Wider-Than-Expected Loss at Pharmacyclics
Pharmacyclics Inc.’s (PCYC) first quarter 2013 loss of 73 cents per share was wider than the year-ago loss of 19 cents and the loss of 8 cents hinted at by the Zacks Consensus Estimate. The wider loss was attributable to higher costs incurred by the company during the first quarter of 2013.
Total revenue for the first quarter of 2013 climbed 47.7% to $2.8 million. Revenues during the quarter consisted solely of collaborative service revenues. Revenues were way below the Zacks Consensus Estimate of $20 million. Lower-than-expected revenues were also responsible for the wider-than-expected loss.
We note that Pharmacyclics received a clinical milestone payment of $50 million last month under its collaboration and license agreement with Janssen Biotech, a Johnson & Johnson (JNJ) company. This payment is not included in the first quarter 2013 results.
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 first quarter of 2013 jumped to $55.8 million from $19.9 million. The company’s general and administrative expenses increased 400% to $20 million while research and development expenses climbed 126.6% to $35.8 million.
The huge increase in operating costs was primarily attributable to the company’s efforts to develop its pipeline and increased personnel related costs.
Outlook
Pharmacyclics is looking to break even for the second quarter and the full year 2013. While the Zacks Consensus Estimate for the second quarter of 2013 hints at earnings of 1 cent per share, it is a loss of 39 cents for full year 2013.
Our take
We expect investor focus to remain on the development of Pharmacyclics’ lead pipeline candidate ibrutinib. The candidate is being developed for multiple oncology indications in collaboration with Janssen.
Pharmacyclics, a biopharmaceutical company, carries a Zacks Rank #2 (Buy). Celgene Corporation (CELG) and Medivation, Inc. (MDVN) too carry a Zacks Rank #2 in the biopharma space.
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