Forest Laboratories, Inc. (NYSE: FRX), an international
pharmaceutical manufacturer and marketer, today announced that
reported GAAP earnings per share equaled $0.08 in the second
quarter of fiscal 2013 compared with $0.91 in the second quarter of
fiscal 2012 . Non-GAAP earnings per share equaled $0.15 per share
in the second quarter of fiscal 2013 compared with $0.95 share in
the second quarter of fiscal 2012.
Net sales for the quarter decreased 38.8% to $692.0 million,
from $1,130.3 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 $367.6 million during
the quarter, an increase of 9.1% from last year’s second quarter.
Sales of Bystolic® (nebivolol), a beta-blocker for the treatment of
hypertension, were $106.5 million, an increase of 29.4% over the
year-ago period. Sales of Savella® (milnacipran HCl), a selective
serotonin norepinephrine dual reuptake inhibitor (SNRI) for the
management of fibromyalgia, were $26.2 million, an increase of 2.7%
from last year’s second quarter.
The Company commercially launched two of its newest products,
Daliresp® and Viibryd® 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 $19.5 million in the current
quarter. Viibryd (vilazodone HCl), a selective serotonin reuptake
inhibitor (SSRI) and a partial agonist at serotonergic 5-HT1A
receptors for the treatment of adults with major depressive
disorder (MDD) recorded sales of $39.9 million in the current
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
$10.0 million in the current quarter. Teflaro was commercially
launched in March 2011 and recorded sales of $5.3 million in last
year’s second quarter. Sales of Lexapro® (escitalopram oxalate), an
SSRI for the initial and maintenance treatment of MDD in adults and
adolescents and generalized anxiety disorder in adults were $44.7
million compared with $596.1 million in the year-ago period. Patent
protection for Lexapro expired on March 14, 2012.
Contract revenue was $54.3 million in the current quarter
compared to $33.6 million last year. Benicar® (olmesartan
medoxomil) co-promotion income totaled $30.2 million, a decrease of
$1.3 million compared to $31.5 million in last year’s first
quarter. Contract revenue also included $22.7 million of income
from a distribution agreement with Mylan, Inc. (Mylan) pursuant to
which Mylan is authorized to sell a generic version of Lexapro and
the Company retains a portion of the profits from those sales. The
six-month Hatch-Waxman exclusivity period related to generic
Lexapro expired on September 13, 2012.
Cost of sales as a percentage of sales was 21.6% compared with
23.4% in last year’s second quarter. Selling, general and
administrative expense for the current quarter was $374.9 million
as compared to $388.7 million in the year-ago quarter. The current
level of spending reflects the resources and activities we believe
are required to support our currently marketed products,
particularly our newest products: Teflaro, Daliresp and Viibryd and
the pre-launch commercial costs associated with Tudorza™
(aclidinium bromide) for the long-term maintenance treatment of
COPD, and Linzess™ (linaclotide) for the treatment of irritable
bowel syndrome with constipation (IBS-C) and chronic idiopathic
constipation (CIC).
Research and development spending for the current quarter was
$202.8 million compared with $197.3 million in last year’s second
quarter. The current quarter had no product development milestone
charges compared to $30.0 million of milestone payments in the
prior year’s quarter.
Income tax expense for the quarter was $12.4 million, reflecting
a quarterly effective tax rate of 37.4%. The higher effective tax
rate is due principally to the repeal of the R&D tax credit and
the mix of earnings in different jurisdictions. The Company now
expects the annual effective tax rate to be approximately 24% for
fiscal 2013. Reported net income for the quarter ended September
30, 2012 was $20.8 million or $0.08 per share compared to $249.8
million or $0.91 per share reported for last year’s second
quarter.
Diluted shares outstanding for the three months ended September
30, 2012 were approximately 267,169,000, a reduction of
approximately 6.6 million shares compared to the year-ago period
primarily due to the Company’s accelerated share repurchase
programs.
