Amylin sales looking up as Biogen may face downside, Merrill report says

By Jennifer Chiou

New York, Oct. 3 - Amylin's Byetta sales are putting it in line for a possible upside surprise while Biogen IDEC must control costs or see its earnings miss due to a decline in Avonex sales, according to Merrill Lynch biotechnology analysts Eric J. Ende, David W. Munno and Thomas J. McGahren in their third quarter biotech earnings preview.

For Amgen, the analysts said they based their $104.00 price objective on a price/earnings ratio of 26 times their 2007 earnings-per-share estimate of $4.07 and noted Byetta sales are on track for $19 million to $20 million. Merrill added stocking may boost the company's revenues.

The report highlighted Biogen IDEC's Avonex, which saw its market share slip by 0.5% in the third quarter versus the second quarter. Though Avonex had an 8% price increase in June, its U.S. sales are projected to fall in the low end of the consensus range at $233 million.

Merrill noted Genentech's stronger-than-expected sales of Avastin and Herceptin may push earnings above the consensus of $0.30. The analysts said reimbursement of off-label uses of Avastin in lung and breast cancer and Herceptin in breast cancer are occurring more than expected. In addition, Merrill said the company's Ritucan sales look strong, though its Tarceva sales may fall $5 million to $7 million short of consensus at $84 million.

The analysts said their $51.00 price objective for OSI Pharma is based on a P/E ratio of 33 times fully taxed 2008 earnings per share of $1.56. They noted that risks to their price objective include lower-than-anticipated sales of Tarceva and unfavorable rulings from the FDA.

In the report, the Merrill analysts added Myriad Genetics' $24.00 price objective is based solely on discounted earnings analysis of the predictive medicine business.

On the downside, Protein Design Labs is expected to report a loss of $0.05, the report said, and Millennium's Velcade sales are tracking below Merrill's estimate of $51 million. In addition, MGI Pharma lowered its 2005 Aloxi sales guidance to between $250 million and $260 million from $260 million. MGI's price objective, Merrill said, is down to $28.00 from $30.00.

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