Valeant Reports Loss on Drop in Royalties
Valeant Pharmaceuticals International reported a first-quarter loss Thursday on higher expenses and a 48% plunge in royalties on ribavirin, a drug used to treat hepatitis C.
The Costa Mesa company, formerly ICN Pharmaceuticals, reported a loss of $13.6 million, or 16 cents a share, contrasted with net income of $13.7 million, or 16 cents, in the first quarter of 2003. Revenue in the quarter was $157.7 million, essentially flat from $158.7 million a year earlier.
Excluding special items related to an acquisition, Valeant had a loss from continuing operations of $3.3 million, or 4 cents a share. Wall Street had expected a profit of 6 cents a share, according to Thomson First Call. Valeant’s stock fell $1.70, or 7%, to $21.90 on the New York Stock Exchange.
Valeant was hurt by a steeper-than-expected nose dive in ribavirin royalties, which fell to $25.4 million from $48.6 million a year earlier. The drug, sold by Schering-Plough Corp. under the brand name Rebetol, has been a gold mine for Valeant. But it now faces stiff competition from generic formulations of the product.
Robert Uhl of Wells Fargo Securities said in a research note that he believed the price for generic ribavirin is 60% lower than Schering’s name-brand version. Uhl sharply lowered his full-year per-share earnings estimate for Valeant to 5 cents from 30 cents, based on the rapid erosion of the company’s royalty revenue.
Valeant said selling expenses jumped 28% in the quarter to $47.7 million, reflecting investment in global products and the effect of currency translation.
Research and development expenses doubled to $18.5 million, driven by costs associated with trials of two experimental hepatitis drugs. One of them, Viramidine, a follow-on to ribavirin, is in the final round of human tests before it goes to the Food and Drug Administration for review. If it gets the FDA’s OK, Viramidine could reach the market in 2007, the company said.
Separately, the company said Thursday that it had paid Swiss drug maker Roche Holding $13.5 million for non-European marketing rights to Tasmar, a drug used to treat Parkinson’s disease. The company said annual sales for Tasmar should approach $50 million in five years.
Valeant is in the midst of a restructuring that has included layoffs and factory closings under new management. Founder Milan Panic resigned in 2002 under pressure from shareholders.
