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Forest Laboratories, Inc. (FRX), an international pharmaceutical
manufacturer and marketer, today announced that reported GAAP earnings
per share equaled $0.08 in the second quarter of fiscal 2013 compared
with $0.91 in the second quarter of fiscal 2012 . Non-GAAP earnings per
share equaled $0.15 per share in the second quarter of fiscal 2013
compared with $0.95 share in the second quarter of fiscal 2012.
Net sales for the quarter decreased 38.8% to $692.0 million, from
$1,130.3 million in the year-ago period. Namenda(R) (memantine HCl), an
NMDA receptor antagonist for the treatment of moderate and severe
Alzheimer’s disease, recorded sales of $367.6 million during the
quarter, an increase of 9.1% from last year’s second quarter. Sales of
Bystolic(R) (nebivolol), a beta-blocker for the treatment of hypertension,
were $106.5 million, an increase of 29.4% over the year-ago period.
Sales of Savella(R) (milnacipran HCl), a selective serotonin
norepinephrine dual reuptake inhibitor (SNRI) for the management of
fibromyalgia, were $26.2 million, an increase of 2.7% from last year’s
second quarter.
The Company commercially launched two of its newest products, Daliresp(R)
and Viibryd(R) in August 2011. Daliresp (roflumilast), a PDE4 enzyme
inhibitor for the treatment to reduce the risk of exacerbations in
patients with chronic obstructive pulmonary disease (COPD) recorded
sales of $19.5 million in the current quarter. Viibryd (vilazodone HCl),
a selective serotonin reuptake inhibitor (SSRI) and a partial agonist at
serotonergic 5-HT1A receptors for the treatment of adults
with major depressive disorder (MDD) recorded sales of $39.9 million in
the current quarter. Teflaro(R) (ceftaroline fosamil), a broad-spectrum
bactericidal cephalosporin antibiotic for the treatment of adults with
community-acquired bacterial pneumonia and with acute bacterial skin and
skin structure infections, recorded sales of $10.0 million in the
current quarter. Teflaro was commercially launched in March 2011 and
recorded sales of $5.3 million in last year’s second quarter. Sales of
Lexapro(R) (escitalopram oxalate), an SSRI for the initial and maintenance
treatment of MDD in adults and adolescents and generalized anxiety
disorder in adults were $44.7 million compared with $596.1 million in
the year-ago period. Patent protection for Lexapro expired on March 14,
2012.
Contract revenue was $54.3 million in the current quarter compared to
$33.6 million last year. Benicar(R) (olmesartan medoxomil) co-promotion
income totaled $30.2 million, a decrease of $1.3 million compared to
$31.5 million in last year’s first quarter. Contract revenue also
included $22.7 million of income from a distribution agreement with
Mylan, Inc. (Mylan) pursuant to which Mylan is authorized to sell a
generic version of Lexapro and the Company retains a portion of the
profits from those sales. The six-month Hatch-Waxman exclusivity period
related to generic Lexapro expired on September 13, 2012.
Cost of sales as a percentage of sales was 21.6% compared with 23.4% in
last year’s second quarter. Selling, general and administrative expense
for the current quarter was $374.9 million as compared to $388.7 million
in the year-ago quarter. The current level of spending reflects the
resources and activities we believe are required to support our
currently marketed products, particularly our newest products: Teflaro,
Daliresp and Viibryd and the pre-launch commercial costs associated with
Tudorza(TM) (aclidinium bromide) for the long-term maintenance
treatment of COPD, and Linzess(TM) (linaclotide) for the treatment
of irritable bowel syndrome with constipation (IBS-C) and chronic
idiopathic constipation (CIC).
Research and development spending for the current quarter was $202.8
million compared with $197.3 million in last year’s second quarter. The
current quarter had no product development milestone charges compared to
$30.0 million of milestone payments in the prior year’s quarter.
Income tax expense for the quarter was $12.4 million, reflecting a
quarterly effective tax rate of 37.4%. The higher effective tax rate is
due principally to the repeal of the R&D tax credit and the mix of
earnings in different jurisdictions. The Company now expects the annual
effective tax rate to be approximately 24% for fiscal 2013. Reported net
income for the quarter ended September 30, 2012 was $20.8 million or
$0.08 per share compared to $249.8 million or $0.91 per share reported
for last year’s second quarter.
Diluted shares outstanding for the three months ended September 30, 2012
were approximately 267,169,000, a reduction of approximately 6.6 million
shares compared to the year-ago period primarily due to the Company’s
accelerated share repurchase programs.
Six Month Results
Revenues for the six months ended September 30, 2012 decreased 31.9% to
$1,581.8 million from $2,321.0 million in the prior year.
