Actelion Ltd. (ALIOF) reported full-year earnings of $4.37 per American Depository Receipt (ADR), up 8% over the prior-year earnings of $4.05 driven by higher revenues. The Zacks Consensus Estimate was $3.95.
Full Year Details
The company reported net revenue of $1.86 billion in full year 2010, up 13% in local currency primarily driven by higher than expected contract revenues. The Zacks Consensus Estimate was $1.98 billion.
Product sales were up 12% over the prior year in local currency driven by patient demand. On a geographical basis, 45% of product revenues came from the US, 40% from Europe, and the balance from the rest of the world.
The company currently has four products in the market. Three of them, Tracleer, Ventavis and Veletri are all indicated for the treatment of pulmonary arterial hypertension (PAH). The fourth drug, Zavesca, is indicated for the treatment of Gaucher disease.
Tracleer revenues were up 13% in local currency in 2010 due to an increase in demand. Ventavis’ sales decreased 10% from the prior year due to the availability of competing products in the year. Actelion markets Ventavis only in the US.
Veletri, launched in April 2010, also did well in the year. Zavesca sales were up 37% in local currency from the prior year due to increase in demand.
Contract revenue in 2010 increased 38% from the prior year due to the recognition of final milestones pertaining to the collaboration with Roche (RHHBY) for a selective S1P1 receptor agonist.
The Board of Directors of Actelion proposed a first time annual dividend of 0.80 Swiss francs per share. Management also plans to accelerate its current share buyback program of up to 800 million Swiss francs after the shareholder meeting in May 2011.
2011 Guidance
The company has guided towards mid-single digit product sales growth for 2011 in local currency with operational expenditures remaining at approximately 2010 levels. Actelion will issue 2011 operating income and earnings guidance once it has determined the accounting for the discontinuation of almorexant.
Pipeline Update
Actelion is expected to present phase III data (SERAPHIN) on macitentan, a follow-on compound to Tracleer, in late 2011 or early 2012. Data from a phase III trial (GRIPHON) of slexipag for the treatment of PAH is expected in 2013.
In January 2011, Actelion and partner GlaxoSmithKline (GSK) halted the development of almorexant, which was undergoing late-stage development for the treatment of patients suffering from sleeping disorders or insomnia. The decision to discontinue the development of almorexant did not come as a surprise as the candidate delivered mixed results in a 16 day late-stage study, RESTORA 1, in December 2009.
The termination of almorexant’s development is the second pipeline failure at Actelion in a space of few months. In September 2010, the company decided to stop enrolling patients for the late stage study of its anti-brain bleeding candidate clazosentan after disappointing results in another study.
Our Take
We currently have a Zacks #2 Rank (short-term Buy rating) on Actelion. Actelion has a dominant position in the multi-billion dollar PAH market with drugs like Tracleer and Veletri in its product portfolio. We also like the company’s strong pipeline despite the termination of almorexant and clazosentan.
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