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Alza Sees Revenue, Profit Up 20%

Phamaceuticals: The firm projects earnings growth on strong sales of drugs and products that use its patented technology.

February 28, 2001|From Reuters

Drug maker Alza Corp. on Tuesday projected at least 20% growth in its revenue and earnings per share this year amid continued strong sales of its own drugs as well as products such as the NicoDerm smoking-control patch that use its patented drug delivery technologies.

Last year, Alza's revenue rose 24% and earnings per share, after one-time items, grew 28% from a year earlier to 82 cents a share. Alza's 20% growth target results in earnings of just more than 98 cents a share in 2001, slightly below the current consensus estimate from Wall Street of $1 a share, as compiled by First Call/Thomson Financial.

Shares of the Mountain View, Calif.-based company, which makes drugs to treat such maladies as incontinence and cancer, fell $1.57, or nearly 4%, to close at $39.70 on the New York Stock Exchange.

Alza also said it expects to raise research and development spending to $240 million this year from $191 million in 2000. It also projected that its administration and marketing costs would increase from last year's $350 million, although a specific target was not provided.

Matt Fust, Alza's chief financial officer, said the company will finance the extra costs with "very strong revenue growth" and expansion of gross profit margins as sales of its higher-margin flagship drugs continue to grow.

Alza forecast total 2001 revenue above $1.2 billion, which includes a sales target of more than $700 million for its own pharmaceutical products. The company projected 2001 sales of $100 million for cancer treatment Doxil, $240 million for incontinence drug Ditropan XL and $200 million for Concerta, a drug for attention deficit hyperactivity disorder launched late last year.

Fust said Alza was "comfortable" with the middle of the current 20-cents to 24-cents-per-share range of analysts' earnings estimates for this quarter, as compiled by First Call/Thomson Financial.

Fust noted, however, the earnings could fall sequentially in the second quarter due to seasonal Concerta sales, although growth is expected to rebound in the second half of the year.

Within the next 18 months, the company projected it would have three new products entering Phase III clinical trials and a new drug application submitted to the Food and Drug Administration for its acute pain management product E-TRANS fentanyl.

Alza also said it plans to launch initial forays into international markets, which have gone largely untapped by the drug maker.

"Internationally, we are where we were in the United States six years ago--just starting out," said Bruce Cozad, Alza's chief operating officer.

Alza is building a plant in Ireland to produce transdermal products. The company plans to file in Europe for approval to market Concerta and Viadur, which is approved in the United States to relieve the pain of advanced prostate cancer.

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