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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
Let's take a quick look at three stocks -- Dr. Reddy's Laboratories (NYSE: RDY ) , Jazz Pharmaceuticals (NASDAQ: JAZZ ) , and Sanofi (NYSE: SNY ) -- which could all loom large in health care headlines this morning.
Dr. Reddy's Labs launches injected Sumatriptan in the U.S.
First and foremost, Indian pharmaceutical company Dr. Reddy's Laboratories announced the U.S. launch of its Sumatriptan Injection USP Autoinjector System yesterday.
The product, which is injected subcutaneously, is a generic version of GlaxoSmithKline's (NYSE: GSK ) Imitrex STATdose Pen, which is used to treat migraines and cluster headaches. According to year-end data from IMS Health, Imitrex STATdosePen and its generic equivalents generated $169 million in sales during the 2013 calendar year.
The news propelled Indian shares of Dr. Reddy's to an all-time high earlier today, although the effect on the company's overall sales (Dr. Reddy's reported revenue of $2.1 billion in fiscal 2013) may not be that substantial.
The company's top-selling individual drug last year was Omez, a treatment for heartburn or irritation of the esophagus caused by gastroesophageal reflux disease (GERD), which accounted for 8% of its top line. Dr. Reddy's ADR shares have climbed 36% over the past 12 months, and the stock may climb higher this morning as a result of Sumatriptan's U.S. launch.
Jazz's fourth quarter ends on a sour note
Jazz, however, is poised to open lower this morning, after it reported disappointing fourth quarter earnings yesterday after the market close.
Jazz's fourth quarter revenue rose 28% year-over-year to $235.8 million, but missed Wall Street estimates by $2 million. Its non-GAAP earnings rose 12% year-over-year to $1.72 per share, but also missed the consensus estimate by 6 cents. The company attributed its miss on the top and bottom lines to higher incentive-based compensation, foreign exchange headwinds, and a larger number of outstanding shares.
On the bright side, the company's fiscal 2014 revenue guidance of $1.1 billion to $1.16 billion exceeded analyst estimates of $1.08 billion. Its bottom line guidance of $8.00 to $8.25 per share also compared favorably to the consensus estimate of $8.07.
Sales of Xyrem, a narcolepsy treatment, rose 45% year-over-year during the fourth quarter to $164.2 million, accounting for 70% of Jazz's top line. For the full year, sales of Xyrem climbed 50% year-over-year to $569.1 million. Oppenheimer analyst Christopher Holterhoff expects the drug to eventually hit peak sales of $1 billion by 2020, indicating that the drug's sales could continue hitting new highs next year.
Shares fell 6% after hours yesterday following the earnings announcement, but the stock is still up more than 200% over the past 12 months. Analysts at Brean Capital raised their price target on Jazz from $171 to $207 this morning, indicating 18% potential upside from yesterday's closing price.
Sanofi inks a new partnership with Ardelyx
Last but not least, Sanofi signed a new agreement with Ardelyx to license the company's novel phosphate transport NaP2b inhibitor program. The program consists of a number of early stage treatments for the treatment of hyperphosphatemia (an electrolyte disturbance characterized by an abnormally high level of phosphates in the blood) caused by end stage renal disease and chronic kidney disease.
Sanofi will assume the full responsibility of developing the drug candidates, while Ardelyx will retain the option to co-promote the drugs and receive royalties on net sales if successfully approved. Sanofi's upfront payment was undisclosed, but the company will be obligated to pay various milestone payments up to $198 million to Ardelyx if certain targets are achieved.
This new partnership symbolizes a new way for Sanofi to diversify its portfolio beyond its core growth engines of diabetes and rare disease treatments, and complements its promising collaboration with Regeneron in monoclonal antibodies.
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