Forest Laboratories, Inc. (NYSE: FRX), an international
pharmaceutical manufacturer and marketer, today announced that
reported diluted earnings per share equaled $0.17 in the fourth
quarter of fiscal 2013. Reported diluted earnings per share in the
fourth quarter of fiscal 2012 was $0.72. Excluding acquisition
related amortization, non-GAAP EPS in the fourth fiscal quarter of
2013 equaled $0.25 as compared with $0.77 in the fourth quarter of
fiscal 2012.
Product Sales
Performance
Net sales for the quarter decreased 21.4% to $783.2 million,
from $996.9 million in the prior year quarter. The decrease in
sales was due to the loss of patent exclusivity on March 14, 2012
for Lexapro® (escitalopram oxalate), partially offset by sales of
the Company’s next generation products.
Central Nervous System
Franchise
- Namenda® (memantine HCl), an
NMDA receptor antagonist for the treatment of moderate to severe
Alzheimer’s disease, recorded sales of $438.8 million during the
quarter, an increase of 11.6% from last year’s fourth quarter.
- Viibryd® (vilazodone HCl), an
SSRI and a partial agonist at serotonergic 5-HT1A receptors for the
treatment of adults with major depressive disorder, recorded sales
of $44.6 million during the quarter. Sales of Viibryd in last
year’s fiscal fourth quarter were $24.9 million. Viibryd was
launched in August 2011.
Respiratory Franchise
- 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 $23.2 million for the quarter.
Sales of Daliresp in last year’s fiscal fourth quarter were $13.1
million. Daliresp was launched in August 2011.
- TudorzaTM (aclidinium bromide inhalation powder),
an anticholinergic indicated for the long-term maintenance
treatment of bronchospasm associated with COPD, recorded sales of
$10.8 million during the quarter. Tudorza was launched in December
2012 and recorded initial trade stocking of $12.2 million in the
fiscal third quarter.
Bystolic® (nebivolol), a
beta-blocker for the treatment of hypertension, recorded sales of
$132.0 million, an increase of 36.2% over the year-ago period.
Linzess™ (linaclotide), a
guanylate cyclase agonist for the treatment of both irritable bowel
syndrome with constipation and chronic idiopathic constipation in
adults recorded sales of $4.5 million during the quarter. Linzess
was launched in December 2012 and recorded initial trade stocking
of $19.2 million in the fiscal third quarter.
Savella® (milnacipran HCl),
a selective serotonin norepinephrine dual reuptake inhibitor for
the management of fibromyalgia, recorded sales of $26.1 million, an
increase of 3.2% from last year’s fourth 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 $13.1 million, an increase of 65.8%
over last year’s fourth quarter. Teflaro was launched in March
2011.
Contract Revenue was $30.6
million in the current quarter compared to $46.8 million last year.
Benicar® (olmesartan medoxomil) co-promotion income totaled $24.5
million, a decrease of $5.1 million, compared to $29.6 million in
last year’s fourth quarter. Last year’s fourth quarter also
included $17.0 million in royalties from Mylan, Inc. on its sales
of generic Lexapro.
Cost of Sales as a
percentage of sales was 22.7% compared with 21.8% in last year’s
fourth quarter.
Selling, General and
Administrative expense for the current quarter was
$372.7 million as compared to $410.5 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: Linzess, Tudorza, Viibryd,
Daliresp and Teflaro.
Research and Development for
the current quarter was $240.3 million compared with $213.9 million
in last year’s fourth quarter. The current quarter and prior year
quarter included $17.0 million and $5.0 million, respectively in
development milestone expenses.
Income Tax benefit for the
quarter was $14.6 million, which reflects the impact of the
reinstatement of the Research and Development tax credit.
Reported net income for the
quarter ended March 31, 2013 was $45.4 million or $0.17 per share
compared to $192.7 million or $0.72 per share reported for last
year’s fourth quarter.
