Actelion Ltd.’s (ALIOF) shares gained 2.97% following the company’s second-quarter 2014 earnings results. In the reported quarter, Actelion reported earnings of $2.83 per American Depository Receipt (ADR), up 203.77% from the prior-year earnings of 93 cents per ADR. Earnings were well above the Zacks Consensus Estimate of $1.37 per share.
Second-quarter revenues rose 22.6% year over year to $587.1 million, beating the Zacks Consensus Estimate of $517 million.
The First Half in Details
We note that all growth rates below are in constant exchange rates.
Net sales were up 17% from the prior-year period. Excluding the impact of U.S. rebate reversals, net product sales growth was 11%.
In the first half of 2014, Opsumit revenues were CHF 53 million. Opsumit’s revenues were supported by demand by new patients as well as patient switches from Tracleer.
Tracleer revenues were up 8% 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. Higher demand in Japan, Europe and emerging market including Russia also boosted Tracleer’s sales.
Veletri sales soared 127% from the prior year, mainly driven by the demand in Japan, Canada, Netherlands, Spain, Italy and the UK as well as continuous gains in market share in the U.S.
Ventavis sales were up 15% year over year, mainly due to price rise, inventory and rebate reversals.
Zavesca sales were up 18% from the prior-year quarter. Strong sales of the drug for the Niemann-Pick type C indication in ex-U.S. markets and positive price contributed to its outperformance.
Valchlor sales were CHF 3 million.
R&D expenses decreased 1.2% to CHF 190.3 million due to higher clinical development expenses. SG&A expenses increased 7.9% to CHF 319.5 million mainly driven by costs associated with product launches of Opsumit, Valchlor and Veletri.
Pipeline Update
Actelion is developing selexipag jointly with Nippon Shinyaku and is preparing for regulatory filing for the candidate. Additionally, Actelion is enrolling patients in a phase III study (IMPACT), on cadazolid, for the treatment of clostridium difficile-associated diarrhea. In Feb 2014, cadazolid received Qualified Infectious Disease Product (QIDP) status and Fast Track designation in this indication.
2014 Outlook Upgraded
For 2014, the company expects core earnings growth in the mid-teen percentage range (previously forecasted in the mid-single digit range) at constant exchange rates. Excluding rebates reversals, core earnings growth is expected in the low double-digit range. Higher product contribution and the favorable impact of rebate reversals related to Medicaid/Managed Medicaid rebates in the U.S. will lead to higher profitability in 2014.
Our Take
In the reported quarter, both earnings and sales were above expectations, mainly driven by higher demand for Opsumit. Opsumit presented an impressive performance in the first half of 2014. By the end of Jun 2014, Opsumit was launched in 10 new markets outside the U.S. and more than 3,000 patients have been actively treated with Opsumit. Actelion is preparing to launch the drug in other markets later in 2014. Tracleer sales were also encouraging, particularly in the markets where Opsumit is not available. Higher demand by emerging markets also boosted revenues.
Actelion carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector are The Medicines Company (MDCO), Salix Pharmaceuticals Ltd. (SLXP) and Biogen Idec Inc. (BIIB). All these stocks carry a Zacks Rank #1 (Strong Buy).
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