Replies to post #106754 on Biotech Values

[DewDiligence]

DES notes from ABT’s 3Q10 CC:

• ABT’s 3Q10 DES revenues (including Promus royalties) were $450M, +37% YoY with very string growth in Japan and China. DES’s now comprise 5% of ABT’s overall corporate revenue.

• US market share of Xience+Promus: 60%.

• Industry-wide DES penetration in US PCI procedures: 79%.

[DewDiligence]

Color on ABT’s 3Q10 Results and Pipeline

[Following are excerpts from the Q&A addendum to ABT’s 3Q10 financial-results PR issued on 10/20/10. See #msg-55763971 for additional info on Xience.]

http://finance.yahoo.com/news/Abbott-Reports-Strong-Third-prnews-1330364811.html?x=0&.v=1


›What drove the growth of Worldwide Pharmaceutical sales?

Worldwide Pharmaceutical sales increased 21.7 percent, including an unfavorable 1.6 percent effect of exchange rates, driven by strong international pharmaceutical sales growth of approximately 30 percent. Sales in the quarter reflected a contribution from the Solvay acquisition, which closed in February 2010.

Growth in the quarter was led by HUMIRA, with global operational sales growth of 16.1 percent, which excludes an unfavorable 3.5 percent effect of exchange rates. International operational sales growth for HUMIRA was 23.2 percent, which excludes an unfavorable 6.6 percent effect of exchange rates. International anti-TNF market growth trends remain strong, and HUMIRA maintains a market-leading position in many of the international markets. Global lipid franchise sales growth was 22 percent, including the international TriCor sales contribution from the Solvay acquisition. U.S. growth in both the TRILIPIX/TriCor franchise and Niaspan exceeded the growth rate of the overall cholesterol market.


What drove the performance in Worldwide Vascular, Worldwide Nutritional and Worldwide Diagnostics sales?

Double-digit growth in Worldwide Vascular sales was driven by international vascular sales growth of approximately 40 percent. Abbott holds the number-one global position in drug-eluting stents, metallic stents and guidewires. Abbott's drug-eluting stent franchise, which includes XIENCE V and XIENCE PRIME, continues to perform well, including strong international performance in Europe and Japan.

Worldwide Nutritional products sales decreased 1.5 percent, including a favorable 0.8 percent impact from exchange. Growth in the United States during the quarter was negatively impacted by product returns and lower shipments resulting from an infant nutrition recall that was announced in September. Excluding the recall, U.S. nutritionals sales growth would have been in the high-single digits. International nutritional sales growth was impacted by a difficult comparison to the prior year due to new product launches that occurred in the third quarter of 2009 in many international markets.

Growth in Worldwide Diagnostics was driven by high-single digit growth in U.S. diagnostics sales, with continued double-digit growth in Abbott's Molecular and Point of Care diagnostics businesses.


What are the key areas of focus in Abbott's broad-based pipeline?

Across its businesses, Abbott has more than 350 clinical trials underway and expects to deliver more than 75 new products or indications over the next five years. Following are select highlights from breakthrough research across both pharmaceuticals and medical products pipelines:

Oncology

• Abbott's oncology pipeline includes therapies that represent promising, unique scientific approaches to treating cancer. Abbott is focused on the development of targeted treatments that inhibit tumor growth and improve response to common cancer therapies. Abbott currently has nine new molecular entities in human trials.

• The oncology pipeline includes: ABT-263, a Bcl-2 family protein antagonist; ABT-869, a multi-targeted kinase inhibitor; and ABT-888, a PARP-inhibitor that is on track to move into Phase III development for breast cancer early next year. Additionally, Abbott is evaluating a number of promising mechanisms in its pre-clinical pipeline, including work on an early stage cMET antibody biologic for cancer.

• The acquisition of Facet Biotech brought several oncology collaborations, including early- and mid-stage compounds that are being studied for difficult to treat types of cancer, including multiple myeloma and chronic lymphocytic leukemia.