Six Month Results
Revenues for the six months ended September 30, 2012 decreased
31.9% to $1,581.8 million from $2,321.0 million in the prior
year.
Net income for the six months ended September 30, 2012 decreased
85.0% to $76.1 million from $508.0 million reported in the six
months of the prior year. Reported diluted GAAP earnings per share
decreased 84.5% to $0.28 per share in the current year’s six months
as compared to diluted earnings per share of $1.81 per share in
last year’s six months.
Fiscal 2013 Guidance
The Company now expects that GAAP earnings per share for the
fiscal year ending March 31, 2013 will be in the range of $0.15 to
$0.30 including acquisition related amortization. Non-GAAP earnings
per share will be in the range of $0.45 to $0.60.
Total net revenue (includes product sales as well as the
earnings contribution from Benicar, authorized generic sales of
Lexapro, interest income and other income) is now expected to be
$3.2 billion compared with previous guidance of $3.4 billion as a
result of the following:
- As previously disclosed in June 2012,
sales of Lexapro are now expected to be approximately $215 million
compared to the previous estimate of $250 million and royalty
income earned on sales of the Company’s authorized generic version
of Lexapro is now expected to be $60 million compared with previous
guidance of $115 million. Shipments of Levothroid have not resumed
due to manufacturing issues affecting our third party licensor and
supplier. Annual sales of Levothroid are approximately $17
million.
- Sales of Namenda are now expected to
end the year 11% higher than last year compared with previous
guidance of a 17% increase. New initiatives to improve dementia
care in nursing homes, while primarily directed toward reducing
antipsychotic use, appear to have also reduced demand for
Alzheimer’s medications. The impact to Namenda is a projected
reduction in sales of approximately $85 million.
- Sales of Linzess are now expected to be
$25 million compared with previous guidance of $60 million due to a
delay in launch resulting from the extended three month FDA review
of our NDA.
- Teflaro sales are now expected to be
$45 million compared with previous guidance of $65 million.
Finally, the Company has accelerated the enrollment in certain
Phase III and life-cycle development programs. As a result,
research and development expense, including milestones, is now
expected to be $900 million as compared to previous guidance of
$850 million.
Howard Solomon, Chairman and Chief Executive Officer of Forest,
said: “With Lexapro now completely genericized we have a bright
future with our next generation of products combined with growth of
Namenda. We are pleased with the continued successful progress of
our most recent new product launches for Teflaro, Daliresp and
Viibryd. Collectively, our next generation products, Bystolic,
Savella, Teflaro, Daliresp and Viibryd had sales of $202 million in
the quarter, representing 69% growth in comparison to the
comparable prior year quarter. We are also pleased with the
continued positive progress of our late stage new product
development pipeline. During the quarter, we received FDA approval
for two New Drug Applications (NDAs) (aclidinium and linaclotide),
and as planned, submitted an NDA for another product
(levomilnacipran).
During the quarter we and our partner Almirall were pleased to
announce the approval of Tudorza (aclidinium). As the first
long-acting inhaled anticholinergic agent approved in 8 years for
COPD, Tudorza will be an important treatment option available for
the nearly 13 million patients in the U.S. that have been diagnosed
with this serious disease. Tudorza will be launched and available
to patients later this quarter. Also during the quarter, we and our
partner Ironwood Pharmaceuticals were delighted to announce the
approval of Linzess (linaclotide). Irritable bowel syndrome with
constipation and chronic idiopathic constipation affect as many as
13 million and 35 million adult Americans, respectively. There are
few treatment options for these conditions and Linzess has the
potential to improve the lives of patients suffering from the
symptoms associated with these two serious conditions. Linzess will
also be launched and available to patients later this quarter.
