COVID-19 shots fail to immunize drugmakers from EPS misses in broadly upbeat Q3

COVID-19 vaccine makers AstraZeneca PLC and Moderna Inc. both missed EPS estimates for the third quarter, while the majority of biopharma companies exceeded expectations.

Sixteen of the 19 top biopharmaceutical companies surpassed analysts' EPS forecasts for the quarter, with only Eli Lilly and Co. joining AstraZeneca and Moderna in missing their estimates — though each of the stragglers painted a picture of a brighter future.

Lilly appeared particularly well suited for the longer term with a deep pipeline of drugs in development, analysts said. Approvals are expected in 2022 for Lilly's diabetes drug tirzepatide and Alzheimer's disease treatment donanemab, which both have "multibillion-dollar potential," Edward Jones analyst Ashtyn Evans said in a note Oct. 26, the day of the company's earnings call.

AstraZeneca's 48% year-over-year increase in total revenue for the third quarter was the company's highest ever led by strong cancer drug sales, but several other franchises fell short and a 34% rise in research and development costs brought the Cambridge, U.K.-based company below analysts' expectations. AstraZeneca is transitioning to commercial contracts for its COVID-19 vaccine and the acquisition of rare disease-drug maker Alexion is likely to pay off down the road, analysts said.

Moderna had a bumpier ride, slashing its own outlook for sales of its COVID-19 shot Spikevax to a high of $18 billion in 2021 due to manufacturing delays and slowing demand in wealthier, more vaccinated countries. Despite this, the company — whose third-quarter EPS of $7.70 fell furthest from analysts' estimates of $9.38 — has more contracts to fulfill in 2022 and other vaccines in the works, with clinical results for a flu shot due to report soon.

Meanwhile, sales of Johnson & Johnson's own COVID-19 vaccine shot — which it is providing without profit until about late 2022 — also fell below expectations. But due to the company's core businesses, adjusted EPS rose 18.2% from the third quarter of 2020, surpassing estimates.

Pfizer Inc. saw adjusted EPS rise 129% year over year, buoyed by $14.58 billion third-quarter sales in its Comirnaty COVID-19 shot co-developed with Germany's BioNTech SE. The U.S. company again raised full-year expectations to $36 billion.

The Pfizer-BioNTech and Moderna vaccines both received the go-ahead Nov. 19 from the U.S. Centers for Disease Control and Prevention to be used as booster shots in adults of all ages.

Looking to COVID-19 therapies

When it came to therapies for COVID-19, Gilead Sciences Inc.'s Veklury reached $1.9 billion in third-quarter sales, almost tripling estimates as hospitalization rates rose rapidly at the end of summer. But the Foster City, Calif.-based company also suffered in its core HIV business, which dragged due to the wider impact of the virus on patient access.

Still, Gilead was able to beat analysts' expectations because of the COVID-19 antiviral, illustrating the difficulty in estimating the overall effects of the pandemic.

"We've all been a little shy about predicting how the pandemic will continue to evolve because I think we've proven to be not always right on that," CEO Daniel O'Day said on an earnings call Oct. 29.

Both Pfizer and Merck & Co. Inc. have placed faith in oral at-home pills to treat patients with COVID-19, a move that could be a turning point in the pandemic and propel revenues for those companies as the virus reaches an endemic phase. Pfizer announced Nov. 18 that the U.S. government has ordered 10 million treatment courses for its pill, called Paxlovid, for $5.29 billion, contingent on the therapy receiving emergency U.S. regulatory approval.

Outside of COVID-19, many of the core pharmaceutical franchises kept an even keel with standouts like Merck and Bristol Myers Squibb Co.

In contrast, Biogen Inc. once again demonstrated that Alzheimer's disease is a tricky target, experiencing multiple bouts of reimbursement rejections in the launch of its new drug Aduhelm. The treatment, which analysts together estimated would bring in $12 million for the quarter saw only $300,000 in third-quarter sales.

Most recently, the $56,000-per-year list priced Aduhelm received a negative trend vote Nov. 17 from Europe's Committee for Medicinal Products for Medicinal Use, a move that may have wiped out about 40% of future sales, RBC Capital Markets analyst Brian Abrahams said in a note the same day.

Girding for competition

Potential competition haunts several of the biggest pharmaceutical companies even if current earnings stay afloat. Bristol Myers' Revlimid, which represented more than a quarter of the company's third-quarter revenue, will face generic rivals as early as 2022. But a slate of blockbuster drugs and planned business development could bring the company through, executives said.

AbbVie Inc.'s bestselling immunology drug Humira is similarly lined up to face competitors in 2023 — with some litigation ongoing — but newer immunology products as well as Botox gained through the acquisition of Allergan could keep the ship afloat.