Poised to start boosting Velcade in front-line multiple myeloma when FDA gives its nod, Millennium Pharmaceuticals reported $14.9 million in net income for 2007 to beat - if only by a small margin - the previous year's loss.

"The earnings are not as strong as you would like them to be, even though they're breaking profitability," Derek Jellinek, analyst with Susquehanna Financial Group, told "The Pink Sheet" DAILY.

Millennium offered year-end earnings details Feb. 7 at the Merrill Lynch Global Pharmaceutical, Biotechnology & Medical Devices Conference in New York, but already had made public the top-line results, Jellinek noted.

Interest in Velcade (bortezomib), a proteasome inhibitor, remains high. "I don't think anyone refutes that [Velcade] is a good drug, but the growth trajectory is unknown, and you have a high expense structure that keeps growing," he said.

A 6 percent increase in non-GAAP selling, general and administrative costs came with the higher earnings, along with non-GAAP research and development expense, which together totaled $451 million.

Millennium needs another growth driver, Jellinek said, either through an in-license deal or buyout.

Already cleared by FDA for previously treated MM, Velcade drove Millennium's consensus-beating fourth-quarter and full-year earnings. In the U.S., sales rose 20 percent last year to $265.2 million, with royalties increasing to $166.9 million, up 24 percent, as a result of higher international sales.

The firm expects Velcade to sell 20 percent to 30 percent more in 2008, reaping $320 million to $345 million - "very achievable" guidance, Rachel McMinn, analyst with Cowen & Co., told the DAILY.

Fourth-quarter earnings-per-share of 17 cents beat consensus by 5 cents. Net income for the period rose to $41 million, compared with $8.2 million during last year's quarter.

Cambridge, Mass.-based Millennium collected a $40 million milestone payment from partner Ortho Biotech, a Johnson & Johnson subsidiary, when overseas uptake went north of $500 million. The two firms hooked up in the fall of 2006. (¹ Also see "Millennium Inks Velcade Co-Promotion Deal With J&J In U.S." - Pink Sheet, 26 October, 2006.)

Velcade could be approved for front-line MM as soon as mid-2008, earlier than Celgene's Revlimid (lenalidomide), a thalidomide derivative cleared by FDA for myelodysplastic syndromes and previously treated MM. Celgene, of Summit, N.J., is expected to file for Revlimid's front-line approval in the second half of this year. (² Also see "Celgene: Strong Quarter As Front-Line Myeloma Race Continues" - Pink Sheet, 31 January, 2008.)

Word on approval of Velcade in that setting is due June 20, as analysts continue to debate whether the injected compound's price advantage can overcome oral Revlimid, a compound related to Celgene's Thalomid , also used in MM.

After the American Society of Hematology meeting in December, 50 MEDACorp consultants polled by Leerink Swann downplayed Velcade's unfavorable dosing profile, saying it was the lack of an FDA blessing and Phase III data that limited their use of the drug.

More data have been provided since, and Leerink's Howard Liang estimated in a January research report that Velcade could sell $379 million in 2008 and $488 million in 2009, entering an "explosive" growth period that would far exceed Wall Street forecasts for those years.

Jellinek was skeptical. "The whole MM landscape is in flux," he said. "If you talk to treating physicians, they're not sure what compounds to use. They're mixing and matching."

Therapy ultimately will involve an alternating-drug approach, he predicted, adding that Velcade seems to work in pre-treatment settings. Some patients, after getting a Velcade response and then failing, are put on a different drug, then switched back to Velcade - and they respond again.

"This is a nice little franchise, and definitely has more growth in it," Jellinek said. "The trick is, what's the trajectory of that growth?"

- Randall Osborne (r.osborne@elsevier.com)

Millennium Earnings No Shocker, But How High Can Velcade Fly?

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