Pharmacyclics, Inc.’s (PCYC) third-quarter 2014 earnings (including stock-based compensation expenses) of 53 cents per share were above the Zacks Consensus Estimate of 45 cents. Third-quarter 2014 earnings compared unfavorably with the year-ago earnings of 55 cents per share. Results in the quarter were hurt by higher expenses.
Total revenues in the third quarter of 2014 jumped to $207.1 million from $79.1 million in the year-ago quarter, also above the Zacks Consensus Estimate of $199 million. Revenues in the quarter included Imbruvica sales of $142 million. We remind investors that Imbruvica was approved by the FDA on an accelerated basis for treating mantle cell lymphoma (MCL) patients in Nov 2013.
Imbruvica is also approved for patients suffering from chronic lymphocytic leukemia (CLL) who have received at least one prior therapy and for CLL patients (both treatment naive and previously treated) with deletion of the short arm chromosome 17.
Last month, the company received approval for Imbruvica for the treatment of adults suffering from relapsed or refractory MCL, patients with CLL who have received at least one prior therapy and treatment-naïve patients with17p deletion or TP53 mutation who are unsuitable for chemo-immunotherapy.
EU approvals triggered a milestone payment of $80 million from partner Janssen, a Johnson & Johnson (JNJ) company. This will be recognized in the fourth quarter of 2014.
Research & development expenses fell 2.4%, while selling, general & development (SG&A) expenses were up 45.4% during the quarter. Costs associated with the launch of Imbruvica in Europe drove SG&A costs. We note that Pharmacyclics shares 50% of these costs with Janssen.
Along with the third-quarter results, the company announced that it has entered into several agreements with AstraZeneca (AZN) to evaluate Imbruvica in combination with the latter’s MEDI4736 in solid tumors and for patients with hematologic cancer including diffuse large b-cell lymphoma and follicular lymphoma.
Our Take
Although Imbruvica revenues decreased 14.3% in the in the third quarter of 2014, we expect sales to pick up significantly going forward, driven by new indications in the product label and approval in new regions. We are positive on Pharmacyclics’ collaboration with AstraZeneca to evaluate Imbruvica in several indications and in combination with other drugs.
Pharmacyclics carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care space is AMAG Pharmaceuticals, Inc. (AMAG), sporting a Zacks Rank #1 (Strong Buy).
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