Forest Laboratories, Inc. (NYSE: FRX), an international
pharmaceutical manufacturer and marketer, today reported a GAAP
loss per share of $0.58 in the third quarter of fiscal 2013
compared with income of $1.04 in the third quarter of fiscal 2012.
Included in the third quarter results were upfront/licensing
agreement payments totaling $76.0 million, or $0.29 per share, net
of tax. The non-GAAP loss per share was $0.21 in the third fiscal
quarter of 2013 compared with income of $1.08 in the third quarter
of fiscal 2012.
Net sales for the quarter decreased 41.6% to $678.0 million,
from $1.2 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 $345.8 million during
the quarter, an increase of 1.6% from last year’s fiscal third
quarter. Namenda sales were negatively impacted by higher contract
rebates, largely driven by the Medicare Part D Coverage Gap
liability, which peak in the fiscal third quarter and are expected
to return to normal levels in the fiscal fourth quarter.
Sales of Bystolic® (nebivolol), a beta-blocker for the treatment
of hypertension, were $108.8 million, an increase of 20.1% over the
year-ago period. Sales of Savella® (milnacipran HCl), a selective
serotonin norepinephrine dual reuptake inhibitor (SNRI) for the
management of fibromyalgia, were $25.6 million, a decrease of 2.7%
from last year’s third quarter.
In August 2011 the Company launched Daliresp® and Viibryd®.
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 $17.5
million. Sales of Daliresp in last year’s fiscal third quarter were
$8.4 million. Daliresp sales were similarly impacted by contract
rebates as described above. 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 $40.6 million.
Sales of Viibryd in last year’s fiscal third quarter were $18.9
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
$11.5 million. Teflaro was launched in March 2011 and recorded
sales of $6.5 million in last year’s third fiscal quarter.
The Company commercially launched two of its newest products,
Tudorza® and Linzess® in December 2012. Tudorza (aclidinium bromide
inhalation powder), an anticholinergic indicated for the long-term
maintenance treatment of bronchospasm associated with COPD recorded
initial trade stocking of $12.2 million. Linzess (linaclotide), a
guanylate cyclase (GC-C) agonist for the treatment of both
irritable bowel syndrome with constipation (IBS-C) and chronic
idiopathic constipation (CIC) in adults recorded initial trade
stocking of $19.2 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 $20.3 million compared with $593.0 million in the
year-ago period. The Lexapro patent expired on March 14, 2012.
Contract revenue was $38.3 million in the current quarter
compared to $34.1 million last year. Benicar® (olmesartan
medoxomil) co-promotion income increased to $36.0 million, compared
to $31.4 million in last year’s third quarter.
Cost of sales as a percentage of sales was 22.6% in both the
current and prior year third quarters. Selling, general and
administrative expense for the current quarter was $428.4 million
as compared to $396.1 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, Viibryd, Tudorza and Linzess.
Research and development (R&D) spending for the current
quarter was $325.3 million compared with $191.3 million in last
year’s third quarter. The current quarter includes upfront
licensing/agreement payments of $76.0 million and milestone
payments of $44.5 million compared to $24.6 million of milestone
payments in the prior year’s quarter.
Income tax benefit for the quarter was $30.7 million, reflecting
a quarterly effective tax rate of -16.6%. For the quarter ended
December 31, 2012 a net loss of $153.6 million or loss of $0.58 per
share was reported compared to net income of $278.4 million or
income of $1.04 per share reported for last year’s third
quarter.
Nine Month Results
Revenues for the nine months ended December 31, 2012 decreased
34.7% to $2.3 billion from $3.5 billion in the prior year.
Net income for the nine months ended December 31, 2012, the
Company reported decreased to a net loss of $77.5 million compared
to net income of $786.4 million reported in the nine months of the
prior year. Reported earnings per share decreased to a loss of
$0.29 per share in the current year’s nine months as compared to
earnings per share of $2.85 in last year’s nine months.
Fiscal 2013 Guidance
The Company now expects that non-GAAP earnings per share for the
fiscal year ending March 31, 2013 will be at the lower end of the
previously guided 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 between $3.1 billion and $3.2
billion.
Howard, Solomon, Chairman and Chief Executive Officer of Forest
said: “In the third quarter of fiscal 2013, as expected, we
incurred a loss resulting principally from sales lost following the
expiration of Lexapro’s patent exclusivity in March 2012. The third
quarter had lower sales of branded and generic Lexapro than the
prior two quarters, as Lexapro declined in sales closer to its
ultimately anticipated levels.
“More importantly, in the month of December 2012, we launched
two major new products, Tudorza and Linzess. We believe sales of
those products, and the seven products already launched and two
products, levomilnacipran and cariprazine, which were filed with
the FDA this year, and which we anticipate will be launched in our
next fiscal year, will ultimately equal and exceed the sales lost
following the expiration of Lexapro’s exclusivity and the potential
loss in subsequent years of Namenda’s exclusivity. And, of course,
there is always the potential for additional new products.
