Pharmacyclics Inc.’s (PCYC) second quarter 2013 earnings (including stock-based compensation expenses) of 16 cents per share compared favorably with the year-ago loss of 24 cents and the loss of 4 cents hinted at by the Zacks Consensus Estimate. Results in the quarter were aided by higher revenues.
Total revenue for the second quarter of 2013 increased to $54.7 million from $2.1 million a year-ago. Revenues during the quarter consisted solely of collaborative service revenues. Revenues were above the Zacks Consensus Estimate of $52 million. The massive jump in revenues during the second quarter of 2013 was due to the $50 million received by Pharmacyclics from partner Janssen Biotech, a Johnson & Johnson (JNJ) company. In Apr 2013, Pharmacyclics received the clinical milestone payment from Janssen pertaining to the development of oncology candidate ibrutinib (PCI-32765) for the chronic lymphocytic leukemia /small lymphocytic lymphoma indication.
Pharmacyclics has received milestone payments of $200 million under its agreement with Janssen so far. Pharmacyclics is eligible to receive further payments up to $625 million under the agreement.
Pharmacyclics’ total operating expenses for the second quarter of 2013 jumped to $42.6 million from $19.6 million. Both general and administrative as well as research and development expenses were on the upswing during the second quarter of 2013. The huge increase in operating costs was primarily attributable to the company’s efforts to develop its pipeline and increased personnel related costs.
Pharmacyclics is looking to break even for 2013. Currently, the Zacks Consensus Estimate hints at a loss of 99 cents.
At first glance, Pharmacyclics’s second quarter results look impressive. However, revenues included the milestone payment of $50 million from Janssen. We expect investor focus to remain on the development of ibrutinib. The candidate is being developed for multiple oncology indications in collaboration with Janssen.
Pharmacyclics, a biopharmaceutical company, carries a Zacks Rank #3 (Hold). Gilead Sciences Inc. (GILD) and Medivation, Inc. (MDVN) appear to be more attractive in the biopharma space with a Zacks Rank #1 (Strong Buy).
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