Neuroscience / Pain

• Abbott is conducting innovative research in neuroscience, where it has developed compounds that target receptors in the brain that help regulate mood, memory and other neurological functions to address conditions such as Alzheimer's disease and schizophrenia. Abbott has eight new molecular entities in clinical trials for conditions such as schizophrenia, pain, Alzheimer's disease and multiple sclerosis (MS). This includes three compounds in Phase II for Alzheimer's.

• Abbott's neuroscience pipeline also includes a novel, next-generation antibody, daclizumab, which recently entered into Phase III development for relapsing remitting MS (RRMS), the most common form of the disease.

• Abbott is also pursuing compounds that could provide relief across a broad spectrum of pain states, such as chronic back pain, postoperative pain and cancer pain.

Women's Health

• The recent collaboration agreement with Neurocrine to develop and commercialize elagolix for the treatment of endometriosis-related pain brings Abbott a novel, first-in-class oral gonadotropin-releasing hormone (GnRH) antagonist. A Phase IIb study in endometriosis was recently completed.

Chronic Kidney Disease

• Abbott announced an agreement to collaborate with Reata Pharmaceuticals on the development of bardoxolone, an investigational treatment for chronic kidney disease (CKD). Bardoxolone is a first-in-class anti-inflammatory that activates Nrf2, a pathway involved in the progression of CKD. A Phase IIb study was recently completed and initiation of a global Phase III trial is targeted to begin in the coming months.

Immunology

• Abbott's scientific experience with the anti-TNF biologic HUMIRA serves as a strong foundation for its continuing research in immunology. In its pipeline, Abbott continues to explore additional indications for HUMIRA, and recently submitted regulatory applications in the United States and Europe for ABT-874, an anti-IL 12/23 biologic for psoriasis. Abbott is also working to advance development of its early discovery programs, including oral DMARD therapies, as well as other potential biologic targets.

• Additionally, Abbott's proprietary DVD-Ig technology represents an innovative approach that can target multiple disease-causing antigens with a single biologic agent. This technology could lead to combination biologics for complex conditions such as cancer or rheumatoid arthritis, where multiple pathways are involved in the disease.

Hepatitis C

• Abbott's antiviral program is focused on the treatment of hepatitis C (HCV), a disease that affects more than 180 million people worldwide, with approximately three to four million people newly infected each year. Abbott's broad-based HCV development programs include its partnership with Enanta Pharmaceuticals to discover protease inhibitors, as well as its internal programs focused on additional viral targets, including polymerase inhibitors.

• Abbott currently has three HCV compounds in clinical trials, including a protease inhibitor, a polymerase inhibitor and an NS5A inhibitor. Abbott is well positioned to explore combinations of these compounds, a strategy with the potential to markedly transform current treatment practices by shortening therapy duration, improving tolerability and increasing cure rates.

Molecular Diagnostics

• Abbott expects to launch more than 12 new molecular diagnostic products over the next two to three years, including several novel oncology and infectious disease assays, as well as improved instrument systems. Abbott received approval from the U.S. Food and Drug Administration (FDA) to market the Abbott RealTime HBV assay for measuring viral load or the amount of hepatitis B virus in a patient's blood, as well as, a new sensitive molecular diagnostic test and instrument to simultaneously detect two of the nation's most prevalent sexually transmitted diseases, gonorrhea and chlamydia.

Diagnostics

• In 2010, Abbott has launched a number of key assays on its ARCHITECT immunochemistry platform, which will significantly broaden its industry-leading menu. These tests include assays to assess Chagas disease, ovarian cancer, acute kidney injury and HIV.

• Abbott expects to launch several more products this year and also has several next generation instrument systems for hematology, immunochemistry and blood screening in development.

Vascular Devices

• Abbott has the industry's most robust vascular pipeline and expects to deliver more than 10 coronary technologies over the next five years. Abbott is working on well-staged incremental advances, and truly game-changing technologies that have the ability to restate the market.

