>> CHICAGO, March 15 (Reuters) - Drug maker Ivax Corp. (IVX.A: Quote, Profile, Research) on Tuesday said quarterly earnings more than doubled as sales rose on exclusive marketing rights to some key generic drugs, pushing shares up 16 percent. Fourth-quarter net income rose to $63.2 million, or 24 cents per share, from $29.3 million, or 12 cents per share, a year earlier. That beat analysts' forecasts of 19 cents per share, according to Reuters Estimates.
Despite its strong results, Ivax forecast tepid growth in 2005, while its 2006 forecast seems overly optimistic, analysts said. Major growth is not expected in the generics industry this year, as the next big wave of patent expirations on blockbuster drugs begins in 2006.
"We remain leery of how Ivax will achieve these EPS forecasts without tangible new product launches in 2005, but we are nonetheless positively inclined toward the stock on these levels given the surprisingly bullish forecasts," J.P. Morgan analyst Corey Davis said in an investor note.
Revenue rose 28 percent to a record high of $509.2 million, from $399.0 million a year earlier.
Ivax said it expects to earn 76 cents per share to 86 cents per share in 2005, compared with analysts' estimates for 86 cents per share. The company said results will be significantly lower in the first quarter of 2005, but will rebound later in the year. For 2006, it sees $1.35 per share to $1.55 per share, compared with analysts' view of $1.02 per share.
BLIND FAITH
Analyst Elliot Wilbur of CIBC World Markets said the 2006 forecast "requires blind faith."
The 2005 and 2006 forecasts exclude the potential for Ivax to sell generic forms of some key brand name drugs, including GlaxoSmithKline Plc's (GSK.L: Quote, Profile, Research) Flonase nasal spray, which earns $1 billion in U.S. annual sales.
They also exclude potential sales of generic forms of Eli Lilly & Co.'s (LLY.N: Quote, Profile, Research) Zyprexa for schizophrenia, Forest Laboratories' (FRX.N: Quote, Profile, Research) Lexapro depression drug, and Merck & Co.'s (MRK.N: Quote, Profile, Research) Zocor cholesterol drug. Ivax has patent challenges outstanding for most of these products.
Results in 2004 reflected exclusive marketing rights to sell cheaper versions of diabetes drugs and Pfizer Inc.'s (PFE.N: Quote, Profile, Research) $3 billion a year epilepsy drug Neurontin. Ivax markets a generic version of Neurontin in tablet form, which it began selling in August.
The Miami, Florida, company was the first to market with a tablet, which is not considered an exact copy of Neurontin, which is sold in capsule form. The form matters because pharmacists cannot automatically substitute the tablet form without getting approval from physicians.
Rival generic drugmakers Teva Pharmaceutical Industries Ltd. (TEVA.O: Quote, Profile, Research) and Alpharma Inc. (ALO.N: Quote, Profile, Research) co-market a capsule version of Neurontin. Pfizer, in a fairly unusual move, also launched its own generic form of the drug.
Shares of Ivax rose $2.51, or 15.9 percent, to $18.30 on the American Stock Exchange on Tuesday afternoon. <<
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