cdeamaze's  Instablog

Good news keeps coming and they can only get better!

With Roche reported Q309 results, it is clear that Tamiflu sales went thru the roof again! Tamifu sales jumped 9 folds to $974M during Q309 compared with a year ago. On a sequential basis, sales jumped 71% with 119% jump in stockpiling and 8% jump in seasonal use.

Of 974M sales in Q309: 712M accounted for  pandemic stockpiling  and 262M
for  seasonal use. Percentage change vs Q308 are: US(+99%), Japan(+24671%),Europe/ROW(+10384%).  In Q209 the corresponding numbers are US(+710%), Japan(+30977%),Europe/ROW(+1423%)

Last quarter(Q309) I projected royalties from Roche to be 85M based on 15% royalties. It turns out the royalties is 113.5M, which is close to 20% for the quarter.

Looking ahead, therefore, I am raising the royalties percentage to 20% and the projected Tamiflu Royalties for Gilead Science(GILD) in Q409 becomes 195M(+1120%). This compared with 113.5M for Q309, 51.9M for Q209, 33.2M for Q1 09, and 16M for Q408.
 
Impact on bottom line
This royalties translates to approximately a contribution of .15 to EPS(or 19% of average Q409  GAAP EPS .81*)
Note: In Q309 cc the official guidance for Q409 royalties is also 195M but EPS contribution of .16

*In the coming weeks, analysts will be busy revising their Q409 EPS .81 UPWARD because of
(1) 80M royalties increase (based on my analysis and company guidance) compared to Q309
(2) 150M product revenue increase(based on Q309 cc)
(3) 40M R&D expense decrease(based on Q309 cc)

Note:
ROW: Rest Of the World
GAAP: Generally Accepted Accounting Principle
EPS:Earnings Per Share
cc: conference call

Disclosure: I have call options in GILD