Forest Laboratories, Inc. (NYSE: FRX), an international
pharmaceutical manufacturer and marketer, today announced that
reported earnings per share equaled $0.91 in the second quarter of
fiscal 2012. Reported earnings per share in the second quarter of
fiscal 2011 were $1.00.
Net sales for the quarter increased 9.0% to $1,130.3 million,
from $1,037.3 million in the year-ago period. Sales of Bystolic®
(nebivolol), a beta-blocker for the treatment of hypertension, were
$82.3 million, an increase of 29.2% 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 $25.5 million, an increase of 19.1% from last
year’s second 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 $5.3 million. Teflaro was launched in March 2011.
The Company’s newest products, Daliresp® and Viibryd® were formally
launched in August. Following initial trade stocking during the
quarter ended June 30, 2011, sales of 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 $1.2 million and Viibryd
(vilazodone HCl), an SSRI and a partial agonist at serotonergic
5-HT1A receptors for the treatment of MDD recorded sales of $5.3
million. 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 $596.1
million compared with $569.3 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 $336.8 million during the quarter, an increase of 8.6%
from last year’s second quarter.
Contract revenue was $33.6 million in the current quarter
compared to $42.4 million last year. Benicar® (olmesartan
medoxomil) co-promotion income decreased to $31.5 million, compared
to $39.9 million in last year’s second 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 23.4% compared with
23.7% in last year’s second quarter. Selling, general and
administrative expense for the current quarter was $388.7 million
as compared to $316.4 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 newest
products, Teflaro, Daliresp and Viibryd.
Research and development spending for the current quarter was
$197.3 million compared with $154.5 million in last year’s second
quarter. The current quarter includes product development milestone
charges of $30.0 million compared to $3.0 million of milestones in
the prior year’s quarter.
Income tax expense for the quarter was $69.3 million, reflecting
a quarterly effective tax rate of 21.7%. Reported net income for
the quarter ended September 30, 2011 was $249.8 million or $0.91
per share compared to $286.1 million or $1.00 per share reported
for last year’s second quarter.
On August 15th the Company announced that under the 2010 Share
Repurchase Program approved in May 2010, it entered into an
agreement with Morgan Stanley & Co. (MSCO) to repurchase $350
million of its common shares utilizing an accelerated share
repurchase (ASR) transaction. Pursuant to the ASR transaction, MSCO
delivered to the Company 9.7 million shares in the quarter. This
current ASR transaction is in addition to the ASR transaction
announced on June 3, 2011 to repurchase $500 million of its common
shares under the same 2010 Share Repurchase Program. Diluted shares
outstanding at September 30, 2011 were approximately 273,753,000 a
reduction of approximately 13.7 million shares compared to the
year-ago period due mainly to the Company’s accelerated share
repurchase programs.
Six Month Results
Revenues for the six months ended September 30, 2011 increased
7.7% to $2,321.0 million from $2,155.1 million in the prior
year.
Net income for the six months ended September 30, 2011 increased
25.9% to $508.0 million from $403.6 million reported in the six
months of the prior year. Reported diluted earnings per share
increased 32.1% to $1.81 per share in the current year’s six months
as compared to diluted earnings per share of $1.37 per share in
last year’s six months.
Fiscal 2012 Guidance
The Company still expects that diluted earnings per share for
the fiscal year ending March 31, 2012 will be in the range of $3.60
to $3.70.
Howard Solomon, Chairman and Chief Executive Officer of Forest,
said: “We are pleased with our new product launches for Daliresp
and Viibryd and with the continued positive progress of our late
stage new product development pipeline. We officially introduced
Daliresp and Viibryd in August following our first-ever launch of
two products at the same national sales meeting for all of our
salesforces. It is still early days for both products but they are
performing well in-line with our expectations. We also continue to
see solid performance for Bystolic, Savella and Teflaro.
With the launches of Daliresp and Viibryd now officially
underway we have introduced a total of five products in just over
three years with three of those products - Teflaro, Daliresp and
Viibryd, launched in this current calendar year.
