Market briefing---Matt (slow)
NYSE---Deb (fast)
Interview: Serono SA-ADR---Bertarelli, Ernesto---Chief Executive Officer
> welcome to “world financial report.” i’m matt nesto. the dow and s&p each up a little bit. the dow up .1% higher. the s&p about .3% higher. and the nasdaq finishing down for the fifth straight session, about .1%. the worst losing streak since august. the dow and nyse both above average at 1.9 and 1.5 billion. the russell 2000 index was down ever so slightly and there is the total market index up about .3%. treasuries fell as the federal government announced plans to borrow more money than previously expected to cover a larger than expected deficit. 10, five, three and two all reacting rather than the 10 and five acting. three and two little changed on the day. a roller coaster ride on wall street today. deborah kostroun who loves the roller coasters is down at the nyse with the details the. deb?
>> well, obviously, matt, we did see quite a bit of movement in stocks today and kind of some seesaw action going on, especially with the i.s.m. report that came out. we also saw drug stocks impeaching quite a while. in addition to that, phelps dodge, free port mcmoran dropped today. telecom move up, however, we did see semiconductors lower. and it was pfizer that jumped on word that it is going to sell its lung disease drug in germany. that drug also approved by the f.d.a. and chiron beginning clinical trials for a drug that can detect the h.i.v. virus. and phone companies jumped. s.b.c. hiked their d.s.l. prices by $3 over the weekend, ease ago lot of concerns about price cutting and also falling earnings in the industry. we did see those stocks performing well. actually, the best performers in the s&p 500. investors also anticipating another week of very strong earnings. companies that are reporting earnings, you can kind of see aflac, they report also allstate and chubbs. humana actually a little bit lower. but we did see many of the stocks reporting earnings a little bit higher and cyclicals mostly higher in today’s session. however, we did see some really kind of getting mixed as we got closer towards the end of the trading day and that last hour when things really changed. back to you in the studio, matt
>> let’s run the numbers here for you. the fourth quarter profit there at aflac fell 1% because of losses of parmalat bonds. 14 cents a share profit, excluding investment losses was 50 cents a share, in line with wall street estimates. revenue in the fourth quarter at $2.85 billion. slightly less than the $3 moy 05 expected. the company is trying to reverse a slowdown in u.s. sales and maintain profit growth in japan, its largest market. afterhours trade seeing the stock rise up to $39. the close on wall street, regular trade at $37.81. fourth quarter profit at serono jumped 37%, boosted by demand for its top seller, the multiple sclerosis drug rebif. net income rose to $112 million, $7.04 a share. sales up 29%. both those figures better than expectations. serono is benefiting as more doctors in the u.s. prescribe rebif and on track to increase its share of the $2 billion u.s. m.s. market to 30% by 2006. after hours trade, little changed there. in fact, no change whatsoever. we’re joined now in boston by the c.e.o. of serono, no strange tore that town, there once a month. ernesto bertarelli. talk to us about these results here. rebif, your best-selling product. particularly the growth in the u.s. i believe the rebif numbers were up 60% in the fourth quarter in the u.s.?
>> absolutely. thank you very much. very good result in the fourth quarter. very good year for our company with a milestone breaking the $2 billion revenue line, top line. really, really happy with the way things are going.
>> what about that market share? as i said, the u.s. sales up 60% to $55 million of rebif. how is that market share target coming along? are you ahead of schedule?
>> well, we finished the year with about 14% market share. and we have about 17% market share for new prescriptions. so, we’re growing our market share. we’re happy with the performance of the products. it’s a tough market. highly competitive. but we feel we’re on track to achieve market leadership by 2006.
>> to be precise here, you’re about halfway for where you want to be for market share for the rebif, the multiple sclerosis drug?
>> that is correct.
>> you expect to be there by 2006 still, is that right?
>> yeah. 2006. considering that it is a little bit less than two years, we’ve launched the product in the u.s., last year the growth of rebif was 165%. as you said in the last quarter, 60%. we feel we’re on track. we’re happy with the performance of the product and we’re continuing to support the product with resources and new clinicals coming up.
>> as far as resources, any plans as far as acquisitions are concerned? are you still interested in buying new drug therapies?
>> of course. it’s important for us to complement our internal growth with external acquisition of products or possibly companies. we raised some funds in 2003. so, we’re well equipped to address opportunities that will arise in the biotech space.
>> is there any possibility of moving your research and development headquarter from switzerland to the u.s.?
>> we already have our headquarters here in boston and we run half of our research out of boston as well. so, our company is really well established in the u.s. i happen to live in switzerland. but otherwise, many of our executives are here in boston and we do manage our company as we do today from the u.s.a. as well.
>> in a report out from merrill lynch earlier in the week, they raised your company to buy from neutral. but they said even though they obviously liked your stock , they have said a 50/50 chance of european approval for your psoriasis drug rapty va by the third quarter. do you concur with that assessment?
>> it’s always a challenge to project a drug. we’re quite optimistic because the f.d.a. has already reviewed the same file we’re submitting in europe and has approved the product with a unanimous vote from the advisory committee. so, we feel the file is strong. but, again, we are dependent on a decision. we’re working really hard and making sure that this decision is positive sometime mid this year and then we’ll go on and roll out the product across europe towards the end of this year, hoping to have substantial sales in 2005 for this product in the rest of the world outside u.s. and japan.
>> what would substantial be?
>> well, we’re targeting between 200 and 400 million peak sales. the more the better, of course.
>> and is that in―you say “peak sales,” how long will it take you to get there typically with a new drug?
>> well, typically between two to four years. three years on average to reach peak sales. >> ok. the other drug―and this is from the meryl note. again, this is from a company that has just raised their opinion to buy. they say biogen idec may file an anti again earlier than expected in 2004, which would go head to head with your best-selling drug rebif. any tactics to get around that? we’re under a minute.
>> actually, it is always challenging to project our product and it’s difficult for me to come because i haven’t seen the clinical result of the drug. that will be, of course, very important for the success.
>> ok. well, i think we should leave it there. we’re running tight on time t. we certainly appreciate you joining us here today and we will have you back again.
>> thank you very much. good day.
>> of course, our thanks to the c.e.o. of serono there. well, still ahead, the judge has given the go-ahead for the government’s star witness to testify in the martha stewart trial and in earnings news, two thirds of the s&p 500 have now reported earnings and our next guest will tell us what he expects with the companies that are left to report. that is all coming up next.