Net income for the six months ended September 30, 2012 decreased 85.0%
to $76.1 million from $508.0 million reported in the six months of the
prior year. Reported diluted GAAP earnings per share decreased 84.5% to
$0.28 per share in the current year’s six months as compared to diluted
earnings per share of $1.81 per share in last year’s six months.
Fiscal 2013 Guidance
The Company now expects that GAAP earnings per share for the fiscal year
ending March 31, 2013 will be in the range of $0.15 to $0.30 including
acquisition related amortization. Non-GAAP earnings per share will be in
the range of $0.45 to $0.60.
Total net revenue (includes product sales as well as the earnings
contribution from Benicar, authorized generic sales of Lexapro, interest
income and other income) is now expected to be $3.2 billion compared
with previous guidance of $3.4 billion as a result of the following:
--
As previously disclosed in June 2012, sales of Lexapro are now
expected to be approximately $215 million compared to the previous
estimate of $250 million and royalty income earned on sales of the
Company’s authorized generic version of Lexapro is now expected to be
$60 million compared with previous guidance of $115 million. Shipments
of Levothroid have not resumed due to manufacturing issues affecting
our third party licensor and supplier. Annual sales of Levothroid are
approximately $17 million.
--
Sales of Namenda are now expected to end the year 11% higher than last
year compared with previous guidance of a 17% increase. New
initiatives to improve dementia care in nursing homes, while primarily
directed toward reducing antipsychotic use, appear to have also
reduced demand for Alzheimer’s medications. The impact to Namenda is a
projected reduction in sales of approximately $85 million.
--
Sales of Linzess are now expected to be $25 million compared with
previous guidance of $60 million due to a delay in launch resulting
from the extended three month FDA review of our NDA.
--
Teflaro sales are now expected to be $45 million compared with
previous guidance of $65 million.
Finally, the Company has accelerated the enrollment in certain Phase III
and life-cycle development programs. As a result, research and
development expense, including milestones, is now expected to be $900
million as compared to previous guidance of $850 million.
Howard Solomon, Chairman and Chief Executive Officer of Forest, said:
"With Lexapro now completely genericized we have a bright future with
our next generation of products combined with growth of Namenda. We are
pleased with the continued successful progress of our most recent new
product launches for Teflaro, Daliresp and Viibryd. Collectively, our
next generation products, Bystolic, Savella, Teflaro, Daliresp and
Viibryd had sales of $202 million in the quarter, representing 69%
growth in comparison to the comparable prior year quarter. We are also
pleased with the continued positive progress of our late stage new
product development pipeline. During the quarter, we received FDA
approval for two New Drug Applications (NDAs) (aclidinium and
linaclotide), and as planned, submitted an NDA for another product
(levomilnacipran).
During the quarter we and our partner Almirall were pleased to announce
the approval of Tudorza (aclidinium). As the first long-acting inhaled
anticholinergic agent approved in 8 years for COPD, Tudorza will be an
important treatment option available for the nearly 13 million patients
in the U.S. that have been diagnosed with this serious disease. Tudorza
will be launched and available to patients later this quarter. Also
during the quarter, we and our partner Ironwood Pharmaceuticals were
delighted to announce the approval of Linzess (linaclotide). Irritable
bowel syndrome with constipation and chronic idiopathic constipation
affect as many as 13 million and 35 million adult Americans,
respectively. There are few treatment options for these conditions and
Linzess has the potential to improve the lives of patients suffering
from the symptoms associated with these two serious conditions. Linzess
will also be launched and available to patients later this quarter.
We and our partner Pierre Fabre Laboratories were pleased to recently
announce that we have submitted an NDA to the FDA for levomilnacipran, a
serotonin norepinephrine reuptake inhibitor (SNRI) for the treatment of
major depressive disorder. MDD is a serious medical condition requiring
treatment that affects more than 15 million adults in the U.S. We are
also on track to file the NDA for cariprazine for the treatment of
schizophrenia and acute mania associated with bipolar 1 disorder, later
this quarter. Assuming their respective regulatory approvals in calendar
2013, we expect to launch levomilnacipran and cariprazine during fiscal
2014.
During the quarter we also completed two business development
transactions with our partner Almirall. In Canada, where we have
established a wholly owned subsidiary, we entered into an agreement to
co-promote the aclidinium franchise with Almirall. In another agreement,
we have granted Almirall exclusive commercialization rights for
linaclotide in Mexico.
We have achieved remarkable progress over the past few years. Today we
have one of the strongest and most diverse product portfolios and
pipelines in the industry, in large part due to our strong core
competency in our key therapeutic focus areas and our status as a
partner of choice, as evidenced by our numerous repeat collaborations.