During the quarter we and our partner Ironwood Pharmaceuticals,
Inc. were delighted to announce that a New Drug Application (NDA)
was filed with the U.S. Food and Drug Administration (FDA) for
linaclotide for the treatment of chronic constipation (CC) and
irritable bowel syndrome with constipation (IBS-C). This brings the
total number of new products we will be marketing by next year,
assuming approval of this year’s submissions for aclidinium and
linaclotide, to seven products. All of these products have patent
protection until 2020 and beyond.
Two weeks ago we and our partner Gedeon Richter were pleased to
announce positive preliminary top-line results from a Phase III
clinical trial of cariprazine for the treatment of patients with
acute mania associated with bipolar I disorder. The results of the
study are encouraging and we believe demonstrate the potential of
cariprazine as a novel antipsychotic agent. We now have two
positive cariprazine registration studies for the bipolar I
disorder indication and in our fourth fiscal quarter we expect to
receive the results from two Phase III clinical trials for
schizophrenia. If the results from the two schizophrenia trials are
positive, we plan to submit an NDA for cariprazine for acute mania
associated with bipolar I disorder, and for schizophrenia, during
calendar 2012. Cariprazine is also being investigated in Phase II
clinical trials for patients with bipolar depression, and as an
adjunct treatment in major depressive disorder.
We have been working diligently for the past seven years to
build a solid product development pipeline that will more than
replace the loss of Lexapro and Namenda following expiration of
their marketing exclusivity over the next three years. We
successfully introduced Bystolic in 2008 and Savella in 2009 and
are currently in the process of launching Teflaro, Daliresp and
Viibryd. With these five launches in hand plus the completed
filings for aclidinium and linaclotide along with the potential
filings for levomilnacipran and cariprazine in 2012, we are on
track with our business strategy 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 SIX MONTHS ENDED
ENDED SEPTEMBER 30 SEPTEMBER 30
2011 2010
2011 2010
Reported diluted earnings per share: $ 0.91 $ 1.00 $ 1.81 $ 1.37
Specified items, per share, net of tax: DOJ Investigations - - 0.39
Licensing payment to TransTech Pharma, Inc. for glucose-lowering
agents - - - 0.17 Licensing payment to Blue Ash Therapeutics, LLC
for azimilide 0.14 Rounding
-
- - 0.03
Adjusted Non-GAAP diluted earnings per share:
$ 0.91
$ 1.00
$ 1.95
$ 1.96
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
October 28, 2011 at both websites and also by dialing (800)
642-1687 (US or Canada) or +1 706 645-9291 (international),
Conference ID: 11565492.
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 SIX MONTHS ENDED
SEPTEMBER 30
ENDED
SEPTEMBER 30
(In thousands, except per share amounts)
2011 2010
2011 2010
Revenues: Net sales $ 1,130,250 $ 1,037,264 $ 2,234,385 $
2,057,390 Contract revenue 33,579 42,402 74,218 82,206 Interest
income 5,086 8,493 10,665 15,506 Other income
164 1,742 Net
revenues 1,169,079
1,088,159 2,321,010
2,155,102 Costs and expenses: Cost of
goods sold 263,984 246,240 517,781 477,944 Selling, general and
administrative 388,657 316,386 746,734 764,755 Research and
development
197,331 154,511
391,774 374,168
849,972 717,137
1,656,289 1,616,867
Income before income tax expense 319,107 371,022 664,721
538,235 Income tax expense
69,294
84,912 156,771
134,648 Net income $
249,813 $ 286,110
$ 507,950 $
403,587 Net income per share: Basic $
0.91 $ 1.00 $ 1.82 $ 1.37 Diluted $ 0.91 $ 1.00 $ 1.81 $ 1.37
Weighted average number of shares outstanding: Basic
273,196 287,401 279,449 294,139 Diluted 273,753 287,491 280,015
294,222
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