We and our partner Pierre Fabre Laboratories were pleased to
recently announce that we have submitted an NDA to the FDA for
levomilnacipran, a serotonin norepinephrine reuptake inhibitor
(SNRI) for the treatment of major depressive disorder. MDD is a
serious medical condition requiring treatment that affects more
than 15 million adults in the U.S. We are also on track to file the
NDA for cariprazine for the treatment of schizophrenia and acute
mania associated with bipolar 1 disorder, later this quarter.
Assuming their respective regulatory approvals in calendar 2013, we
expect to launch levomilnacipran and cariprazine during fiscal
2014.
During the quarter we also completed two business development
transactions with our partner Almirall. In Canada, where we have
established a wholly owned subsidiary, we entered into an agreement
to co-promote the aclidinium franchise with Almirall. In another
agreement, we have granted Almirall exclusive commercialization
rights for linaclotide in Mexico.
We have achieved remarkable progress over the past few years.
Today we have one of the strongest and most diverse product
portfolios and pipelines in the industry, in large part due to our
strong core competency in our key therapeutic focus areas and our
status as a partner of choice, as evidenced by our numerous repeat
collaborations. Commercially we have successfully launched five new
products in less than five years - Bystolic, Savella, Teflaro,
Daliresp and Viibryd. With the upcoming launches of Tudorza and
Linzess we will have seven young and growing products in our
commercial portfolio, an enviable achievement for our Company. With
these seven launches in hand, plus the completed NDA filing for
levomilnacipran and the upcoming filing for cariprazine, we are
well on track to secure the sales and earnings to build long-term
growth 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
SEPTEMBER 30
SIX MONTHS
ENDED
SEPTEMBER 30
2012
2011 2012
2011 Reported diluted earnings per
share: $0.08 $0.91 $0.28 $1.81 Specified items, per share, net of
tax:
Amortization arising from business
combinations
and acquisitions of product rights
Recorded in Cost of sales 0.03 0.02 0.07 0.03 Recorded in Selling,
general and administrative 0.04 0.02 0.08 0.03
Licensing payment to Blue Ash
Therapeutics, LLC
for azimilide recorded in R&D
- - - 0.14 Rounding
- - -
0.01
Adjusted Non-GAAP diluted earnings
per
share:
$0.15
$0.95
$0.43
$2.02
Forest will host a conference call at 10:00 AM EDT today to
discuss the results. The conference call will be webcast live 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 November 16, 2012 at both websites and
also by dialing (855) 859-2056 (US and Canada) or +1 404 537-3406
(international), Conference ID: 33378270.
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, respiratory,
gastrointestinal, and pain management 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 assumes no obligation
to update forward-looking statements contained in this release to
reflect new information or future events or developments. Forest
assumes no obligation to update forward-looking statements
contained in this rerelease to reflect new information or future
events or developments.
FOREST LABORATORIES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited)
THREE MONTHS
ENDED
SEPTEMBER 30
SIX MONTHS
ENDED
SEPTEMBER 30
(In thousands, except per share amounts)
2012
2011
2012
2011
Revenues: Net sales $ 692,017 $ 1,130,250 $ 1,443,783 $
2,234,385 Contract revenue 54,277 33,579 120,112 74,218 Other
income
14,343 5,250
17,869 12,407 Net revenues
760,637 1,169,079
1,581,764 2,321,010
Costs and expenses: Cost of goods sold 149,723 263,984
317,946 517,781 Selling, general and administrative 374,889 388,657
757,198 746,734 Research and development
202,839 197,331
398,005 391,774
727,451 849,972
1,473,149 1,656,289
Income before income tax expense 33,186 319,107 108,615
664,721 Income tax expense
12,409
69,294 32,553
156,771 Net income $
20,777 $ 249,813
$ 76,062 $
507,950 Net income per share: Basic
$0.08 $0.91 $0.28 $1.82 Diluted $0.08 $0.91 $0.28 $1.81
Weighted average number of
shares outstanding:
Basic 266,503 273,196 267,447 279,449 Diluted 267,169 273,753
268,092 280,015
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