Nothing's scarier than a pharmaceutical company with the dark clouds of patent-infringement litigation hanging over it. That's where Canadian drugmaker QLT
I didn't think QLT was a suitable investment last July, with all of the issues surrounding it, but shares have been up since then. Sales of Eligard have grown strongly to combat the reduced royalties from macular degeneration drug Visudyne. And now that QLT put the Eligard patent dispute behind it this month, except for in a few remaining places including Germany, the company's ownership of the drug appears to be safe, and the biggest risk to its business is gone.
Despite that good news, however, total revenue for 2006 was down 24% year over year to $175 million, as sales of Visudyne in the United States got pounded by the introduction of Genentech's
After adjusting for various charges, earnings came in at $0.37 a share in 2006. Though the company didn't provide sales guidance for Visudyne this year, it's safe to say that things are going to get worse before they get better when Lucentis gets off the ground in Europe, considering that Visudyne accounted for 74% of QLT's revenue last year.
QLT has been off with its sales guidance in the past, but with the various disruptions behind it, the estimates that it provided for Eligard going forward will hopefully be more accurate. Even with a planned drop of roughly 40% in sales, general, and administrative expenses, 2007 is going to be another rough year for QLT's bottom line. There is some value in shares of QLT, though, and if Eligard sales can pick up again, really patient investors might get an opportunity to catch some shares of cash-rich QLT on the cheap sometime this year.