Commercially we have successfully launched five new products in less
than five years - Bystolic, Savella, Teflaro, Daliresp and Viibryd. With
the upcoming launches of Tudorza and Linzess we will have seven young
and growing products in our commercial portfolio, an enviable
achievement for our Company. With these seven launches in hand, plus the
completed NDA filing for levomilnacipran and the upcoming filing for
cariprazine, we are well on track to secure the sales and earnings to
build long-term growth well into the future."
Use of Non-GAAP Financial Information
Non-GAAP earnings per share information adjusted to exclude certain
costs, expenses and other specified items as summarized in the table
below. This information is intended to enhance an investor’s overall
understanding of the Company’s past financial performance and prospects
for the future. This information is not intended to be considered in
isolation or as a substitute for earnings per share prepared in
accordance with GAAP.
FOREST LABORATORIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
THREE MONTHS SIX MONTHS
ENDED ENDED
SEPTEMBER 30 SEPTEMBER 30
2012 2011 2012 2011
----- ----- ----- -----
Reported diluted earnings per share: $0.08 $0.91 $0.28 $1.81
Specified items, per share, net of tax:
Amortization arising from business combinations
and acquisitions of product rights
Recorded in Cost of sales 0.03 0.02 0.07 0.03
Recorded in Selling, general and administrative 0.04 0.02 0.08 0.03
Licensing payment to Blue Ash Therapeutics, LLC - - - 0.14
for azimilide recorded in R&D
Rounding - - - 0.01
----- ----- ----- -----
Adjusted Non-GAAP diluted earnings per
$0.15 $0.95 $0.43 $2.02
share:
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Forest will host a conference call at 10:00 AM EDT today to discuss the
results. The conference call will be webcast live on the Company’s
website at www.frx.com
and also on the website www.streetevents.com.
Please log on to either website at least fifteen minutes prior to the
conference call as it may be necessary to download software to access
the call. A replay of the conference call will be available until
November 16, 2012 at both websites and also by dialing (855) 859-2056
(US and Canada) or +1 404 537-3406 (international), Conference ID:
33378270.
About Forest Laboratories and Its Products
Forest Laboratories’ (FRX) longstanding global partnerships and
track record developing and marketing pharmaceutical products in the
United States have yielded its well-established central nervous system
and cardiovascular franchises and innovations in anti-infective,
respiratory, gastrointestinal, and pain management medicine. The
Company’s pipeline, the most robust in its history, includes product
candidates in all stages of development across a wide range of
therapeutic areas. The Company is headquartered in New York, NY. To
learn more, visit www.FRX.com.
Except for the historical information contained herein, this release
contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements involve a
number of risks and uncertainties, including the difficulty of
predicting FDA approvals, the acceptance and demand for new
pharmaceutical products, the impact of competitive products and pricing,
the timely development and launch of new products, and the risk factors
listed from time to time in Forest Laboratories’ Annual Report on Form
10-K, Quarterly Reports on Form 10-Q and any subsequent SEC filings.
Forest assumes no obligation to update forward-looking statements
contained in this release to reflect new information or future events or
developments. Forest assumes no obligation to update forward-looking
statements contained in this rerelease to reflect new information or
future events or developments.
FOREST LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
THREE MONTHS SIX MONTHS
ENDED ENDED
SEPTEMBER 30 SEPTEMBER 30
(In thousands, except per share amounts)
2012 2011 2012 2011
------- --------- --------- ---------
Revenues:
Net sales $ 692,017 $ 1,130,250 $ 1,443,783 $ 2,234,385
Contract revenue 54,277 33,579 120,112 74,218
Other income 14,343 5,250 17,869 12,407
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Net revenues 760,637 1,169,079 1,581,764 2,321,010
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Costs and expenses:
Cost of goods sold 149,723 263,984 317,946 517,781
Selling, general and administrative 374,889 388,657 757,198 746,734
Research and development 202,839 197,331 398,005 391,774
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727,451 849,972 1,473,149 1,656,289
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Income before income tax expense 33,186 319,107 108,615 664,721
Income tax expense 12,409 69,294 32,553 156,771
------- --------- --------- ---------
Net income $ 20,777 $ 249,813 $ 76,062 $ 507,950
== ======= == ========= == ========= == =========
Net income per share:
Basic $0.08 $0.91 $0.28 $1.82
Diluted $0.08 $0.91 $0.28 $1.81
Weighted average number of
shares outstanding:
Basic 266,503 273,196 267,447 279,449
Diluted 267,169 273,753 268,092 280,015
SOURCE: Forest Laboratories, Inc.
Forest Laboratories, Inc.
Frank J. Murdolo, 1-212-224-6714
Vice President - Investor Relations
media.relations@frx.com
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