Forest Laboratories, Inc. (NYSE: FRX), an international
pharmaceutical manufacturer and marketer, today announced that
reported earnings per share equaled $0.72 in the fourth quarter of
fiscal 2012. Reported earnings per share in the fourth quarter of
fiscal 2011 were $1.12. Excluding acquisition related amortization,
non-GAAP EPS in the fourth fiscal quarter of 2012 equaled $0.78 as
compared with $1.14 in the fourth quarter of fiscal 2011.
Net sales for the quarter decreased 8.7% to $996.9 million, from
$1.1 billion 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 $393.1 million during the
quarter, an increase of 19.5% from last year’s fourth quarter.
Sales of Bystolic® (nebivolol), a beta-blocker for the treatment of
hypertension, were $96.9 million, an increase of 32.6% over the
year-ago period. Sales of Savella® (milnacipran HCl), a selective
serotonin norepinephrine dual reuptake inhibitor (SNRI) for the
management of fibromyalgia, were $25.3 million, an increase of 6.5%
from last year’s fourth quarter. The Company’s newest products,
Daliresp® and Viibryd®, were formally launched 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 $13.1
million. Viibryd (vilazodone HCl), an SSRI and a partial agonist at
serotonergic 5-HT1A receptors for the treatment of adults with
major depressive disorder (MDD) recorded sales of $24.9 million.
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 $7.9 million.
Teflaro was launched in March 2011. 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 $355.8 million
compared with $594.8 million in the year-ago period. Patent
protection for Lexapro expired on March 14, 2012.
Contract revenue was $46.8 million in the current quarter
compared to $36.9 million last year. Benicar® (olmesartan
medoxomil) co-promotion income totaled $29.6 million, a decrease of
$4.4 million compared to $34.0 million in last year’s fourth
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 receives a residual royalty until the end of March
2014. Contract revenue also included $17.0 million of income from a
distribution agreement with Mylan, Inc. wherein we have authorized
Mylan to sell a generic version of Lexapro and we retain a portion
of the profits from those sales.
Cost of sales as a percentage of sales was 21.8%, unchanged as
compared with last year’s fourth quarter. Selling, general and
administrative expense for the current quarter was $410.5 million
as compared to $351.7 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 spending for the current quarter was
$213.9 million compared with $140.9 million in last year’s fourth
quarter. The current quarter includes product development milestone
charges of $5.0 million. The prior year quarter did not include any
product development milestone expenses.
Income tax expense for the quarter was $21.0 million, reflecting
a quarterly effective tax rate of 9.8% which included certain
adjustments from prior year tax reserves. Reported net income for
the quarter ended March 31, 2012 was $192.7 million or $0.72 per
share compared to $322.5 million or $1.12 per share reported for
last year’s fourth quarter.
Diluted shares outstanding at March 31, 2012 were approximately
268,465,000 a reduction of approximately 20.2 million shares
compared to the year-ago period primarily due to the Company’s
accelerated share repurchase programs.
Twelve-month Results
Revenues for the twelve months ended March 31, 2012 increased
3.8% to $4.6 billion from $4.4 billion in the prior year.
Net income for the twelve months ended March 31, 2012 decreased
6.5% to $979.1 million from $1.0 billion reported in the prior
year. Reported earnings per share decreased 0.6% to $3.57 in the
current year’s twelve months as compared to earnings per share of
$3.59 in last year’s twelve months.
Howard Solomon, Chairman and Chief Executive Officer of Forest,
said: “The Company just completed a remarkably successful fiscal
year in which we further progressed our late stage R&D
pipeline, launched Daliresp and Viibryd, our two most recent new
primary care product introductions, and reported solid financial
performance.
In just four years we have introduced a total of five new
products - Bystolic, Savella, Teflaro, Daliresp and Viibryd, three
of which launched during this past calendar year. In addition, New
Drug Applications (NDAs) for two more primary care products,
aclidinium, a novel long-acting inhaled anticholinergic
bronchodilator for the long-term, maintenance treatment of
bronchospasm associated with chronic obstructive pulmonary disease
(COPD), and linaclotide, a guanylate cyclase type-C (GC-C)
receptor, for the treatment of irritable bowel syndrome with
constipation (IBS-C) and chronic constipation (CC) have been
submitted to the FDA, with imminent decisions in the coming months
and active preparations underway to launch them both. Finally,
during the quarter we completed the clinical development of two
additional important products, cariprazine for the treatment of
schizophrenia and acute mania associated with bipolar I disorder,
and levomilnacipran for the treatment of major depressive disorder
(MDD). Accordingly we plan to submit the NDAs for both products
later this year.
Assuming approval of aclidinium and linaclotide, we will have,
perhaps, one of the largest group of new primary care and specialty
product offerings in the industry with the potential to add two
more product launches, cariprazine and levomilnacipran, next year.
This potential portfolio of these nine new products would cover six
major therapeutic areas - anti-infective, cardiovascular, central
nervous system, gastrointestinal, respiratory and pain. Several of
these products are already being developed in logical combinations
with other drugs, i.e. Bystolic and valsartan, aclidinium and
formoterol and Teflaro with avibactam.