“Our strategy for acquiring products has repeatedly been
confirmed, in concept and in execution. Of course, the sales
potential of each varies. A few, like Savella and Teflaro, will
achieve more modest sales. But, for example, Bystolic, launched
several years ago, with sales of $108 million this last quarter, an
increase of 20.1% over the previous year, with its growth to be
significantly augmented by the combination with valsartan,
presently in Phase III, is likely to be another one of our largest
products in coming years.
“The launch of every product requires major effort. It is costly
financially and in human effort, and two in one quarter is
especially demanding. Each involves sales force training and each
involves a costly launch meeting with additional training and
motivational presentations involving nearly two thousand sales and
marketing personnel at each meeting. Most of those expenses were
incurred in the last quarter for both products, including increased
production costs for launch quantities, which were not compensated
by initial stocking sales. Our marketing department and sales force
membership and management exceeded even their usual impressive
performance. It always takes a little while for the expense dust to
clear, and to see the sales and profits generated by each new
product.
“During the quarter we and our partner Gedeon Richter were
pleased to announce that we have submitted the NDA to the FDA for
cariprazine, a potent D3/D2 receptor partial agonist with preferred
binding to D3 receptors, for the treatment of schizophrenia and
Bipolar I Disorder. Schizophrenia and Bipolar I Disorder are
serious medical conditions requiring treatment that affects
millions of adult patients in the U.S. We are also studying
cariprazine for the treatment of bipolar depression, and for
treatment resistant depression. In addition, earlier this year we
announced submission of our NDA for levomilnacipran for the
treatment of major depressive disorder.
“In addition, we announced two important business development
transactions during the quarter. In October we were pleased to
announce that we entered into a broad strategic alliance with
Moksha8 in Latin America. Moksha8 is a leader in the
commercialization of CNS medicines in Latin America. Our alliance
includes an exclusive license from Forest to Moksha8 to
commercialize Viibryd, and potentially other Forest products and
also provides us with an opportunity to acquire Moksha8 in two
years under certain conditions. In November we were pleased to
announce that we entered into an agreement with Adamas
Pharmaceuticals for the development and commercialization of a
fixed dose combination of Namenda XR and donepezil as a once-daily
therapy for the treatment of moderate and severe dementia of the
Alzheimer’s type.
“The portfolio of our nine new products will 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 combination with
other drugs, i.e. Bystolic and valsartan, Namenda XR and donepezil,
Tudorza and formoterol, and Teflaro with avibactam. And there will
be more to come as we continue to execute our business development
strategy to find new product opportunities.
“We believe that we are well on our way to realizing the fruits
of success from our new product portfolio that could ultimately
generate significant levels of sales and earnings to more than
replace the expiring products and secure long-term growth for our
Company.”
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,
2012
2011
2012
2011
Reported Diluted earnings/(loss) per share: $
(0.58 ) $ 1.04 $ (0.29
) $ 2.85 Per share impact of specified items
net of tax: Amortization arising from business combinations and
acquisitions of product rights Recorded in Cost of sales 0.04 0.02
0.10 0.05 Recorded in Selling, general and administrative 0.04 0.02
0.12 0.06 Upfront licensing/agreement payments 0.28 -- 0.28 0.14
Rounding
0.01 --
0.01 -- Adjusted
Non-GAAP earnings/(loss) per share:
$
(0.21 )
$ 1.08
$ 0.22
$ 3.10
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 14, 2013 at both websites and also by dialing (855)
859-2056 (US or Canada) or +1 (404) 537-3406 (international),
Conference ID: 78714269.
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 LABORATORIES, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) THREE MONTHS NINE MONTHS
ENDED
DECEMBER 31,
ENDED
DECEMBER 31,
(In thousands, except per share amounts)
2012 2011
2012 2011
Revenues: Net sales $ 677,967 $ 1,161,254 $ 2,121,750 $
3,395,639 Contract revenue 38,314 34,149 158,426 108,367 Other
income
6,409 13,918
24,278 26,325 Net
revenues 722,690
1,209,321 2,304,454
3,530,331 Costs and expenses: Cost of
goods sold 153,311 262,732 471,257 780,513 Selling, general and
administrative 428,380 396,054 1,185,578 1,142,788 Research and
development
325,290
191,269 723,295
583,043 906,981
850,055 2,380,130
2,506,344 Income (loss) before income tax
expense
(184,291
) 359,266
(75,676
) 1,023,987 Income tax expense (benefit)
(30,683 ) 80,830
1,870 237,601 Net
income (loss) ($153,608 )
$
278,436 ($ 77,546 )
$
786,386 Net income (loss) per share:
Basic ($0.58 ) $ 1.04 ($0.29 ) $ 2.86 Diluted ($0.58 ) $ 1.04
($0.29 ) $ 2.85
Weighted average number of shares
outstanding: Basic 266,018 267,397 266,967 275,400 Diluted
266,018 267,604 266,967 275,867
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