Diluted Weighted Average Shares
Outstanding at March 31, 2013 were approximately
267,259,000.
Twelve-month Results
Revenues for the twelve months ended March 31, 2013 decreased
31.8% to $3.1 billion from $4.6 billion in the prior year.
The Company reported a net loss for the twelve months ended
March 31, 2013 of $32.1 million compared to net income of $979.1
million reported in the prior year. Reported losses per share of
$0.12 in the current year’s twelve months compared to diluted
earnings per share of $3.57 in last year’s twelve months. Excluding
acquisition related amortization and certain upfront licensing
payments, non-GAAP EPS for fiscal year 2013 equaled $0.45 as
compared with $3.88 for fiscal year 2012.
Chairman and Chief Executive
Officer
Howard Solomon, Chairman and Chief Executive Officer of Forest,
said: “Fiscal year 2013 was an important transition year for our
Company following the loss of patent exclusivity for Lexapro in
March 2012. In the last few years we have had the confluence of two
major events – the expiration of our patent on Lexapro, and the
launch of seven new products – the earliest of which was Bystolic
which was launched in 2008, followed by six new product launches
including two this past December. Assuming regulatory approval, two
additional new products will be launched this year.
“Losing Lexapro meant losing half of our sales and a larger
portion of our profits. Launching seven new products meant
incurring the large expense of the launch itself and the intensive
detailing to physicians to make them aware of our new products and
with related promotional activities, all of which are essential for
an effective launch. We have not compromised the effort necessary
to achieve effective physician awareness even though we have had to
deal with multiple launches. That confluence ultimately created a
trough in our earnings requiring that we report a loss for the
fiscal year, something that has not happened since fiscal 1997.
However, it appears that on an annual basis, we are beginning to
extricate ourselves from that trough. In the last quarter of fiscal
2013 we had a profit of $45.4 million which we expect will
ultimately grow as our new products and additional ones to be
launched continue to grow. Bystolic had sales in our last quarter
of $132.0 million and appears to be headed for annual sales in
excess of five hundred million dollars. We expect that other of our
new products can equal or surpass even that impressive
achievement.
“We are pleased with the performance this quarter of two of our
most recent product launches, Tudorza and Linzess. It is only a few
months into the launch for these products, but they are performing
well in-line with our expectations. Our other new products,
Bystolic, Savella, Teflaro, Daliresp and Viibryd also turned in
solid performances during the quarter. Collectively, these seven
next generation products had sales of $254.3 million in the
quarter, representing 51.3% growth in comparison to the comparable
prior year quarter. In addition, in the coming months we expect to
launch Namenda XR, a once-daily extended-release formulation of
Namenda, for the treatment of mild to severe dementia of the
Alzheimer’s type.
“We are also pleased with the continued positive progress of our
late stage new product development pipeline. Last week we and our
partner Almirall, S.A. reported positive topline Phase III clinical
trial results from the study of the fixed dose combination of
Tudorza and formoterol for the treatment of patients with moderate
to severe COPD. Also during this quarter, topline results from a
second Phase III clinical study of Tudorza and formoterol will be
reported as will topline results from a Phase III clinical trial
from the study of the fixed dose combination of Bystolic and
valsartan for the treatment of hypertension. Assuming the
successful completion of these two clinical development programs we
plan to submit New Drug Applications (NDA) to the FDA in early
calendar 2014. We believe the clinical benefit of these new fixed
dose combinations may significantly increase the sales of our novel
base products.
“During the second half of calendar 2013 we expect FDA decisions
for two additional NDA filings – levomilnacipran, a serotonin
norepinephrine reuptake inhibitor for the treatment of major
depressive disorder, and cariprazine for the treatment of
schizophrenia and acute mania associated with bipolar 1 disorder.
