Actelion Ltd. (ALIOF) reported first quarter 2012 earnings of 71 cents per American Depository Receipt (ADR), down 49% from the prior-year earnings of $1.39. Results were hurt by lower revenues. Earnings were above the Zacks Consensus Estimate of 66 cents.
First Quarter Details
The company reported net revenue of approximately $453 million, down 19.3% from $561 million reported in the first quarter of 2011. Revenues were short of the Zacks Consensus Estimate of $468 million. The decline in revenues was due to lower product sales and contract revenues. All growth rates below are in local currency and represent growth over the prior-year period.
Product sales were down 4% from the prior year period. Results were hurt by a weak performance in the US due to excessive competition coupled with low levels of inventory. On a regional basis, 37% of product revenues came from the US (down 12%), 41% from Europe, 11% from Japan (up 3%) and the balance from the rest of the world (down 1%).
The company currently has four products in the market. Three of them, Tracleer, Ventavis and Veletri are indicated for the treatment of pulmonary arterial hypertension. The fourth drug, Zavesca, is indicated for the treatment of Gaucher’s disease.
Tracleer revenues were down 6% in the first quarter mainly due to lower levels of inventory.Ventavis sales were up 1% from the prior year. Veletri, launched in 2010, did very well in the quarter with sales soaring 111% due to a strong performance in the US. Zavesca sales were up 19% from the prior year due to strong performances in markets such as the US, Canada, the Czech Republic, Germany, Turkey and Italy.
Contract revenue in the quarter was negligible during the quarter and plummeted sharply due to the termination of Actelion’s agreement with GlaxoSmithKline (GSK) regarding insomnia candidate, almorexant, in January 2011. The first quarter of 2012 saw Actelion recognizing revenues from the deal for the last time.
Actelion continues to expect 2012 core earnings to be flat year over year in terms of local currency.
Our Recommendation
The shares of Actelion retain a Zacks #3 Rank (short-term Hold rating).
