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2Q Revenues Decline at Actelion

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Switzerland-based Actelion reported second quarter 2012 earnings of $1.56 per American Depository Receipt (ADR), up 100% from the prior-year earnings of $0.78. Results benefited from currency movements. Earnings were above the Zacks Consensus Estimate of 69 cents.

The company reported net revenue of approximately $478 million, down 5.7% from $507 million reported in the second quarter of 2011. The decline in revenues was due to lower product sales and contract revenues. Revenues were, however, above the Zacks Consensus Estimate of $453 million.

On a half yearly basis, adjusted earnings were $2.24 per ADR, up approximately 29% from $1.77 year over year. The company reported net revenue of approximately $905 million in the first half of 2012, down approximately 14% from $561 million reported in the first half of 2011.

The First Half in Detail

We note that all growth rates below are in local currency and represent growth over the prior-year period.

Product sales were down 3% from the prior year period. Results were hurt by a weak performance in the US due to excessive competition coupled with price cuts in many markets. On a regional basis, 40% of product revenues came from the US, 39% from Europe, 11% from Japan and the balance from the rest of the world.

We note that Actelion has three marketed products, Tracleer, Ventavis and Veletri, for the treatment of pulmonary arterial hypertension. Zavesca is indicated for the treatment of Gaucher’s disease. Zavesca is also approved in the EU for treating adults suffering from progressive neurological manifestations patients and children suffering from Niemann-Pick type C disease (NP-C). Zavesca (brand name: Brazaves) was launched this year for the NP-C indication in Japan.

Tracleer revenues were down 4% in the second quarter mainly due to excessive competition in the US. Ventavis sales were down 8% from the prior year. The decline was attributable to lower units shipped. Veletri, launched in 2010, did very well in the quarter with sales soaring 82% due to strong performance in the US. Zavesca sales were up 20% from the prior year. Strong sales of the drug in the NP-C indication in Europe contributed to the impressive showing.

Adjusted research & development expenses (R&D) declined 1% in the first half of 2012.  Adjusted selling, general and administrative expenses were down 18%.


Actelion expects 2012 core earnings to grow in mid-single digits as opposed to the previous forecast of no year over year growth in terms of local currency.

Our Recommendation

Actelion carries a Zacks #3 Rank (Hold) in the short-run.

We remind investors that earlier in the month, Actelion announced that approximately 135 employees of the company could be shown the door following the cost saving initiative launched by it. Actelion expects to include a one-time charge related to the move in its 2012 results.

Actelion was also in the news when the company and its partner Auxilium Pharmaceuticals, Inc. gained approval in Canada for their drug Xiaflex for the treatment of Dupuytren's contracture in adults with a palpable cord.

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