Forest Laboratories, Inc. (NYSE: FRX), an international
pharmaceutical manufacturer and marketer, today announced that
diluted earnings per share equaled $0.69 in the third quarter of
fiscal 2010. Reported earnings per share included two one-time
charges. The first was for a new product license fee of $75.0
million, or $0.25 per share net of tax, related to the previously
announced product licensing agreement with Almirall, S.A.
(Almirall) for LAS100977, an inhaled once-daily administered
long-acting beta2 agonist for the treatment of both asthma and
chronic obstructive pulmonary disease (COPD). The second was for
certain restructuring costs related to our Long Island packaging
facility of $14.0 million, or $0.03 per share net of tax. Reported
diluted earnings per share in the third quarter of fiscal 2009 were
$0.62 and included new product licensing fees of $150.0 million, or
$0.41 per share net of tax, related to licensing agreements with
Phenomix Corporation (Phenomix) for dutogliptin for the treatment
of diabetes and Pierre Fabre Médicament (Pierre Fabre) for F2695
for the treatment of depression.
Net sales for the quarter increased 8.4% to $997.0 million, from
$920.0 million in the year-ago period. Sales of Lexapro®
(escitalopram oxalate), an SSRI for the initial and maintenance
treatment of major depressive disorder in adults and adolescents
and generalized anxiety disorder in adults were $582.6 million, a
decrease of 0.5% from the year-ago period. Namenda®, an NMDA
receptor antagonist for the treatment of moderate and severe
Alzheimer’s disease, recorded sales of $282.5 million during the
quarter, an increase of 17.3% from last year’s third quarter. Sales
of Bystolic® (nebivolol), a beta-blocker for the treatment of
hypertension, were $47.5 million. Bystolic was launched in January
2008, and sales in last year’s fiscal third quarter were $21.0
million. The Company’s newest product, Savella® (milnacipran HCl),
a selective serotonin norepinephrine dual reuptake inhibitor (SNRI)
for the management of fibromyalgia, which was launched in late
April 2009, recorded sales of $15.4 million. Contract revenue
increased 6.5% to $55.8 million, principally due to Benicar®
(olmesartan medoxomil) co-promotion income of $51.6 million, an
increase of 9.1% compared to last year’s third quarter. Per the
agreement with Daiichi Sankyo, active co-promotion of Benicar by
Forest ended in the first quarter of fiscal 2009 and the Company
now receives a gradually reducing residual royalty until the end of
March 2014. Interest income of $7.3 million decreased from $24.2
million reported in the year-ago period, due to lower interest
rates earned on the Company’s short duration portfolio.
Cost of sales as a percentage of sales was 24.8% compared with
22.5% in last year’s third quarter due to the one-time
restructuring charge of $14.0 million, or $0.03 per share net of
tax. During the period, the Company commenced closing its packaging
operations on Long Island resulting in a one-time charge. Excluding
the one-time charge, cost of sales as a percentage of sales would
have been 23.4% for the quarter.
Selling, general and administrative expense for the current
quarter was $307.0 million as compared to $290.0 million in the
year-ago quarter. The current level of spending reflects the
resources and activities required to support our currently marketed
products, particularly our most recently launched product Savella.
Research and development spending for the current quarter was
$233.6 million and includes the upfront license payment of $75.0
million to Almirall in connection with the licensing agreement for
LAS100977. R&D spending reported in the third quarter of the
prior fiscal year totaled $279.1 million and included $150.0
million of upfront licensing payments to Phenomix and Pierre Fabre.
Excluding such payments in both periods, R&D spending for the
current fiscal quarter increased 22.9%. The current quarter also
included product development milestone payments of $23.7 million
compared to $5.9 million of milestones in the prior year’s
quarter.
Income tax expense for the quarter was $66.2 million, reflecting
a quarterly effective tax rate of 24.0%. The higher quarterly rate
was the result of the upfront fee for the product licensing
agreement transaction during the quarter. Reported net income for
the quarter ended December 31, 2009 was $210.2 million or $0.69 per
share compared to $188.0 million or $0.62 per share reported for
last year’s third quarter.
Diluted shares outstanding at December 31, 2009 were
303,845,000, an increase of approximately 1.1 million shares
compared to the year-ago period.
Nine-month
Results
Revenues for the nine months ended December 31, 2009 increased
6.1% to $3.137 billion from $2.957 billion in the prior year.
Net income for the nine months ended December 31, 2009 decreased
2.3% to $659.8 million from net income of $675.0 million reported
in the nine months of the prior year. Reported diluted earnings per
share decreased 1.8% to $2.17 in the current year’s nine months as
compared to diluted earnings per share of $2.21 in last year’s nine
months.
Howard Solomon, Chairman and Chief Executive Officer of Forest,
said: “We are pleased with the financial performance of the Company
reported for the quarter, particularly with the growth of our
newest products, Bystolic and Savella and also with our several
pipeline developments in the quarter. During the quarter we
submitted a New Drug Application for ceftaroline, our novel
cephalosporin for the treatment of patients suffering from
complicated skin structure and skin infections (cSSSI), community
acquired bacterial pneumonia (CABP) and for patients infected with
methicillin-resistant Staphylococcus aureus (MRSA). In addition we
reported positive top-line clinical trial results for three
important products in development. We also broadened the depth of
our product development pipeline through the addition of two new
business development opportunities during the quarter.
