well with sales soaring 47%. Zavesca sales were up 17% from the prior year. Strong sales of the drug for the Niemann-Pick Type C indication in ex-U.S. markets and increasing prices contributed to its impressive showing.
Outlook
Actelion continues to expect double-digit core earnings growth in 2013. For 2014, the company expects to maintain the same level of core earnings growth as seen in 2013 and at least single-digit growth in 2015.
Pipeline Update
The regulatory process for the approval of Opsumit pulmonary arterial hypertension (PAH) in the U.S., EU and other markets is in progress. A decision from the U.S. Food and Drug Administration (FDA) on the candidate is expected by Oct 19, 2013. Approval in Europe is expected in early 2014.
The final result from a phase III study on another PAH candidate, selexipag is expected in mid 2014. Actelion’s novel antibiotic, cadazolid, to treat Clostridium difficile associated diarrhea has moved into phase III study.
Other Information
Actelion has completed the acquisition of privately-held Ceptaris Therapeutics. The acquisition closed on the heels of the erstwhile Ceptaris’ Valchlor gaining FDA approval in mid-Sep 2013. Valchlor is indicated for the treatment of early-stage mycosis fungoides-type cutaneous T-cell lymphoma. Valchlor will be launched by year end. The company will use a dedicated sales force and will evaluate the opportunity outside the U.S., before filing for registration in other markets.
Actelion completed a share buyback program worth CHF 800 million in Aug 2013, which was initiated in Oct 2010. Actelion has bought back shares worth CHF 417 million so far in 2013.
Actelion carries a Zacks Rank #1 (Strong Buy). Currently, companies like Roche (RHHBY), Isis Pharmaceuticals, Inc. (ISIS) and AMAG Pharmaceuticals Inc. (AMAG) look equally attractive.
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