Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Why Pharmacyclics, Inc. Shares Stumbled Out of the Gate

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.

What: Shares of Pharmacyclics (NASDAQ: PCYC  ) , a biopharmaceutical company developing small-molecule therapies to treat cancer and other immune-mediated diseases, dipped as much as 12% after reporting its first-quarter earnings results before the opening bell.

So what: For the quarter, Pharmacyclics reported total revenue of $119.4 million, a more than 40-fold increase from the $2.8 million in revenue reported in the year-ago period. This was comprised of $56.2 million in Imbruvica sales following its first full quarter as an approved therapy for mantle cell lymphoma and $60 million in milestone payments from marketing partners Janssen Biotech, a subsidiary of Johnson & Johnson (NYSE: JNJ  ) . Adjusted profit for the quarter soared 200%, reversing course from a loss of $0.40 per share in the year-ago period to a profit of $31.3 million, or $0.40 per share. By comparison, both estimates crushed the Street's forecast of $0.22 in EPS and $104.4 million in revenue.

The wheels fell off the wagon, however, when Pharmacyclics issued its full-year net product sale guidance of $295 million, plus or minus 5%. Keep in mind this figure doesn't include milestone payments, but then again milestone payments can be completely unpredictable. In other words, investors had a hard time deciphering Phamacyclics' net product sales guidance next to Wall Street's $417.4 million full-year revenue consensus.

Now what: Investors may not be pleased with the guidance, but everything appears to be taking shape nicely for the company. In February, Pharmacyclics had Imbruvica approved in the chronic lymphocytic leukemia indication, and that is by far a larger market than mantle cell lymphoma, lending hope that sales of the drug are going to quickly soar.

The key point investors are going to want to hone in on moving forward is whether Pharmacyclics can be profitable sans milestone payments. Although it could receive up to an additional $380 million in development, regulatory, and approval milestone payments, investors wants to see Imbruvica sales sustaining Pharmacyclics before they push the company any higher. I personally expect Imbruvica to shine and hit blockbuster status in due time, but following Pharmacyclics' monstrous run over the past five years, I'm still not dipping my toes into the water -- at least not yet.

Pharmacyclics shares have soared in recent years, but even it could have a tough time keeping pace with this top stock over the long haul
Give me five minutes and I'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year, his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252%, and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2941520, ~/Articles/ArticleHandler.aspx, 9/1/2015 2:13:44 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Sean Williams

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and in investment planning topics. You'll usually find him writing about Obamacare, marijuana, developing drugs, diagnostics, and medical devices, Social Security, taxes, or any number of other macroeconomic issues.

Today's Market

updated Moments ago Sponsored by:
DOW 16,144.07 -383.96 -2.32%
S&P 500 1,923.55 -48.63 -2.47%
NASD 4,677.93 -98.58 -2.06%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
PCYC $0.00 Down +0.00 +0.00%
JNJ $91.96 Down -2.03 -2.15%
Johnson & Johnson CAPS Rating: ****