• MitraClip – Presented additional data from the pivotal trial, EVEREST II, at the TCT conference, which continued to demonstrate the safety and sustained meaningful clinical benefits of the therapy for the treatment of mitral regurgitation. Abbott's MitraClip system is on the market in Europe and is currently under review for approval by the FDA.

• XIENCE PRIME – Abbott's next-generation drug eluting stent (DES) that capitalizes on the proven attributes of XIENCE V while offering a novel stent design and a modified delivery system for improved deliverability. XIENCE PRIME is on the market in Europe, and is in clinical trials in the United States with an expected launch in 2012.

• XIENCE Nano – XIENCE V for small vessels is in clinical trials in the United States. This 2.25 mm diameter stent was launched in Europe in 2008, and is expected to launch in the United States in 2011.

• "Thinman" DES – Abbott is developing an ultra thin DES, which would be the thinnest DES on the market at the time of launch. Thin stent struts are designed to improve clinical outcomes by reducing vessel injury upon deployment, enabling faster healing and improving deliverability in complex anatomy.

• Bioresorbable Vascular Scaffold (BVS) – Abbott is developing a BVS that is gradually resorbed into the vessel wall – much like sutures are resorbed after healing a wound – with the potential to restore full vessel motion. Abbott has the most advanced BVS clinical program in the industry.

• Core Coronary products – Abbott is continuing to expand its position in the more than $2 billion core coronary market, recently launching a next-generation frontline balloon dilatation catheter in Europe. Abbott plans to launch several new balloons in Europe and the United States over the next year. In addition, Abbott has a new line of guide wires in development.

Vision Care

• Abbott expects more than 20 new products and technology advancements over the next five years, including the launch of a new contact lens solution that is underway in Europe and the United States. In its market-leading LASIK business, Abbott is expanding its proprietary laser platform into new vision correction applications, including cataract surgery, and is developing new diagnostic instruments and treatments to improve visual outcomes. Abbott also continues to expand its premium and standard intraocular lenses (IOL), including Synchrony, its next-generation IOL approved in Europe and other countries around the world. Synchrony is currently under FDA review in the United States.‹

[DewDiligence]

ABT Reports 4Q10 Results

[ABT is another company that’s a major beneficiary of The Global Demographic Tailwind, but has been unable to convince investors that it has bright prospects. Thanks to the recent Solvay and Piramal acquisitions (#msg-41922225, #msg-50436738), ABT now derives almost 60% of sales from outside the US, and a significant proportion of *that* is from emerging markets.

In 4Q10, Humira (which comprises 30% of ABT’s pharma sales and 19% of the overall company’s sales) grew 15% YoY in constant currencies to an annualized run rate of $7.5B (!), gaining market share vs Enbrel and Remicade. The newer entrants in the RA/autoimmune market such as Simponi, Stelara, and Actemra are evidently having little or no effect on the growth of Humira, which is what ABT has been predicting all along.

Coincident with its 4Q10 report, ABT issued 2011 non-GAAP EPS guidance of $4.54-4.64, which represents about 10% growth from 2010. (The non-GAAP EPS guidance excludes an expected $0.78/sh of charges for acquisition-related restructuring and the 2% workforce reduction that was announced coincident with the 4Q10 results.) Thus, ABT has a forward P/E of only 10x, which is a bargain, IMO, for a blue-chip company that’s a major beneficiary of The Global Demographic Tailwind and has no consequential patent expirations to contend with in the next few years.

ABT’s own 4Q10 PR is at http://finance.yahoo.com/news/Abbott-Reports-DoubleDigit-prnews-1406223331.html?x=0&.v=1 .]

http://www.reuters.com/article/idUSN2528992320110126?feedType=RSS&feedName=basicMaterialsSector&rpc=43

›Jan 26, 2011 5:25pm EST
By Ransdell Pierson

NEW YORK, Jan 26 (Reuters) - Abbott Laboratories (ABT) forecast double-digit profit growth in 2011, but barely as much as Wall Street expects, and said it will cut 1,900 jobs over several years to offset costs of U.S. healthcare reforms.