Assuming their respective regulatory approvals in calendar 2013, we
will have achieved nine FDA approvals from seven different
divisions of the FDA in less than six years. Our portfolio of
products would cover six major therapeutic areas - anti-infective,
cardiovascular, central nervous system, gastrointestinal,
respiratory and pain providing the Company with a diversified range
of commercial opportunities. To achieve all of this would be an
impressive accomplishment by any measure.
“As I have said before, it will take time for sales of our new
products to increase in volume and we expect that some of these new
products will be especially successful and that together these nine
products, with other products which we may obtain, will enable us
to grow beyond our present patent cliffs with a group of products
with patent expiry in the next decade and some well into that
decade. This is a very exciting time for our Company and I am
confident that our corporate strategy is sound and we are in a
great position to succeed well into the future.”
Fiscal 2014 Guidance
Regarding the fiscal year ending March 31, 2014, the Company
expects that GAAP diluted earnings per share will be in a range of
$0.40 to $0.60. This includes acquisition related amortization and
planned research and development milestone payments related to
existing pipeline products but does not include any upfront
licensing payments which may be made for additional product
development transactions or acquisitions that may occur during the
fiscal year.
Excluding acquisition related amortization non-GAAP earnings per
share will be in the range of $0.80 to $1.00.
Key assumptions supporting the fiscal year 2014 forecast include
the following:
Product Sales
- Fiscal year 2014 total product sales of
approximately $3.3 billion, compared with $2.9 billion reported in
fiscal 2013. This includes sales for the anticipated launches of
Namenda XR and levomilnacipran.
- Sales of our next generation products
total $1.32 billion, representing 48.2% growth in comparison to
fiscal 2013.
Central Nervous System Franchise
- Namenda sales, including the launch of
Namenda XR, of approximately $1.625 billion compared with $1.5
billion reported in fiscal 2013.
- Viibryd sales of approximately $220
million versus the $163 million reported in fiscal 2013.
- Levomilnacipran sales of approximately
$13 million.
Respiratory Franchise
- Daliresp sales of approximately $110
million versus the $78 million reported in fiscal 2013.
- Tudorza sales of approximately $90
million versus the $23 million reported in fiscal 2013.
Bystolic
- Sales of approximately $535 million
versus the $455 million reported in fiscal 2013.
Linzess
- Sales of approximately $170 million
versus the $24 million reported in fiscal 2013.
Savella
- Sales of approximately $106 million
compared with the $105 million reported in fiscal 2013.
Teflaro
- Sales of approximately $60 million
versus the $44 million reported in fiscal 2013.
Benicar earnings will decline approximately 32% from $126
million reported in fiscal 2013. Per the agreement with Daiichi
Sankyo, Forest’s active co-promotion of Benicar ended in the first
quarter of fiscal 2009 and the residual royalty the Company
receives will discontinue at the end of fiscal 2014.
Total Net Revenue
Approximately $3.5 billion, compared with $3.1 billion reported
in fiscal 2013 (includes product sales as well as the earnings
contribution from Benicar, interest income and other income).
Selling, General and
Administrative
Expense of approximately $1.75 billion. This expense includes
funding continued competitive levels of support behind currently
promoted products including Bystolic, Savella, Teflaro, Daliresp,
Viibryd, Tudorza and Linzess. In addition, the estimate includes
spending for the upcoming launches of Namenda XR and
levomilnacipran.
Research and Development
Investment of approximately $835 million in support of the
late-stage product pipeline, including post-approval commitments
for certain marketed products. This projection includes planned
milestone payments of approximately $60 million and represents, in
total, a decrease of around 6% from the $893 million reported in
fiscal year 2013, excluding initial licensing payments.
Income Tax
An effective tax rate for fiscal 2014 of approximately 23.5%
which reflects shifts in the mix of earnings among jurisdictions
and the reinstatement of the U.S. R&D tax credit in January
2013.
Shares Outstanding
Diluted shares outstanding will average approximately
268,000,000 for the fiscal year ending March 31, 2014 and assumes
no shares will be repurchased.
