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UCB Misses Earnings Ests, Revs In Line

Zacks Equity Research

UCB (UCBJF) reported 2013 earnings per share of $2.56, down 8% on a reported basis but up 1% at constant exchange rates (:CER). Earnings missed the Zacks Consensus Estimate of $2.84.

Revenues for 2013 were approximately $4.5 billion (down 1% on a reported basis but up 2% at CER), in line with the Zacks Consensus Estimate. UCB’s revenues primarily include sales of Cimzia, Vimpat, Neupro and Keppra.

All growth rates mentioned below are on a year-on-year basis and at CER.

Cimzia (Crohn’s disease and inflammatory arthritis) sales went up 32% to €594 million in 2013, and Vimpat (epilepsy) sales came in at €411 million, reflecting an increase of 27%. Neupro, which is marketed as a treatment for Parkinson’s disease (:PD) and restless legs syndrome (:RLS), recorded sales of €182 million, up 39%.

However, sales of Keppra, another epilepsy treatment, declined 12% to €712 million in 2013. Sales were hurt by generic competition in Europe.

The combined sales of Cimzia, Vimpat and Neupro accounted for about 34.8% of total revenues in 2013.

In 2013, research and development (R&D) expenses were €856 million, down 2% year over year. In 2013, general and administrative expenses were €205 million, down 5% while selling and marketing expenses were €802 million, up 4%.

Pipeline Update

Vimpat as monotherapy met its primary endpoint in a phase III study on epilepsy in the U.S. in Mar 2013. The data from the study was submitted as part of the supplemental New Drug Application (sNDA) with the U.S. Food and Drug Administration (:FDA). This sNDA was accepted in early Oct 2013. A phase III study on Vimpat for the indication of f adjunctive epilepsy in children is ongoing. The first results will be out in 2017.

The European Commission granted the amended marketing authorization for Cimzia for active axial spondyloarthritis (axSpA) in Oct 2013. The U.S. FDA approved Cimzia for the treatment of active psoriatic arthritis (PsA) and active ankylosing spondylitis (:AS) in September and October, respectively. A complete response letter was issued by the FDA for the supplemental Biologics License Application of Cimzia for axSpA.

Other phase III candidates in UCB’s pipeline include brivaracetam (results expected in the second half of 2014) as adjunctive therapy for the treatment of partial onset seizures in adults with epilepsy, romosozumab (first half of 2016) in osteoporosis in post-menopausal women, and epratuzumab (first quarter of 2015) in systemic lupus erythematosus (:SLE).

2014 Guidance

UCB expects revenues to about €3.5 million to €3.6 million in 2014. UCB expects recurring EBITDA in the range of €740–770 million and earnings per share in the band of €1.90–€2.05.

UCB carries a Zacks Rank #3 (Hold). Strong performance of three products (Cimzia, Vimpat and Neupro) along with strength in the emerging markets has driven UCB’s growth. Investors looking for better-ranked stocks in the biopharma sector may consider companies like Actelion Ltd. (ALIOF), Lannett Co., Inc. (LCI) and Biogen Idec Inc. (BIIB). Actelion and Biogen carry a Zacks Rank #2 (Buy) while Lannett holds a Zacks Rank #1 (Strong Buy).

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