The company, whose shares fell 2.5 percent to $46.75, also reported quarterly sales and earnings that topped forecasts, fueled by demand for its prescription drugs and heart stents.

Solid fourth-quarter results for the healthcare company contrasted with those of its larger rival, Johnson & Johnson (JNJ), which on Tuesday reported sales far short of estimates and forecast 2011 profit growth of 1 percent to 3 percent.

Abbott will post double-digit earnings growth this year, in 2012 and likely in following years, said Chief Executive Miles White, in a conference call with analysts, helped by a pipeline of experimental drugs that he thinks are "under-appreciated" by Wall Street.

"I don't think anyone else will be growing that much this year," said Morningstar analyst Damien Conover. "The rest of the industry will be growing in the low single-digits."

The positive long-term earnings picture and the company's limited exposure to generics in coming years make Abbott attractive and a bigger buying opportunity, given Wednesday's share declines, Conover said .

"There's a lot of potential here for the company and the stock," said Conover, who has a two-year price target of $68 on Abbott. Conover said Abbott shares are trading at parity with the drug group, at about 10 times expected 2011 per-share earnings, despite the drugmaker's superior profit outlook.

Sanford Bernstein analyst Derrick Sung cautioned Abbott may become too dependent on a single product: its Humira treatment for rheumatoid arthritis. He said the injectable drug, whose quarterly sales rose 13 percent to $1.88 billion, accounts for about half of Abbott's operating profits.

"As Humira continues to drive growth over the next few years, Abbott's dependency on Humira will actually increase," Sung said in a research note. In the meantime, he warned that Pfizer Inc (PFE) and other drugmakers are developing new treatments that will dent Humira's sales. [Analysts have been predicting the demise of Humira for as long as I can remember.]

Abbott said it earned $1.44 billion, or 92 cents per share, in the quarter, with results tempered by costs of recent acquisitions. That compared with $1.54 billion, or 98 cents per share, a year earlier. Excluding special items, Abbott earned $1.30 per share, a penny better than analysts' average forecast, according to Thomson Reuters I/B/E/S.

Abbott forecast 2011 earnings of $4.54 to $4.64 per share. But most of the forecast range is below the average Wall Street estimate of $4.63 per share.

The company said most of the 1,900 planned job cuts, representing 2 percent of its global workforce, will come from its U.S. pharmaceutical commercial and manufacturing operations.

"We're taking this action in our U.S. pharmaceutical business as a result of changes in the healthcare industry, including healthcare reform and the challenging regulatory environment," a company spokesman said.

Sanford Bernstein's Sung said the layoffs are expected to save Abbott $295 million over the next few years. But costs of healthcare reform to Abbott this year alone will likely top $200 million, while European austerity measures reduce company sales by more than $250 million in 2011, he said.

Pricing pressures will remain a long-term challenge for Abbott and its rivals, White said. J&J executives on Tuesday also cited growing pressure from governments and insurers to curb costs.

Abbott sales rose 13.4 percent to $9.97 billion in the fourth quarter, helped by the recent acquisition of Solvay SA's medicines business, topping Wall Street forecasts of $9.89 billon.

Global pharmaceutical sales rose almost 23 percent to $5.94 billion. Combined sales of its Trilipix and TriCor medicines to lower blood fats called triglycerides rose 19 percent to $499 million.

Sales of Niaspan, which raises "good" HDL cholesterol, gained almost 13 percent to $286 million. Abbott's coronary stents, used to prop open arteries that have been cleared of plaque, remained a dependable growth driver, with sales jumping almost 20 percent to $514 million.

Sales of pediatric nutritionals remained a disappointment, falling nearly 6 percent to $742 million following a recall last September of the company's beetle-contaminated Similac infant formula.‹