Amortization Arising From Business
Combinations and Acquisitions of Product Rights
Cost of sales - $0.16 per share
Selling, general and administrative - $0.24 per share
Use of Non-GAAP Financial
Information
Forest provides non-GAAP income and non-GAAP EPS financial
measures as alternative views of the Company’s performance. These
measures exclude certain items (including costs, expenses, gains/
(losses) and other specified items) due to their significant and/or
unusual individual nature and the impact they have on the analysis
of underlying business performance and trends. Management reviews
these items individually and believes excluding these items
provides information that enhances investors’ understanding of the
Company’s financial performance. The information on non-GAAP income
and non-GAAP EPS should be considered in addition to, but not
in lieu of, net income and EPS prepared in accordance with
generally accepted accounting principles in the United States
(GAAP). Non-GAAP Adjusted income and its components are non-GAAP
financial measures that have no standardized meaning prescribed by
GAAP and, therefore, have limits in their usefulness to investors.
Because of the non-standardized definitions, Non-GAAP Adjusted
income and its components (unlike GAAP net income and its
components) may not be comparable to the calculation of similar
measures of other companies. Non-GAAP adjusted income and its
components are presented solely to permit investors to more fully
understand how management assesses performance. A reconciliation
between GAAP financial measures and non-GAAP financial measures is
as follows:
FOREST LABORATORIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION Forest
Laboratories, Inc. Specified Items For the Three and
Twelve Months Ended March 31, 2013 and 2012
(In thousands)
Three Months Ended March 31, Twelve Months
Ended March 31, 2013 2012
2013 2012
Amortization arising from business combinations and acquisitions of
product rights $ 10,709 $ 9,366 $
37,965 $ 23,674
Impact of specified items on Cost
of goods sold 10,709 9,366 37,965
23,674 Amortization arising from business
combinations and acquisitions of product rights 11,005
5,926 43,900
21,104
Impact of specified items on Selling,
general and administrative 11,005 5,926
43,900 21,104 Upfront payment to Adamas - -
65,000 - Licensing payment to Blue Ash for azimilide - - - 40,000
Other licensing agreement payment - -
6,000 -
Impact of
specified items on Research and development -
- 71,000
40,000
Increase/( decrease) to
pre-tax income 21,714
15,292 152,865
84,778 Income tax impact of specified items -
- -
-
Increase/ (decrease) to net earnings $
21,714 $ 15,292
$ 152,865 $ 84,778
Forest Laboratories, Inc. Reconciliation of GAAP
Line Items to Certain Non-GAAP Line Items For the Three and
Twelve Months Ended March 31, 2013 and 2012
Three Months Ended
March 31, 2013 Three Months Ended March 31,
2012 GAAP Specified Non-GAAP
GAAP Specified Non-GAAP
(In thousands)
Reported Items Adjusted
Reported Items Adjusted
Gross profit $643,845 $10,709 $ 654,554 $838,139 $9,366 $
847,505 Selling, general and administrative 372,728 11,005 361,723
410,549 5,926 404,623 Research and development 240,299 - 240,299
213,889 - 213,889
Earnings before provision for taxes 30,818
21,714 52,532 213,701 15,292 228,993 Provision for taxes (14,625) -
(14,625) 21,029 - 21,029
Earnings after provision for taxes
$45,443 $21,714 $ 67,157 $192,672 $15,292 $ 207,964 Weighted
average number of diluted shares outstanding: 267,259 - 267,259
268,465 - 268,465
Twelve Months Ended
March 31, 2013 Twelve Months
Ended March 31, 2012 GAAP
Specified Non-GAAP GAAP
Specified
Non-GAAP
(In thousands)
Reported Items
Adjusted Reported
Items Adjusted
Gross profit $ 2,477,042 $ 37,965 $ 2,515,007 $
3,587,957 $ 23,674 $ 3,611,631 Selling, general and administrative
1,558,306 43,900 1,514,406 1,553,337 21,104 1,532,233 Research and
development 963,594 71,000 892,594 796,932 40,000 756,932
Earnings before provision for taxes (44,858) 152,865 108,007
1,237,688 84,778 1,322,466 Provision for taxes (12,755) - (12,755)
258,630 - 258,630
Earnings after provision for taxes
($32,103) $ 152,865 $ 120,762 $ 979,058 $ 84,778 $ 1,063,836
Weighted average number of diluted shares outstanding: 266,807 -
266,807 274,016 - 274,016
Forest Laboratories, Inc.
