Mylan trumpets Botox biosimilar deal ahead of 'decent' Q4 earnings

Mylan, like the rest of its generics peers, is suffering in the U.S. thanks to stepped-up pricing pressure. But it’s hoping a new biosimilar can eventually help its stateside sales.

Wednesday, the company said it had teamed up with Revance on a cheaper copy of Allergan blockbuster Botox, a partnership Bernstein analyst Ronny Gal labeled a “smart move.”

“Both development and manufacturing of toxins are highly complex and heavily regulated, and Mylan has not developed biosimilars in-house yet (all partnered). The partnership with Revance brings them the capabilities they need,” he wrote to clients Wednesday.

Botox is Allergan’s biggest product, and it’s been called a “pipeline in a drug” thanks to a host of indications across fields ranging from aesthetics to depression. For now, though, neither Mylan nor Revance “would provide any material color ... around clinical pathway, timing, line extensions, etc.,” RBC Capital Markets analyst Randall Stanicky wrote in his own note to clients, adding that “there are several outstanding questions around this opportunity.”

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Gal, for his part, expects the product to take at least four to five years to reach the market, and of course, it’s possible that it won’t make it there at all, he pointed out. But in the meantime, the way he sees it, Mylan’s not in bad shape—despite a U.S. pricing situation still denting top lines across the industry.

For the fourth quarter, the company reported European and rest-of-world revenues that topped forecasts at $1.07 billion and $816 million, helping offset North American sales of $1.30 billion, which lagged behind the $1.45 billion consensus estimate. Earnings per share checked in close to estimates at $1.43, compared with Wall Street’s $1.41.

“The pipeline looks closer, and there is no clear negative catalyst one can point to to drive the stock lower,” wrote Gal, who called the fourth-quarter numbers "decent." And what’s more, he sees an improvement in Mylan’s transparency that he expects will help the stock as investors “get more comfortable with their ability to predict the company’s financials.”

“In the past, Mylan was very challenging to track and assumptions were frequently changed,” he wrote, adding that “shorts made a tidy living pointing to all the ‘shady’ aspects of quarterly reports.”

In Stanicky’s view, however, investors shouldn’t count out the U.S. pricing impact. North America generates 42% of revenue, he said, stressing that “the U.S. is still material with base business pressure to continue.”  

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And as he pointed out, Mylan has some “sizeable swing factors” on the horizon that could make a big impact on its 2018 results. The company reiterated its FDA action dates for copies of once-struck-down Advair in June and Allergan’s Restasis in July, both of which could “move the needle depending on competitive dynamics,” he noted.

For now, Mylan is expecting 2018 to yield revenues in the range of $11.75 billion to $13.25 billion, with earnings hitting between $5.20 and $5.60 per share.