Forest Laboratories, Inc. (NYSE: FRX), an international
pharmaceutical manufacturer and marketer, today announced that
reported earnings per share equaled $0.90 in the first quarter of
fiscal 2012. Excluding a charge of $40.0 million, or $0.14 per
share net of tax for a new product licensing fee, non-GAAP earnings
per share for the first fiscal quarter were $1.04 per share. The
new product licensing fee is related to the previously announced
agreement with Blue Ash Therapeutics, LLC (Blue Ash) for azimilide,
a novel antiarrhythmic agent. Reported earnings per share in the
first quarter of fiscal 2011 were $0.39 after a charge of $148.4
million or $0.39 per share net of tax, related to the settlement
with the United States Department of Justice (DOJ) stemming from
investigations led by the DOJ and the U.S. Attorney’s Office for
the District of Massachusetts, and a charge of $50.0 million or
$0.17 per share net of tax for a new product licensing fee, related
to our agreement with TransTech Pharma, Inc. (TransTech) for a
novel class of glucose-lowering agents for the treatment of
diabetes.
Net sales for the quarter increased 8.2% to $1.1 billion, from
$1.0 billion in the year-ago period. Sales of Lexapro®
(escitalopram oxalate), a selective serotonin reuptake inhibitor
(SSRI) for the initial and maintenance treatment of major
depressive disorder (MDD) in adults and adolescents and generalized
anxiety disorder in adults were $585.7 million compared with $565.2
million in the year-ago period. Namenda® (memantine HCl), an NMDA
receptor antagonist for the treatment of moderate and severe
Alzheimer’s disease, recorded sales of $319.9 million during the
quarter, an increase of 3.9% from last year’s first quarter. Sales
of Bystolic® (nebivolol), a beta-blocker for the treatment of
hypertension, were $78.0 million, an increase of 31.0% over the
year-ago period. Sales of Savella® (milnacipran HCl), a selective
serotonin norepinephrine dual reuptake inhibitor (SNRI) for the
management of fibromyalgia, recorded sales of $25.8 million, an
increase of 25.6% from last year’s first quarter. Teflaro®
(ceftaroline fosamil), a broad-spectrum bactericidal cephalosporin
for the treatment of adults with community-acquired bacterial
pneumonia (CABP) and with acute bacterial skin and skin structure
infection (ABSSSI), recorded sales of $2.7 million. Teflaro was
launched in March 2011. The Company’s newest marketed products,
Daliresp™ and Viibryd™, became available to patients during the
quarter and will be formally launched next month. Sales of Daliresp
(roflumilast), a PDE4 enzyme inhibitor for the treatment of chronic
obstructive pulmonary disease (COPD) recorded sales of $8.5 million
and Viibryd (vilazodone HCl), an SSRI and a partial agonist at
serotonergic 5-HT1A receptors for the treatment of MDD recorded
sales of $7.3 million, primarily representing initial wholesaler
stocking.
Contract revenue was $40.6 million in the current quarter
compared to $39.8 million last year. Benicar® (olmesartan
medoxomil) co-promotion income decreased to $36.7 million, compared
to $37.1 million in last year’s first quarter. Per the agreement
with Daiichi Sankyo, Forest’s active co-promotion of Benicar ended
in the first quarter of fiscal 2009 and the Company now receives a
gradually reducing residual royalty until the end of March
2014.
Cost of sales as a percentage of sales was 23.0% compared with
22.7% in last year’s first quarter. Selling, general and
administrative expense for the current quarter was $358.1 million
as compared to $448.4 million in the year-ago quarter which
included a $148.4 million charge related to the settlement with the
DOJ. The current level of spending reflects the resources and
activities required to support our currently marketed products,
particularly our newest products, Bystolic, Savella and Teflaro, as
well as launch activities related to Daliresp and Viibryd.
Research and development spending for the current quarter was
$194.4 million compared with $219.7 million in last year’s first
quarter. Research and development spending in the current quarter
includes a $40 million licensing fee payment to Blue Ash for
azimilide while the prior year’s quarter included a licensing fee
payment of $50.0 million to TransTech. Excluding such payments,
R&D spending reported in the current fiscal quarter decreased
9.0%. The current quarter did not include product development
milestone payments compared to $20.1 million of milestones in the
prior year’s quarter.
Income tax expense for the quarter was $87.5 million, reflecting
a quarterly effective tax rate of 25.3%. Reported net income for
the quarter ended June 30, 2011 was $258.1 million or $0.90 per
share compared to $117.5 million or $0.39 per share reported for
last year’s first quarter.
On June 3rd the Company announced that under the 2010 Share
Repurchase Program announced in May 2010, it entered into an
agreement with Morgan Stanley & Co. (MSCO) to repurchase $500
million of its common shares utilizing an accelerated share
repurchase (ASR) transaction. Pursuant to the ASR transaction, MSCO
delivered to the Company 11.8 million shares in the quarter. Actual
shares outstanding at June 30, 2011 were approximately 274,528,000,
a reduction of approximately 11.0 million shares compared to the
year-ago period.
