The biotech sector is taking center stage this week as several key players are scheduled to announced earnings. Investors and analysts are looking for updates on pipeline drugs, patents, acquisitions, and scandals as earnings season roles in for Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Juno Therapeutics Inc (NASDAQ:JUNO), Horizon Pharma PLC (NASDAQ:HZNP), and Kite Pharma Inc (NASDAQ:KITE).
Valeant Pharmaceuticals Intl Inc
Valeant is expected to release its Q4:2015 earnings on Monday, February 29 before market open. For the fourth quarter, analysts are expecting revenues of $2.75 billion, compared to $2.28 billion from the same quarter of last year, and earnings of $2.61 per share, compared to earnings of $2.58 for the same quarter of last year.
In the fourth quarter, the company increased focus on damage control following its decision to terminate its relationship with specialty pharmacy Philidor due to fraud allegations. This change caused the company to update its fourth quarter guidance in mid-December to reflect a “significant disruption” in business. However, the company shortly after signed a 20-year distribution deal with Walgreens. The company was also subject to a congressional probe regarding its $80,000+ price tags for its Hep C treatments Harvoni and Sovaldi. Furthermore, CEO Michael Pearson temporarily stepped down due to medical leave for pneumonia.
Analyst Neil Maruoka of Canaccord Genuity weighed in on the stock prior to its Q4 earnings. The analyst reiterated a Buy rating on shares with a $170 price target, commenting on how he believes the severed ties with Philidor affected sales. He states, “Our forecast sequential decrease in Valeant’s revenue is a result of lost sales from the termination of the Philidor relationship on October 30th, as the company likely provided many products free of charge to affected customers after ending its relationship with the specialty pharmacy. We believe that these sales will eventually begin to reemerge through other, more traditional, distribution channels (including Walgreens) and the negative impact of this transition from Philidor should largely be limited to the next couple of quarters.”
According to TipRanks’ statistics, out of the 17 analysts who have rated the company in the last 3 months, 10 gave a Buy rating, 1 gave a Sell rating, while 6 remain neutral. The average 12-month price target for the stock is $156.42, marking a 94% upside from where shares last closed.
Juno Therapeutics Inc
Juno will report fourth quarter earnings on Monday, February 29 after market close. Analysts expect the company to post a loss per share of ($0.47) and revenue of $4.79 million for the quarter. In the same quarter of last year, the company posted a non-GAAP net loss of ($1.61) per share.
Since the biotech company does not have any approved products yet, all eyes will be on pipeline updates. The company is best known for its work with cancer treatments using T-cell-based immunotherapy. Investors are looking forward to hearing updates on JCAR015, JCAR017 and JCAR014; pipeline treatments for specific forms of acute lymphoblastic leukemia and non-Hodgkin’s lymphoma. Most recently, the company released data on JCAR015 and JCAR014 highlighting encouraging clinical responses.
Analysts will be looking closely at the company’s cash burn levels since it does not generate revenue. In the company’s previous earnings report, it stated that cash burn for full year 2015 is likely to be at the higher end of guidance between $125 million and $150 million. Lastly, over the summer Juno and Celgene announced a ten-year collaboration plan for cancer and autoimmune disease therapies. Analysts will be listening on the conference call for any update on this partnership.
According to TipRanks, all 6 analysts who have rated the stock in the last 3 months are bullish on Juno with an average 12-month price target of $66.25, marking an 80% potential upside from where shares last closed.
Horizon Pharma PLC
Horizon Pharma is expected to post earnings on Monday, February 29 before market open. Analysts are expecting fourth quarter revenues of $240.82 million, compared to $103.84 million from the same quarter of last year, and earnings of $0.62 per share, compared to last year’s earnings of $0.27 per share.
For this report, analyst will be watching for numbers from its primary care business, as it has recently reflected prescription growth. Similarly, analysts expect strong sales from the company’s key products, including Actimmune, which is approved to treat Chronic Granulomatous Disease and Severe, Malignant Osteopetrosis. Acquisitions of the past year, such as Hyperion Therapeutics, are expected to contribute positively to the earnings report as the deal helped to diversify the company’s product portfolio. In December, Horizon acquired Crealta Holdings LLC, causing the company to increase its 2016 sales guidance.
Analyst Irina Rivkind Koffler of Mizuho weighed on in the company regarding its upcoming earnigns report. She states, “We expect another strong quarter for HZNP. We model revs of $242.7M and $0.65 EPS relative to $240.9M and $0.62 consensus. We have also updated our model for guidance issued on Jan 12. We see potential upside to prior 2016 revenue guidance of $1,025-1,050M, and $505-520M in adjusted EBITDA from the recent ‘innovative drug’ status designation of Ravicti in Canada. There are approximately 100 UCD patients in Canada and we note that most of them are already known to the company since they participated in a prior Ravicti trial.”
According to TipRanks’ statistics, out of the 8 analysts who have rated the company in the last 3 months, 6 gave a Buy rating, 1 gave a Sell rating, while 1 remains on the sidelines. The average 12-month price target for the stock is $32.71, marking a 65% upside from where shares last closed.
Kite Pharma Inc
Kite Pharma is scheduled to release fourth quarter earnings on Monday, February 29 after market close. Analysts estimate the company will post a loss per share of ($1.11), compared to the same quarter of last year in which it posted a GAAP net loss per share of ($0.33).
The company does not have any approved products in its portfolio but its pipeline focuses on T cell therapies for cancer, similar to Juno Therapeutics. The safety of these treatments is a top priority of investors. However, CEO Arie Belldegrun stated in a recent interview with Forbes, “There are those who are saying it will not move on, but we know we are going in the right direction.” This comment comes after the company disclosed a patient death in its trial over the summer, which sent shares down 16%. To quell investor concerns, Belldegrun shared more information than necessary to assure investors that the death was a result of the patient’s sickness, not of the treatment.
Investors will be focused on the company’s main pipeline candidate; KTE-C19; which is in Phase 2 trials to treat B-cell lymphoma, transformed follicular lymphoma, and mantle cell lymphoma. Last week, the company announced new appointments to its commercial leadership team leading investors to believe the company is confident the pipeline drug is on the right track towards FDA approval.
Investors will also be looking for an update on the company’s collaboration with Amgen, which was announced a year ago to advance cancer treatments. To kick off the collaboration, Kite received a $60 million upfront payment from Amgen in 1Q15.
According to TipRanks, all 6 analysts who have weighed in on the Kite Pharma in the last 3 months are bullish on the stock. The average 12-month price target between these 6 analysts is $86, marking an 81% potential upside from current levels.