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With earnings season in full swing, earnings reports practically dominate the stories to watch this week in the health-care sector. Today we'll look at a few noteworthy reports worth keeping an eye on, as well as one FDA ruling bound to turn heads.
Starting in reverse, you'll want to keep a close eye on Isis Pharmaceuticals (NASDAQ: ISIS ) and Sanofi (NYSE: SNY ) , which are expected to receive an FDA ruling on Kynamro, its homozygous familial hypercholesterolemia drug, on Tuesday. Although Kynamro received a recommendation of approval from the FDA panel by a 9-6 vote, it nonetheless had the panel raise plenty of yellow flags with regard to excess fat buildup in the liver, as well as abnormal growths known as neoplasms in 3.1% of all tested patients. Furthermore, Aegerion Pharmaceuticals' Juxtapid was approved well before its PDUFA date to treat HoFH, adding an extra level of competition and urgency for Isis and Sanofi.
With Pfizer, Merck, and Eli Lilly all on the earnings docket this week, I'd suggest keeping an eye on all three. I specifically chose Lilly as the one most worth watching because of the steep fall off the patent cliff that's expected through 2017. Lilly is expected to lose two blockbuster drugs -- Cymbalta for depression, and diabetes drug Humalog, which are expected to have combined for more than $7 billion in annual sales this year. Sales of high-growth drugs such as Forteo and Effient, as well as growth at Lilly's animal health division, will be key figures to watch. You'll also want to keep an eye out for indications of what Lilly might do to spur sales growth, such as collaborative partnerships or buyout opportunities. Look for this earnings report on Tuesday.
Biotech growth juggernaut Regeneron, best known for Eylea, its blockbuster wet age-related macular degeneration treatment, is slated to report earnings on Friday. Considering that Regeneron raised sales estimates on Eylea three times last year and it's crushed Wall Street's EPS estimates by an average of 129% over the past three quarters, I think you'd be Foolish not to be keeping a close eye on this company. I'll be looking for updated guidance with regard to Eylea sales now that Regeneron has received approval for the drug in Europe for wet-AMD. I'll also be tuned in for any additional info on when Regeneron might have its late-stage data available in its attempt to gain additional indications for Eylea. Unsurprisingly, I'd expect another big earnings beat here.
Finally, I'd keep a close eye on Aetna in the health-benefits sector, which is preparing for the implementation of the Affordable Care Act next year. Most insurers are trading at incredibly cheap valuations because of the profit caps soon to be imposed by the ACA. However, the personal mandate that's going to require individuals to obtain health insurance is going to create a historic influx of new customers into the industry. I'll be looking for comments from management with regard to how Aetna is positioning itself to take advantage of this expected influx, as well as its ability to keep costs under control. Look for Aetna to report its results on Thursday.
Can this pharma survive the patent cliff?
Over the next two years, Eli Lilly will see nearly $0.40 of every $1.00 in sales exposed to generic competition. How does the company plan to respond to this huge patent cliff? Better yet, what does this mean for investors? In a brand-new premium report on Eli Lilly, The Motley Fool's top pharmaceuticals analyst delves into everything investors need to know about the stock today. Simply click here now to claim your copy.