Reconciliation of GAAP EPS to Non-GAAP EPS For the Three
and Twelve Months Ended March 31, 2013 and 2012
(In thousands,
except earnings per share)
Three Months Ended March
31, Twelve Months Ended March
31, 2013 2012
2013 2012
Reported Net income (loss): $ 45,443
$ 192,672 ($32,103) $ 979,058
Specified items net of tax: Amortization arising from business
combinations and acquisitions of product rights Recorded in Cost of
sales 10,709 9,366 37,965 23,674 Recorded in Selling, general and
administrative 11,005 5,926 43,900 21,104 Upfront Licensing
payments recorded in research and development - - 71,000 40,000
Impact of specified items on provision for income taxes - -
- -
Adjusted Non-GAAP earnings: $
67,157 $ 207,964 $ 120,762
$ 1,063,836 Forest Laboratories,
Inc. Reconciliation of GAAP EPS to Non-GAAP EPS For
the Three and Twelve Months Ended March 31, 2013 and 2012
Three Months Ended March
31, Twelve Months Ended March 31, 2013
2012 2013
2012 Reported Diluted earnings (losses) per
share: $ 0.17 $ 0.72 ($0.12)
$ 3.57 Specified items net of tax: Amortization
arising from business combinations and acquisitions of product
rights Recorded in Cost of sales 0.04 0.03 0.14 0.09 Recorded in
Selling, general and administrative 0.04 0.02 0.16 0.08
Upfront Licensing payments recorded in research and development - -
0.27 0.15 Rounding - - (0.01)
Adjusted Non-GAAP earnings
per share $ 0.25 $ 0.77 $
0.45 $ 3.88
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 May
23, 2013 at both websites and also by dialing (855) 859-2056 (US or
Canada) or +1 (404) 537-3406 (international), Conference ID:
32019672.
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. Forest’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 OPERATIONS (Unaudited)
THREE
MONTHS TWELVE MONTHS
ENDED ENDED MARCH 31 MARCH 31 (In
thousands, except per share amounts)
2013
2012
2013
2012
Revenues:
Net sales $ 783,186 $ 996,909 $ 2,904,936 $ 4,392,548 Contract
revenue 30,640 46,847 189,066 155,214 Interest income 4,929 6,360
29,150 20,364 Other income
2,916
5,597 2,973
17,918
Net revenues
$ 821,671 $
1,055,713 $ 3,126,125
$ 4,586,044
Costs and expenses:
Cost of goods sold 177,826 217,574 649,083 998,087 Selling, general
and administrative 372,728 410,549 1,558,306 1,553,337 Research and
development
240,299 213,889
963,594 796,932
790,853 842,012
3,170,983 3,348,356
Income (loss) before income tax
expense
30,818 213,701 ( 44,858) 1,237,688 Income tax expense (benefit)
(
14,625)
21,029 (
12,755)
258,630
Net income (loss)
$ 45,443 $
192,672 (
$ 32,103)
$
979,058
Net income (loss) per share:
Basic $ 0.17 $ 0.72 ($0.12) $ 3.58 Diluted $ 0.17 $ 0.72 ($0.12) $
3.57
Weighted average number of shares
outstanding:
Basic 266,322 268,023 266,807 273,561 Diluted 267,259 268,465
266,807 274,016
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