Forest Laboratories, Inc. (NYSE: FRX), an international
pharmaceutical manufacturer and marketer, today announced that
reported earnings per share were $1.04 in the third quarter of
fiscal 2012. Reported earnings per share in the third quarter of
fiscal 2011 were $1.11 after a charge for a new product licensing
fee of $66.1 million, or $0.23 per share net of tax, related to a
licensing agreement with Grünenthal GmbH (Grünenthal) for GRT 6005
and its follow-on compound GRT 6006, for the treatment of moderate
to severe chronic pain.
Net sales for the quarter increased 9.2% to $1.2 billion, from
$1.1 billion in the year-ago period. Sales of Bystolic®
(nebivolol), a beta-blocker for the treatment of hypertension, were
$90.6 million, an increase of 33.0% over the year-ago period. Sales
of Savella® (milnacipran HCl), a selective serotonin norepinephrine
dual reuptake inhibitor (SNRI) for the management of fibromyalgia,
were $26.3 million, an increase of 6.9% from last year’s third
quarter. Teflaro® (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 $6.5
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, 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 $8.4
million and Viibryd (vilazodone HCl), an SSRI and a partial agonist
at serotonergic 5-HT1A receptors for the treatment of major
depressive disorder (MDD) recorded sales of $18.9 million. Sales of
Lexapro® (escitalopram oxalate), a selective serotonin reuptake
inhibitor (SSRI) for the initial and maintenance treatment of MDD
in adults and adolescents and generalized anxiety disorder in
adults were $593.0 million compared with $586.5 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 $340.4 million during the quarter, an
increase of 6.4% from last year’s third quarter.
Contract revenue was $34.1 million in the current quarter
compared to $46.8 million last year. Benicar® (olmesartan
medoxomil) co-promotion income decreased to $31.4 million, compared
to $42.8 million in last year’s third 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 22.6% compared with
23.4% in last year’s third quarter. Selling, general and
administrative expense for the current quarter was $396.1 million
as compared to $285.7 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 (R&D) spending for the current
quarter was $191.3 million compared with $200.8 million in last
year’s third quarter. The prior year third quarter included a $66.1
million upfront licensing payment to Grünenthal. Excluding the
payment to Grünenthal, R&D spending in the current fiscal
quarter increased 42.0%. The current quarter includes product
development milestone payments of $24.6 million compared to $4.2
million of milestone payments in the prior year’s quarter.
Income tax expense for the quarter was $80.8 million, reflecting
a quarterly effective tax rate of 22.5%. Reported net income for
the quarter ended December 31, 2011 was $278.4 million or $1.04 per
share compared to $320.7 million or $1.11 per share reported for
last year’s third quarter.
Diluted shares outstanding at December 31, 2011 were
approximately 267,604,000 a reduction of approximately 20.4 million
shares compared to the year-ago period primarily due to the
Company’s accelerated share repurchase programs.
Nine Month Results
Revenues for the nine months ended December 31, 2011 increased
7.6% to $3.5 billion from $3.3 billion in the prior year.
Net income for the nine months ended December 31, 2011 increased
8.6% to $786.4 million from $724.3 million reported in the nine
months of the prior year. Reported diluted earnings per share
increased 14.9% to $2.85 per share in the current year’s nine
months as compared to diluted earnings per share of $2.48 per share
in last year’s nine months.
Fiscal 2012 Guidance
The Company now expects that diluted earnings per share for the
fiscal year ending March 31, 2012 will be in the range of $3.65 to
$3.75.
Howard Solomon, Chairman and Chief Executive Officer of Forest,
said: “We are pleased with the financial performance of the Company
reported this quarter and with the continued positive progress of
our new product launches. In the quarter, excluding the small
increase for Lexapro, we had a sales increase of $91 million which
included a $20.6 million increase for Namenda whose patent expires
in 2015. The remaining $70.4 million of growth is principally
attributable to Bystolic, Savella, Teflaro, Viibryd and Daliresp,
all five new products with patents expiring in the next decade. The
fact that Bystolic, which we launched in 2008, achieved $90.6
million in quarterly sales representing 33% growth over the prior
year is truly an outstanding performance, particularly since
Bystolic is the only branded beta-blocker in an otherwise generic
category of multiple anti-hypertensive agents. And we fully expect
continued annual sales level increases until they ultimately
subside. Our other products may also have significant year-to-year
growth prospects.
