Pharmacyclics, Inc.’s (PCYC - Analyst Report) fourth-quarter 2014 earnings of 81 cents per share were below the Zacks Consensus Estimate of 88 cents. Earnings were also down marginally from the year-ago earnings of 82 cents per share. Results in the quarter were hurt by higher expenses.
Pharmacyclics Inc. - Earnings Surprise | FindTheBest
Total revenues in the fourth quarter of 2014 jumped to $290.2 million from $123.6 million in the year-ago quarter, also above the Zacks Consensus Estimate of $274 million.
Full year 2014 revenues increased approximately 180% to $729.7 million, topping the Zacks Consensus Estimate of $708 million. Full year earnings increased to $1.1 per share from 87 cents a year ago. The Zacks Consensus Estimate was at $1.06 per share.
Quarterly Details
Imbruvica is Pharmacyclics’ sole marketed product. Imbruvica’s net product revenues in the U.S. rose to $185 million in the fourth quarter, up 31% sequentially.
We remind investors that Imbruvica gained FDA approval for all lines of therapy for the treatment of patients suffering from Waldenstrom's macroglobulinemia (WM) in Jan 2015. This makes Imbruvica the first and only FDA approved treatment for this indication.
We note that this is the fourth approval for Imbruvica. Imbruvica is currently approved for the treatment of patients with mantle cell lymphoma (MCL) or chronic lymphocytic leukemia (CLL) who have received at least one previous therapy and for CLL patients with a deletion of the short arm of chromosome 17. We are encouraged by the label expansion of Imbruvica.
Meanwhile, Pharmacyclics is working on expanding Imbruvica’s label further and is evaluating the drug for indications like small lymphocytic lymphoma and diffuse large B-cell lymphoma among others.
EU approvals for MCL and CLL indications and submission of regulatory application for Imbruvica for WM in the EU triggered a milestone payment of $100 million from partner Janssen, a Johnson & Johnson (JNJ - Analyst Report) company. This was recognized in the fourth quarter of 2014.
Net research & development expenses were $47.5 million as compared to $10.5 million in the prior-year quarter. Net selling, general & development (SG&A) expenses went up 108.4% to $50.3 million in the reported quarter. We note that Pharmacyclics shares 50% of these costs with Janssen.
2015 Outlook
For 2015, the company continues to expect Imbruvica U.S. net product revenues to be approximately $1 billion, representing a year-over-year jump of 103%. The increase is expected to be driven by higher market penetration for the four approved indications.
Our Take
Although Pharmacyclics missed on fourth quarter earnings, we are pleased with Imbruvica’s U.S. revenues increasing 31% in the in the fourth quarter of 2014. We expect sales to increase significantly going forward, driven by new indications in the product label and approval in new regions.
Pharmacyclics holds a Zacks Rank #1 (Strong Buy). Other well-ranked stocks in the health care space include Theravance, Inc. (THRX - Analyst Report) and Alnylam Pharmaceuticals, Inc. (ALNY - Analyst Report), both holding a Zacks Rank #2 (Buy).
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