With regard to clinical trial results we and our partner
Ironwood Pharmaceuticals reported positive top-line clinical trial
results for two Phase III studies of linaclotide in patients with
chronic constipation (CC). These two trials are part of a larger
Phase III program investigating the effects of linaclotide
treatment on patients with either CC or with irritable bowel
syndrome with constipation (IBS-C). In addition we and our partner
Gedeon Richter reported positive top-line Phase II results for
cariprazine for the treatment of acute exacerbation of
schizophrenia in a study of 732 patients. We have previously
announced positive top-line Phase II results in patients suffering
from acute mania associated with bipolar I disorder and plan to
initiate Phase III trials for both indications early this year. And
earlier this month we and our partner Almirall announced positive
top-line results from a new Phase III study of aclidinium in
patients suffering from chronic obstructive pulmonary disease
(COPD). This is the first of three new ongoing Phase III studies
investigating a higher dose and twice-daily administration of
aclidinium in COPD patients.
We announced two new business development collaborations during
the quarter. The first is a collaboration that enabled us to add to
our ongoing partnership with Almirall in the respiratory
therapeutic area by entering into an agreement to develop, market
and distribute LAS100977 in the United States. LAS100977 is
Almirall’s inhaled, once-daily administered long-acting beta2
agonist (LABA) that will be developed in combination with an
undisclosed corticosteroid for the treatment of both asthma and
chronic obstructive pulmonary disease. We were also delighted to
announce the expansion of our recently established relationship
with AstraZeneca to collaborate with them in the anti-infective
therapeutic area to help patients suffering from serious
infections. This transaction broadens our partnership beyond just
ceftaroline to now include ceftaroline/NXL104, and
ceftazidime/NXL104. The transaction is expected to close in our
fiscal fourth quarter following satisfaction of customary closing
conditions, including the expiration of the applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976.
Also in the quarter we hosted our first investor meeting to
review our late-stage product development pipeline with the global
investment community. This was a key event for our Company that
enabled our leadership team to share their perspective in an
in-depth review of our repertory of products in development. We
reviewed ten products either approved, at the FDA now, or to be
submitted to the FDA in the next few years. This group of products
should be available to replace currently marketed products whose
patents will expire over the next two to five years, and will most
assuredly be joined by other new product opportunities. As I have
said many times before we continue to believe that we are well on
our way to building a portfolio of new products that could
ultimately generate levels of sales and earnings to secure
long-term growth for our Company.”
Use of Non-GAAP Financial
Information
This press release contains 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 diluted earnings per share prepared in
accordance with GAAP.
FOREST LABORATORIES, INC. AND
SUBSIDIARIES
SUPPLEMENTAL FINANCIAL
INFORMATION
THREE MONTHS
NINE MONTHS
ENDED
ENDED
DECEMBER 31
DECEMBER 31
2009
2008
2009
2008
Reported diluted earnings per share: $ 0.69 $ 0.62 $ 2.17 $ 2.21
Specified items, per share, net of tax: Termination of Azor®
co-promotion
0.08 Licensing payments to Phenomix for dutogliptin and to Pierre
Fabre for F2695 0.41 0.41 Licensing payment to Nycomed for Daxas
0.33 Licensing payment received from AstraZeneca for ceftaroline
(0.13 ) Settlement payment to Caraco related to Lexapro 0.04
Restructuring costs 0.03 0.03 Licensing payment to Almirall for
LAS100977 0.25 0.25
Adjusted Non-GAAP
diluted
earnings per share:
$ 0.97 $ 1.03 $ 2.69 $ 2.70
Forest will host a conference call at 10:00 AM EST today to
discuss the results. The conference call will be webcast live
beginning at 10:00 AM EST 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
February 9, 2010 at both websites and also by dialing (800)
642-1687 (US or Canada) or +1 706 645-9291 (International),
Conference ID: 47773469.
About Forest Laboratories and
Its Products
Forest Laboratories (NYSE: FRX) is a U.S.-based pharmaceutical
company with a long track record of building partnerships and
developing and marketing products that make a positive difference
in people’s lives. In addition to its well-established franchises
in therapeutic areas of the central nervous and cardiovascular
systems, Forest’s current pipeline includes product candidates in
all stages of development and across a wide range of therapeutic
areas. The Company is headquartered in New York, NY. To learn more
about Forest Laboratories, 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 LABORATORIES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
THREE MONTHS
NINE MONTHS
ENDED DECEMBER 31
ENDED DECEMBER 31
(In thousands, except per share
amounts)
2009
2008
2009
2008
Revenues:
Net sales $ 997,002 $ 920,013 $ 2,907,958 $ 2,739,329 Contract
revenue 55,755 52,433 154,053 153,796 Interest income 7,302 24,235
28,913 61,658 Other income 4,621 1,274 45,841 2,522
Net revenues
1,064,680 997,955 3,136,765 2,957,305
Costs and expenses:
Cost of goods sold 247,648 206,654 685,553 608,995 Selling, general
and administrative 306,962 289,968 943,693 959,184 Research and
development 233,609 279,051 643,814 537,520 788,219 775,673
2,273,060 2,105,699
Income before income tax
expense
276,461 222,282 863,705 851,606 Income tax expense 66,229 34,307
203,913 176,625
Net income
$ 210,232 $ 187,975 $ 659,792 $ 674,981
Net income per share:
Basic $ 0.69 $ 0.62 $ 2.18 $ 2.21 Diluted $ 0.69 $ 0.62 $ 2.17 $
2.21
Weighted average number
of
shares outstanding:
Basic 303,348 302,163 303,097 304,813 Diluted 303,845 302,791
303,590 305,676
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