Monday’s Top Health Care Stories: Pfizer, Auxilium, and Regeneron

Let's take a look at three stocks -- Pfizer (NYSE: PFE  ) , Auxilium Pharmaceuticals (NASDAQ: AUXL  ) , and Regeneron (NASDAQ: REGN  ) -- which could make waves across the health care sector this Monday morning.

Pfizer misses revenue estimates for the first quarter
First up, Pfizer just reported its first quarter earnings, missing analyst estimates on the top line by $730 million.

For the quarter, Pfizer earned $2.33 billion, or $0.36 per share, a decline from the $2.75 billion, or $0.38 per share, it earned in the prior year quarter. Excluding special items, Pfizer earned $0.57 per share, topping the average Thomson Reuters estimate by two cents. Total revenues slid 8.5% to $11.35 billion. Pfizer also pulled its full year forecast, stating that it would update its guidance "as soon as practicable".

Pfizer's established pharmaceuticals segment has long been a laggard for the company -- in fiscal 2013, revenue at the segment fell 8% year-over-year to $9.46 billion. During the first quarter, Pfizer's revenue from global established pharmaceutical business (a newly established, larger segment than the original segment) slumped 13% year-over-year to $5.99 billion. This division has long been considered a possible candidate for a spin-off or a sale. Earlier this year, Valeant, Actavis, and Mylan all expressed interest in acquiring the business.

Investors should note that Pfizer has been trying to acquire British pharmaceutical giant AstraZeneca for up to $106 billion in a bid to strengthen its oncology pipeline. However, AstraZeneca rejected the bid last week, while British regulators called for an inquiry into the bid.

Auxilium reports first quarter earnings
Auxilium Pharmaceuticals, which recently tumbled after revising its full year guidance due to lower-than-expected demand for its Testim testosterone gel, just reported its first quarter earnings.

Auxilium's net revenue rose 34% year-over-year to $88.5 million thanks to inorganic growth and the launch of Stendra, an erectile dysfunction drug licensed from VIVUS, and Xiaflex's new indication of Peyronie's Disease. The company's net loss came in at $0.39 per share, or $19.4 million, compared to a narrower loss of $0.05 per share, or $2.3 million, in the prior year quarter.

Auxilium started 2013 with only two products, but increased its portfolio to 12 products by the end of fiscal 2013. Auxilium now promotes seven products across men's health care and orthopedics, and sees high growth potential in five of them -- Stendra, Xiaflex for Peyronie's disease (PD), Xiaflex for Dupuytren's contracture (DC), Testopel, and Edex.

Stendra, which launched in January, generated sales of $11.6 million during the quarter. Sales of Xiaflex (for both PD and DC indications) rose 38% year-over-year to $16.6 million, while sales of Testopel rose from nothing in the prior year to $32 million. Sales of Testim, as previously warned, fell 76% due to lower demand for testosterone gel products.

Regeneron inks a new collaboration with Avalanche Biotechnologies
Last but not least, Regeneron just signed an agreement with Avalanche Biotechnologies to discover, develop, and commercialize novel gene therapy products for ophthalmologic diseases. The collaboration will cover a wide array of treatments discovered jointly by the two companies and developed using Avalanche's Ocular BioFactory platform.

Regeneron will pay Avalanche an upfront cash payment and contingent payments totalling up to $640 million dependent on the achievement of certain development and regulatory milestones, as well as royalties on net sales of products. The collaboration covers eight specific therapeutic targets, and Regeneron will retain exclusive worldwide rights on each if they are commercialized.

Although the agreement merely beefs up Regeneron's developmental pipeline, it's an important development for two reasons -- it's a new way to diversify Regeneron's top line away from U.S. sales of its eye treatment Eylea, which accounted for 67% of its 2013 revenue, and it represents a cohesive pipeline expansion in ophthalmology.   

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