Our late stage new product development pipeline continues to
progress very well. We currently have two new drug applications
(NDAs) under review at the FDA. In June we and our partner Almirall
filed an NDA for aclidinium, a novel long-acting inhaled
anticholinergic bronchodilator for the treatment of COPD. In August
we and our partner Ironwood Pharmaceuticals, Inc. filed an NDA for
linaclotide, a guanylate cyclase type-C (GC-C) receptor, for the
treatment of irritable bowel syndrome with constipation (IBS-C) and
chronic constipation (CC). We look forward to hearing from the FDA
as the Agency completes its review for both NDAs in the coming
months. If FDA approvals are granted our plans are to launch both
products later this calendar year.
During the quarter the ceftazidime-avibactam Phase III clinical
program was initiated. The first set of clinical trials is for the
treatment of complicated intra-abdominal infections and, in the
next few months the program will also include Phase III clinical
studies for complicated urinary tract infections. Later this
calendar quarter we will be reporting top-line results from two
ongoing Phase III clinical trials for cariprazine for the treatment
of schizophrenia and acute mania associated with bipolar I
disorder. In addition, we will be reporting top-line results from
an ongoing Phase III clinical trial for levomilnacipran for the
treatment of major depressive disorder. If the results from the
clinical studies for these two programs are positive, we plan to
submit an NDA for cariprazine and an NDA for levomilnacipran later
this calendar year.
Of course, we have additional products in development and
additional business development transactions in active negotiation.
And we will assuredly have additional products that will enrich our
pipeline still further. The same skill, the same acquisition,
development and marketing leadership that created our present
remarkable pipeline is and will be leading the acquisition,
development and marketing of all our new and future products.
Investors with a longer range objective, now that the Lexapro
cliff is almost past, can expect to see significant annual growth
in sales, likely more than sufficient in several years to more than
replace the expiring products. We believe that achieving such a
rich repertory of products validates our business plan. Of course
it will take significant effort and expense, most noticeable in the
earliest years, to accomplish our goal. The future is never
certain, but people and history are usually the most reliable
guide.”
Use of Non-GAAP Financial
Information
Non-GAAP earnings per share information adjusted to exclude
certain costs, expenses and other specified items are 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 NINE
MONTHS ENDED ENDED DECEMBER 31 DECEMBER
31 2011 2010
2011 2010 Reported
diluted earnings per share: $ 1.04 $ 1.11 $ 2.85 $ 2.48 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 Grünenthal for oral
small
molecule analgesics
- 0.23 - 0.23
Licensing payment to Blue Ash
Therapeutics, LLC
for azimilide
- - 0.14 - Rounding
- -
- 0.02
Adjusted Non-GAAP diluted earnings
per
share:
$ 1.04
$ 1.34
$ 2.99
$ 3.29
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 1, 2012 at both websites and also by dialing (800)
585-8367 (US or Canada) or +855 859-2056 (international),
Conference ID: 37551625.
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 MONTHSENDED
DECEMBER 31
NINE MONTHSENDED
DECEMBER 31
(In thousands, except per share
amounts)
2011
2010
2011
2010
Revenues:
Net sales
$1,161,254 $1,063,878 $3,395,639 $3,121,268
Contract revenue
34,149 46,785 108,367 128,442
Interest income
3,340 7,098 14,004 22,604
Other income
10,578 8,575 12,321
9,124 Net revenues 1,209,321
1,126,336 3,530,331
3,281,438 Costs and expenses:
Cost of goods sold
262,732 248,428 780,513 726,372
Selling, general and administrative
396,054 285,662 1,142,788 1,050,417
Research and development
191,269 200,825 583,043
574,993 850,055 734,915
2,506,344 2,351,782 Income
before income tax expense 359,266 391,421 1,023,987 929,656
Income tax expense
80,830 70,714 237,601
205,361 Net income $ 278,436
$ 320,707 $ 786,386 $
724,295 Net income per share:
Basic
$1.04 $1.11 $2.86 $2.48
Diluted
$1.04 $1.11 $2.85 $2.48
Weighted average number of
shares outstanding:
Basic
267,397 287,704 275,400 292,066
Diluted
267,604 287,999 275,867 292,168
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