Idec’s Profit Rises on Sales of Key Drug
Idec Pharmaceuticals Corp. of San Diego said its first-quarter profit rose on higher sales of a key cancer drug but that sales of another biotech medication were disappointing.
Idec’s net income climbed 39% to $41.2 million, or 24 cents a share, from $29.7 million, or 17 cents, a year earlier. Revenue in the first quarter soared 47% to $117.2 million, from $79.7 million last year, driven by Rituxan, a treatment for lymph cancer and one of two drugs Idec sells.
“We had a good quarter,” Chairman and Chief Executive William H. Rastetter said.
Idec co-markets Rituxan with biotech giant Genentech Inc. of South San Francisco. Last week, Genentech triggered a sell-off in the stocks of both companies when it reported first-quarter Rituxan sales of $310 million -- a 32% gain from a year ago but a 3% drop from the fourth quarter. Genentech records sales of Rituxan and shares profit with Idec.
The companies blamed the slower pace of Rituxan sales on higher inventories in the fourth quarter and said they did not expect the trend to continue. Still, analysts predicted that Rituxan sales would slow from last year’s torrid pace. Jennifer M. Chao of investment firm RBC Capital Markets expects Rituxan sales for the year to reach $1.4 billion, a 20% gain over 2002.
Idec said sales of Zevalin, another drug to treat lymph cancer, were $5.7 million in the quarter, substantially below Wall Street’s expectations. Zevalin is a radiopharmaceutical -- an antibody with a radioactive payload -- that is complicated to use. It has been on the market for a year.
Idec blamed disappointing Zevalin results on a change in Medicare reimbursement that makes the drug unprofitable to use in about one-fourth of hospitals. However, the company acknowledged that the medication is profitable in the remaining hospitals, and in some cases hospitals may pocket a profit of $8,000 per patient.
Chao said 340 patients received Zevalin in the quarter, but 28,000 patients have advanced lymphoma and may be candidates for the drug. She said the way Medicare reimburses for Zevalin at most hospitals could be a strong incentive to use it, but other factors are at play.
She said Zevalin is administered by hospital-based nuclear medicine departments, not oncologists who typically treat lymphoma patients. Oncologists have been reluctant to refer their patients to nuclear medicine specialists, in part because they would lose income, Chao said.
In addition, she said, increased use of Rituxan is crowding out Zevalin.
On Tuesday, Idec shares fell 4 cents to $31.35 on Nasdaq, and rose to $32 in after-hours trading. Quarterly results were announced after the market closed.
