Biotech Values

[DewDiligence]

Notes re JNJ 3Q09 Financial Results and CC

1. For the second consecutive quarter, the medical-device and diagnostics unit outsold the pharma unit, which is in a cyclical low due to the loss of patent exclusivity on two large-selling drugs, Topamax and oral Risperdal, and the approval delays for Xarelto (#msg-38215847) and Comfyde (#msg-40761552). JNJ will submit responses to the FDA for Xarelto and Comfyde in 4Q09 and 2010, respectively.

2. Among the few bright spots in the pharma unit was Prezista, an HIV protease inhibitor launched in 2006; 3Q09 sales leapt 100% YoY in constant currencies to $151M. (Prezista is still a distant third to BMY’s Reyataz and ABT’s Kaletra in this category, however.)

3. The Cypher stent continued to be crushed by ABT’s market-leading Xience and BSX’s Promus clone of Xience (#msg-39762286). US Cypher sales fell 45% YoY and 24% QoQ (!) to $53M; the 11% market share was the lowest since Cypher’s launch seven years ago. Ex-US Cypher sales fell 18% YoY and 4% QoQ to $158M, a 24% market share. Worldwide Cypher sales decreased 27% YoY and 10% QoQ to $211M, a 19% market share.

4. Regulatory timelines for the promising Nevo stent slipped slightly. The EU submission is now planned for 1Q10 rather than 4Q09, and the FDA submission is expected in 2012 rather than 2011. No explanation was given for the delays.