Howard Solomon, Chairman and Chief Executive Officer of Forest,
said: “We are very pleased with the financial and operational
performance of the Company during the quarter. Bystolic and Savella
continued with their strong performance, and the recent launch of
Teflaro has been very satisfactory. We initiated the scientific
launches to health care professionals for our newest products,
Daliresp and Viibryd and both products became available to patients
in June. Daliresp and Viibryd will be formally launched to the
medical community next month at the same national sales meeting of
all of our salesforces. Upon the official launches of Daliresp and
Viibryd, we will have launched a total of five products in just
three years with three of those products launched in this current
calendar year. We also still have Namenda XR, a 28 mg once-daily
extended-release formulation of memantine for the treatment of
moderate and severe Alzheimer’s disease, which has been approved,
but not yet launched.
Also during the quarter, we and our partner Almirall were
pleased to announce that as planned, a New Drug Application (NDA)
was filed with the U.S. Food and Drug Administration (FDA) for
aclidinium, for the treatment of COPD. Later this quarter we and
our partner Ironwood Pharmaceuticals, Inc. plan to file an NDA for
linaclotide for the treatment of chronic constipation (CC) and
irritable bowel syndrome with constipation (IBS-C). That would
bring the total of new products we will be marketing by next year,
assuming approval of this year’s submissions, to eight products,
including Namenda XR. All these products, excluding Namenda XR,
have patent protection until 2020 and beyond. And yesterday, we and
our partner Pierre Fabre, announced very positive preliminary
top-line results from a Phase III study of levomilnacipran for the
treatment of adults with major depressive disorder. A statistically
significant improvement was achieved for levomilnacipran treated
patients for all dose groups compared to placebo, a significant
milestone in the ongoing development program for
levomilnacipran.
Obviously, all this didn’t just suddenly happen; it is truly the
culmination of a strategy that was put into place well over six
years ago. Except for Viibryd, which we purchased in April of this
year, these launches and filings represent years of searching and
selecting and developing and preparing FDA submissions and
presenting at Advisory Committee meetings and obtaining regulatory
approval for marketing and for labeling and promotional materials.
Having completed all the clinical and preclinical work necessary to
file an NDA and to obtain approval after the FDA’s review, which is
always a lengthy and detailed process often involving various FDA
groups with differing expertise, is an extraordinary
accomplishment. To achieve it with seven products, including
aclidinium and linaclotide in four years would be a still more
impressive achievement.
It will take time - a few years certainly - for the sales of our
numerous new products to increase in volume and the ones that are
yet to be filed with the FDA, or are in development, in
negotiation, or which we will obtain in the future, altogether to
surpass the sales of Lexapro which loses its patent protection in
2012, and Namenda which loses its patent protection in 2015.
However we continue to believe that we are well on our way to
building and launching a portfolio of new products that could
ultimately generate levels of sales and earnings to secure
long-term growth for our Company. Forest has achieved remarkable
progress over the past several years - including one of the deepest
new product portfolios in the industry. This is a very exciting and
successful time for our Company and I am confident that our
corporate strategy is sound and we are in a great position to
succeed 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 ENDED JUNE 30 2011
2010 Reported earnings per
share: $ 0.90 $ 0.39 Specified items, per share, net of tax: DOJ
investigations 0.39 Licensing payment to TransTech for
glucose-lowering agents 0.17 Licensing payment to Blue Ash for
azimilide
0.14 Adjusted Non-GAAP
earnings per share:
$ 1.04 $
0.95
Forest will host a conference call at 10:00 AM EDT today to
discuss the results. The conference call will be webcast live
beginning at 10:00 AM EDT 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
August 2, 2011 at both websites and also by dialing (800) 642-1687
(US or Canada) or +1 706 645-9291 (International), Conference ID:
80419236
About Forest Laboratories and Its
Products
Forest Laboratories’ (NYSE: 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 and respiratory
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 LABORATORIES, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) THREE MONTHS (In thousands,
except per share amounts) ENDED JUNE 30
2011
2010 Revenues: Net sales $ 1,104,135 $
1,020,126 Contract revenue 40,639 39,804 Interest income 5,578
7,013 Other income
1,579 Net
revenues 1,151,931
1,066,943 Costs and expenses: Cost of
goods sold 253,797 231,704 Selling, general and administrative
358,077 448,369 Research and development
194,443 219,657
806,317 899,730 Income
before income tax expense 345,614 167,213 Income tax expense
87,477 49,736 Net
income $ 258,137 $
117,477 Net income per share: Basic
$ 0.90 $ 0.39
Diluted
$ 0.90 $
0.39 Weighted average number of shares
outstanding: Basic
285,801
300,950 Diluted
286,375
301,026
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