We expect that some of these new products will be especially
successful and that together these nine products will enable us to
grow well beyond our present cliffs with a group of products with
patent expiry in the next decade and some well into that decade.
And, of course, we expect to continue to feed our hungry
pipeline.”
Fiscal 2013 Guidance
Regarding the fiscal year ending March 31, 2013, the Company
expects that diluted earnings per share will be in a range of $0.90
to $1.05 including acquisition related amortization, the estimated
impact of increased investments for marketing to support the new
product launches of aclidinium and linaclotide which we expect to
launch during the fourth calendar quarter of 2012, the continued
launches of Teflaro, Daliresp and Viibryd and research and
development to support the ongoing progress of our late stage
product development pipeline. This guidance also reflects planned
research and development milestone payments related to existing
pipeline products but does not include any licensing or milestone
payments which may be made for additional product development
transactions or acquisitions that may occur during the fiscal year.
Excluding acquisition related amortization diluted earnings per
share will be in the range of $1.20 to $1.35.
Key assumptions supporting the fiscal year 2013 forecast include
the following:
*Namenda sales growth of approximately 17% over the $1.4 billion
reported in fiscal 2012.
*Bystolic sales growth of approximately 29% over the $347.8
million reported in fiscal 2012.
*Savella sales growth of approximately 5% over the $102.8
million reported in fiscal 2012.
*Teflaro sales of approximately $65 million versus the $22.4
million reported in fiscal 2012.
*Daliresp sales of approximately $85 million versus the $31.2
million reported in fiscal 2012.
*Viibryd sales of approximately $175 million versus the $56.5
million reported in fiscal 2012.
*Aclidinium sales of approximately $35 million.
*Linaclotide sales of approximately $60 million.
*Lexapro sales of approximately $250 million; and income from
authorized generic sales of Lexapro of approximately $115
million.
*Benicar earnings decline of approximately 10% from $129.3
million reported in fiscal 2012.
*Total net revenue (includes product sales as well as the
earnings contribution from Benicar, authorized generic sales of
Lexapro, interest income and other income) of approximately $3.4
billion, compared with $4.6 billion reported in fiscal 2012.
*Selling, general and administrative expense of approximately
$1.6 billion. This expense includes funding continued competitive
levels of support behind currently promoted products including
Bystolic, Savella, Teflaro, Daliresp and Viibryd. In addition, the
estimate includes spending for the upcoming launches of aclidinium
and linaclotide.
*Research and development spending of approximately $850 million
in support of the late-stage product pipeline. This projection
includes planned milestone payments of approximately $65 million
and represents, in total, an increase of around 12% from last
year’s spend levels excluding initial licensing payments.
*An effective tax rate for fiscal 2013 of approximately 26.4%
which reflects shifts in the mix of earnings among jurisdictions
and the expiration of the U.S. R&D tax credit in December
2011.
*Diluted shares outstanding will average approximately
268,000,000 for the fiscal year ending March 31, 2013.
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 TWELVE MONTHS ENDED
ENDED MARCH 31 MARCH 31
2012 2011
2012 2011 Reported
diluted earnings per share: $ 0.72 $ 1.12 $ 3.57 $ 3.59 Specified
items, per share, net of tax: Amortization arising from business
combinations and acquisitions of product rights 0.06 0.02 0.16 0.02
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
Licensing payment to Blue Ash Therapeutics, LLC for azimilide - -
0.14 - Rounding
- -
0.01 0.03 Adjusted Non-GAAP
diluted earnings per share: $
0.78 $
1.14 $
3.88 $
4.43
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 May1,
2012 at both websites and also by dialing (855) 859-2056 (US and
Canada) or +1 404 537-3406 (international), Conference ID:
65370662.
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 TWELVE MONTHS
ENDED
MARCH 31
ENDED
MARCH 31
(In thousands, except per share amounts)
2012 2011
2012 2011
Revenues: Net sales $ 996,909 $ 1,091,858 $ 4,392,548 $
4,213,126 Contract revenue 46,847 36,914 155,214 165,356 Interest
income 6,360 6,964 20,364 29,568 Other income
5,597 2,526
17,918 11,650 Net revenues
1,055,713 1,138,262
4,586,044 4,419,700
Costs and expenses: Cost of goods sold 217,574 237,609
998,087 963,981 Selling, general and administrative 410,549 351,694
1,553,337 1,402,111 Research and development
213,889 140,879
796,932 715,872
842,012 730,182
3,348,356 3,081,964
Income before income tax expense 213,701 408,080 1,237,688
1,337,736 Income tax expense
21,029
85,605 258,630
290,966 Net income $
192,672 $ 322,475
$ 979,058 $
1,046,770 Net income per share: Basic $
.72 $ 1.12 $ 3.58 $ 3.60 Diluted $ .72 $ 1.12 $ 3.57 $ 3.59
Weighted average number of shares outstanding: Basic 268,023
288,371 273,561 291,058 Diluted 268,465 288,663 274,016 291,175
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