Monday’s Top Biotech Stories: Allergan, Anacor, and Sinovac Biotech

Allergan, Anacor, and Sinovac are the top health care stocks to watch this Monday morning.

Leo Sun
Leo Sun
Jul 21, 2014 at 9:05AM
Health Care

Let's take a look at three stocks -- Allergan (UNKNOWN:AGN.DL), Anacor Pharmaceuticals (UNKNOWN:ANAC.DL) , and Sinovac Biotech (NASDAQ:SVA) -- which could all loom large in health care headlines this Monday morning.

Allergan tops earnings estimates for the second quarter
Allergan just posted its second quarter earnings. The company's non-GAAP earnings per share rose 23.8% year-over-year to $1.51 per share, topping analyst estimates by $0.07. Total revenue rose 16.7% to $1.86 billion, topping expectations by $80 million.

Allergan's top line growth improved across the board. Revenue at Allergan's largest business, its eye care segment, rose 14.5% year-over-year to $827 million. Sales of Botox and neuromodulators rose 12.9% to $579.4 million. Sales of core medical devices, consisting of facial and breast aesthetic products, climbed 25.8% to $288.5 million. Looking ahead, Allergan expects to full year Botox sales between $2.2 billion to $2.28 billion. It expects sales of Restasis, its top dry eye treatment, to come in between $1.04 billion to $1.07 billion.

Investors should remember that Allergan is currently being targeted by Valeant Pharmaceuticals (NYSE:BHC) in a $53 billion hostile takeover attempt. Valeant also recently complained to U.S. and Canadian regulators, alleging that Allergan made false statements to investors regarding sales at the former's Bausch & Lomb eye care unit.

Anacor signs a deal with Sandoz to commercialize Kerydin
Anacor Pharmaceuticals just announced that it entered an exclusive agreement with Novartis' (NYSE:NVS) Sandoz subsidiary to commercialize and distribute Anacor's Kerydin topical solution. Kerydin is a treatment for a fungal infection of the toenail which affects roughly 35 million people in the United States. The FDA approved Kerydin earlier this month. Wedbush Securities expects the drug to generate sales of $16 million next year and peak sales of $347 million by 2021.

Last month, the FDA approved a rival drug, Jublia, from Valeant Pharmaceuticals. Anacor's stock plunged last year when clinical data showed Kerydin's degree of benefit appeared to be lower than Jublia's.

The deal entitles Anacor to upfront payments up to $40 million and an additional milestone payment of $25 million expected in January 2015. Sandoz and Anacor will share gross profits equally, but starting in 2015, profit sharing payments will be made to Anacor only after Sandoz accrues the first $50 million of gross profits. The long-term profit-sharing arrangement includes minimum cumulative profit-sharing payments to Anacor totalling $45 million. All these payments should significantly boost Anacor's revenue, which came in at $17.2 million in 2013.

Anacor also gets an option to repurchase all rights to Kerydin from Sandoz either three years after launch or by December 31, 2017, whichever comes first. Anacor expects the drug to be launched as early as the end of the quarter in the United States. Shares of Anacor are up more than 7% in pre-market trading this morning.

Sinovac receives tender to supply the Beijing Health Bureau with vaccines
Chinese vaccine maker Sinovac Biotech just announced that the Beijing Health Bureau has selected it as the sole supplier of inactivated hepatitis A vaccine in pre-filled syringes to the EPI (Expanded Program of Immunization). The tender is valued at roughly 16 million RMB ($2.58 million). The vaccines purchased by the Beijing Health Bureau will be used between 2014 to 2016. Sinovac expects to start deliveries within the next few months.

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Sinovac's inactivated vaccine, Healive, was launched in 2002 and is currently available in adult and pediatric doses. China has used Healive in China's national immunization program since February 2008. Last month, Sinovac announced that its value added tax (VAT) applied to the sales of Sinovac's vaccine products will be reduced from 6% to 3% effective July 1.

Both developments are positive ones for Sinovac, which has rallied 44% over the past 12 months.