ALZA FIRST QUARTER ROYALTIES GROW OVER 35% TO NEARLY $9 MIL. DUE LARGELY TO PROCARDIA XL; GENENTECH’s FIRST QUARTER ACTIVASE SALES APPROACH $55 MIL.

Alza's first quarter royalties and fees grew about 35% to$8.6 mil. "with a substantial portion of this increase resulting from royalties received from Pfizer based upon sales of Procardia XL in the U.S.," the drug delivery R&D firm reported. Overall revenues for the quarter were up slightly to $24 mil., from $23.4 mil. in 1989, reflecting, in part, a 29% decrease in net sales of $4.4 mil. The decline in net sales, Alza said, was due largely to "timing differences for shipments to pharmaceutical company clients." First quarter net income increased 25% to $5.5 mil. Alza also reported that its royalty agreement for Procardia XL calls for Pfizer to pay the company 4% of sales until the end of 1991 and "approximately 7%" after 1991. "Alza's product development agreements typically provide for royalties to Alza on net sales ranging from 5% to 12%, with earlier signed agreements, such as the Pfizer Procardia XL agreement, at the lower end of this range and more recent agreements at the higher end," the company explained. For Procardia XL sales in the U.S., Alza said it had two different choices for royalties: 5% of product sales for "approximately 4 years" and 6% thereafter; or 4% until 1991 and 7% afterward. Alza said that the reduced rate for the first few years reflects "certain advance payments and credits available to Pfizer from various Alza/Pfizer agreements." Alza CEO Martin Gerstel explained that Alza chose the arrangement providing the higher long-term royalty rate "in view of our expectations of growing and substantial sales volume long term" for Procardia XL. The one-a-day version of the calcium channel blocker nifedipine generated approximately $40 mil. in sales from the product's October 1989 launch through December of last year. Gerstel also announced that Alza is in "advanced negotiations to manufacture certain products based on Alza technology for various client companies." He noted that "most of these products" will be manufactured at the company's new manufacturing facility in Vacaville, Calif. Depending on Alza's reaching final agreements with its potential clients, Gerstel said it "is anticipated" that the plant will be activated during the current quarter ending June 30. The company cautioned that chargeable costs, including depreciation, may exceed third-party manufacturing revenues after the plant start-up, thereby reducing pretax income "by up to $1 mil. to $1.5 mil. per quarter during the initial quarters of activation." Pfizer reported that Procardia XL and the antifungal Diflucan contributed "more than $90 mil." in sales during the quarter. Pfizer health care sales rose 5% in the first quarter. The gain was generated by a 7% increase in hospital product revenues and a 5% rise in pharmaceutical sales. "As was the case in the first quarter last year," Pfizer pointed out, "pharmaceuticals experienced unusually heavy ordering patterns in several markets." Corporate sales increased 3.2% to $1.5 bil. and net income was ahead 4.6% at $251.9 mil. During the quarter, the company narrowed its focus with the sale of two operations. Divested because they "no longer fit" Pfizer's long-term strategy, Pratt noted, was the DeKalb-Pfizer Genetics seeds business and the Pigments unit. Genentech reported a 32% first quarter revenues gain to$120.2 mil. and an 80% jump in net income to $13.3 mil. The increased revenues were partly due to a pretax gain of approximately $11.9 mil. from the sale in March of the company's one-quarter equity stake in Genencor. That gain, however, was essentially balanced out by $11.7 mil. in merger-related expenses associated with the biotech firm's planned merger with Hoffmann-La Roche. Genentech predicted that merger-related expenses will total approximately $150 mil. by the time the merger is complete. Combined product sales of Genentech's TPA product Activase and recombinant human growth hormone Protropin were up 23% to $89.9 mil. in the first quarter and accounted for about 75% of the company's revenues. Activase sales in the first quarter grew 14% compared to the same period last year to $54.9 mil. However, Activase sales were down slightly from the fourth quarter when the product generated sales of $56.7 mil. Protropin sales increased 40% to $35 mil. Sales of Warner-Lambert's ethical pharmaceutical products increased 10% to $359 mil. in the first quarter, led by revenues from its lipid-lowering agent Lopid (gemfibrozil) and the anticonvulsant Dilantin (phenytoin), the company reported. The Dilantin advances are apparently another example of a rejuvenated old brand product in the wake of the generics investigation Consolidated W-L sales increased 7.9% in the first three months of 1990 to $1.1 bil. Earnings were ahead by double-digits, up 19% to $120.3 mil. R&D expenses for the quarter were $81.3 mil., compared to $68.1 mil. in the comparable period a year ago. Lopid sales climbed 49% last year to $285 mil. and the drug controlled a 31% share of the market. Warner-Lambert told securities analysts in January that the sales and market share figures were in line with 1989 projections. Dilantin sales increased 5% to $132 mil. in 1989. Warner-Lambert did not offer any specifics about Dilantin's performance in the first quarter just ended. FDA is looking at phenytoin in its review of narrow-therapeutic range drugs and that fact, combined with the ongoing generics investigation, may be having a positive effect on Dilantin prescriptions. OTC drug sales in the quarter rose 4% to $355 mil., led by Halls cough drops and Listerine Antiseptic Mouthwash. For all of last year, Halls sales were $271 mil. while Listerine revenues totaled $248 mil. worldwide. Merck's first quarter revenues jumped 11.9% to $1.8 bil. with earnings of $403.8 mil., an increase of 18.6% from the year-ago quarter. Excluding fluctuations in the exchange rate, which had a negative 1% impact, sales for the quarter were up 13%, Merck said. New products led the sales increase and both Merck's domestic and international operations reported unit volume gains, the company noted. Results for the quarter reflected "strong sales gains" by the lipid-lowering drug Mevacor (lovastatin), Merck said. Mevacor now controls 57% share of the U.S. lipid-lowering market and has been prescribed for more than 1.4 mil. patients. Mevacor is one of 17 Merck drugs with sales over $100 mil., according to the company, which does not break out the contributions of individual drugs to the total picture. However, at pharmacy acquisition cost (lower than sales figures reported by companies), Mevacor sales were $404 mil. in 1989, according to Pharmaceutical Data Services information ("The Pink Sheet" March 19, p. 16). Marion Merrell Dow reported first quarter net earnings of$111 mil. on corporate sales totaling $578 mil. While accounting standards require the newly merged company to compare first quarter results with Marion's results for the same period last year, the company provided a comparison with what first quarter results would have been in 1989 had the companies been merged at that time. "From that perspective, Marion Merrell Dow would have reported an 11% gain in sales for the quarter ended March 31, 1990 and a 21% increase in earnings," Marion Merrell Dow noted. Seldane sales grew 31% in the quarter due largely "to the strength of Seldane sales in Europe; a positive response by the U.S. market to the co-promotion of Seldane by both the Marion and Merrell Dow sales divisions, which doubled -- to about 1,100 -- the number of sales reps calling on physicians in support of the product; and shipments to Japan for the planned April launch of the product in that country," the company said. In addition, Nicorette sales were up 86%; however, Carafate sales held flat in the wake of "reduced promotional support for the product since the introduction of Cardizem SR. The sustained-release calcium channel blocker generated over twice the sales it did in the first quarter of its introduction last year.