Biotechs Seattle Genetics and Alkermes handily beat Wall Street's fourth-quarter estimates Thursday, pushing Alkermes stock into a brief breakout as SGEN stock hit a five-month high.
Analysts were impressed by Seattle Genetics' enthusiasm for its cancer treatment, Padcev. Guidance for full-year sales excluded the likelihood Padcev will gain approval in April for never-before-treated patients with metastatic bladder cancer.
Meanwhile, Alkermes moved up its expectations to become profitable by a year. The company expects to report its first profits in 2024 or 2025. This comes as Alkermes works to separate its cancer drugs business from its neuroscience division in the second half of this year.
On today's stock market, SGEN stock surged 13.3% to close at 160.91. That helped shares retake their 200-day moving average, according to MarketSmith.com. Alkermes stock briefly topped a buy point at 29.38 out of a cup-with-handle base. Shares closed up 4.4% at 28.18.
SGEN Stock: Nearly Perfect Beat
Seattle Genetics reported a nearly perfect across-the-board beat. Overall, fourth-quarter sales jumped roughly 23% to $528 million, beating SGEN stock analysts' call for $479.2 million, according to FactSet. The company lost 80 cents per share, but that was better than expectations for a $1.03 per-share loss.
Three of Seattle Genetics' products beat expectations, SVB Securities analyst Andrew Berens said in a note to clients. Only Tivdak, a treatment for cervical cancer, came in light at $18 million. The Street expected closer to $19 million, he said. Tivdak sales soared 191% year over year, however.
"We think the asset's safety profile (ocular toxicity) as well as required ocular examinations may be impeding uptake in what is already a relatively limited opportunity," Berens said.
He kept his market perform and 141 price target on SGEN stock.
Outlook Discounts A Looming Opportunity For SGEN Stock
Sales of Seattle Genetics' biggest medicine, Adcetris, grew 35% to $238 million. SGEN stock analysts predicted about $212 million for the blood cancer treatment.
Other cancer drugs Padcev and Tukysa brought in a respective $122 million and $86 million. Padcev sales rose 32% while Tukysa fell 9%. Tukysa is facing competition in breast cancer treatment from AstraZeneca and Daiichi-Sankyo's Enhertu.
For the year, the company expects roughly $1.93 billion to $2 billion in sales. That's in line with RBC Capital Markets analyst Gregory Renza's views, but excludes the potential for Padcev to gain approval in previously untreated metastatic bladder cancer patients. Needham analyst Ami Fadia says that's a 20,000-patient opportunity. She has a buy rating and 160 price target on SGEN stock.
"A narrative of pipeline prioritization gives way to continued investment in key spots shows the undeniable presence of an advancing pipeline, underscored by notable (and refreshing) management enthusiasm," RBC's Renza said in a note. "The deck is clearing for a certain stability promised for 2023."
Renza has an outperform rating on SGEN stock and raised his price target by 10 to 155.
Solid Beat From Alkermes
Alkermes offered a "solid" fourth-quarter report, though its earnings outlook came in a bit light, Mizuho Securities analyst Uy Ear said in his note to clients.
Fourth-quarter sales sank 6% to about $305 million. But analysts polled by FactSet expected less than $290 million. Adjusted earnings toppled 39% to 14 cents a share. Alkermes stock analysts forecast only a 5-cent gain.
Ear noted better-than-expected sales of Vivitrol, an alcohol dependence treatment, and higher manufacturing as well as royalty revenue. Vivitrol brought in $102 million, better than his estimate for $99 million. Sales of schizophrenia drug Aristada were light at $79 million vs. calls ranging from $83 million to $85 million.
Importantly, sales of Alkermes' newest drug Lybalvi surged 326% to $34.9 million. Lybalvi launched in October 2021 to treat schizophrenia and bipolar 1 disorder. Ear called for $32.7 million in Lybalvi sales. He has a buy rating and 36 price target on Alkermes stock.
Alkermes Stock: Outlook Mixed
This year, the company expects $1.13 billion to $1.25 billion in sales. The midpoint of Alkermes' outlook topped analysts' forecasts. Alkermes expects adjusted earnings up to 23 cents per share. But analysts called for a better 33-45 cents per share.
Shares of both companies launched higher after the stock market opened. Alkermes stock has a Relative Strength Rating of 79 out of a best-possible 99. This means shares rank near the top one-fifth of all stocks in terms of 12-month performance, according to IBD Digital.
SGEN stock has a lower RS Rating of 60.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
