Forest Laboratories, Inc. (NYSE: FRX), an international
pharmaceutical manufacturer and marketer, today announced that
reported diluted earnings per share equaled $0.09 in the first
quarter of fiscal 2014. Reported diluted earnings per share in the
first quarter of fiscal 2013 were $0.21. Excluding acquisition
related amortization and specified items, non-GAAP EPS in the first
fiscal quarter of 2014 and 2013 was $0.28 for both periods. First
quarter 2014 earnings were higher than anticipated primarily due to
timing of spending for research and development expenses.
Product Sales
Performance
Net sales for the quarter increased 6.0% to $796.9 million, from
$751.8 million in the prior year quarter. The increase in sales was
driven by sales of the Company’s next generation products which
totaled $294.1 million, an increase of 47.8% compared with the
first quarter of fiscal 2013, partially offset by a decline in
sales of Lexapro.
Central Nervous System
Franchise
- Sales of Namenda® (memantine
HCl), an NMDA receptor antagonist for the treatment of moderate to
severe Alzheimer’s disease, recorded sales of $397.5 million during
the quarter, an increase of 7.9% from last year’s first quarter.
Namenda XR™ (once-daily memantine HCl), was launched in June
2013 and recorded initial trade stocking of $14.0 million during
the 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, recorded sales of $46.1 million during
the quarter, an increase of 23.4% from last year’s first
quarter.
- Lexapro® (escitalopram oxalate),
an SSRI for the initial and maintenance treatment of MDD in adults
and adolescents and generalized anxiety disorder in adults were
$28.2 million compared with $110.0 million in the year-ago period.
The Lexapro patent expired on March 14, 2012.
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 $24.0 million for the quarter, an
increase of 35.2% from last year’s first quarter.
- Tudorza® (aclidinium bromide
inhalation powder), an anticholinergic indicated for the long-term
maintenance treatment of bronchospasm associated with COPD,
recorded sales of $15.9 million during the quarter. Tudorza was
launched in December 2012 and recorded initial trade stocking of
$12.2 million in the fiscal 2013 third quarter and sales of $10.8
million during the fiscal 2013 fourth quarter.
Bystolic® (nebivolol), a
beta-blocker for the treatment of hypertension, recorded sales of
$126.0 million, an increase of 16.8% 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 $28.8 million
during the quarter. Linzess was launched in December 2012 and
recorded initial trade stocking of $19.2 million in the fiscal 2013
third quarter and sales of $4.5 million during the fiscal 2013
fourth quarter.
Savella® (milnacipran HCl),
a selective serotonin norepinephrine dual reuptake inhibitor for
the management of fibromyalgia, recorded sales of $25.0 million, a
decrease of 6.0% from last year’s first 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 $14.2 million, an increase of 51.8%
over last year’s first quarter.
Contract Revenue was $31.9
million in the current quarter compared to $65.8 million in the
prior year first quarter. Benicar® (olmesartan medoxomil)
co-promotion income totaled $28.1 million, a decrease of $7.3
million, compared to $35.4 million in last year’s first quarter.
Per the agreement with Daichi 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.
Last year’s first quarter also included $29.4 million in royalties
from Mylan, Inc. on its sales of generic Lexapro.
Cost of Sales as a
percentage of sales was 20.8% compared with 22.4% in last year’s
first quarter.
Selling, General and
Administrative expense for the current quarter was
$443.9 million as compared to $382.3 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: Namenda XR, Linzess, Tudorza,
Viibryd, Daliresp and Teflaro. Spending for the quarter also
included a one-time charge of $26.2 million for the write-off of a
loan to Nabriva Therapeutics related to a business development
agreement for Nabriva’s novel antibiotic BC-3781. The Company had
the exclusive right to acquire Nabriva and did not exercise its
right based on development and commercial considerations.
Research and Development for
the current quarter was $185.4 million compared with $195.2 million
in last year’s first quarter. The current quarter included $18.0
million in development milestone expenses. There were no
development milestone payments in the prior year quarter.
Income Tax Expense for the
quarter was $15.0 million, reflecting a quarterly effective tax
rate of 39.2%.
Reported Net Income for the
quarter ended June 30, 2013 was $23.3 million or $0.09 per diluted
share compared to $55.3 million or $0.21 per diluted share reported
for last year’s first quarter.
Diluted Weighted Average Shares
Outstanding at June 30, 2013 were approximately
268,420,000.
Chairman and Chief Executive
Officer
Howard Solomon, Chairman and Chief Executive Officer of Forest,
said: “We are very pleased with the financial results for the
quarter and particularly with the significant percentage increases
in the sales of almost all of our new products and with the initial
response to Linzess and Tudorza which were both launched this past
December. Collectively, our next generation products had sales of
$294.1 million in the quarter, representing 47.8% 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
and our partner Almirall, S.A. reported positive topline Phase III
clinical trial results from two studies of the fixed dose
combination of Tudorza and formoterol for the treatment of patients
with moderate to severe COPD. Also during this quarter, we reported
positive 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. Following the successful completion
of these two clinical development programs we are now in the
process of preparing the submissions of New Drug Applications (NDA)
to the FDA by the end of calendar 2013 for the Tudorza and
formoterol combination, and in early calendar 2014 for the
Bystolic-valsartan combination. We believe the clinical benefit of
these new fixed dose combinations may significantly increase the
sales of our novel base products.
“In the next few days we expect a decision from the FDA on our
NDA filing for levomilnacipran, a serotonin norepinephrine reuptake
inhibitor for the treatment of major depressive disorder, and later
in this calendar year we expect a decision from the FDA on our
filing for cariprazine for the treatment of schizophrenia and acute
mania associated with bipolar 1 disorder.
“During the quarter we were pleased to announce that we entered
into a collaborative licensing option agreement with Trevena, Inc.
for the development of TRV027, a novel beta-arrestin biased ligand
of the angiotensin II type 1 receptor (AT1R) for the treatment of
acute decompensated heart failure (ADHF). TRV027 has the potential
to be a significant new advance in the treatment of ADHF because it
addresses the underlying pathophysiology of the disease which has
been demonstrated in pre-clinical and early clinical work by
Trevena.
“As is evident from the expansive portfolio of next generation
product launches and continued advancements of our late-stage
development pipeline we believe that we will continue to generate
significant levels of sales and earnings to secure long-term growth
for our Company.”
Use of Non-GAAP Financial
Information
Forest provides non-GAAP 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. Non-GAAP financial measures should be considered in
addition to, but not in lieu of, net income and EPS prepared in
accordance with accounting principles generally accepted in the
United States (GAAP). Non-GAAP financial measures 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 Months Ended June 30, 2013 and 2012
Three Months
EndedJune 30, (In thousands)
2013
2012 Amortization arising from business
combinations and acquisitions of product rights $ 12,046
$ 8,858
Impact of specified items on Cost of goods
sold 12,046 8,858 Amortization arising from business
combinations and acquisitions of product rights 14,024 10,939
Write-off of Nabriva note receivable 26,182
-
Impact of specified items on Selling, general and
administrative 40,206 10,939
Increase to pre-tax
income 52,252 19,797 Income
tax impact of specified items - -
Increase to net earnings $ 52,252
$ 19,797
Forest Laboratories,
Inc. Reconciliation of Certain GAAP Line Items to Non-GAAP
Line Items For the Three Months Ended June 30, 2013 and
2012
Three Months Ended June 30, 2013 (In
thousands)
GAAPReported
SpecifiedItems
Non-GAAPAdjusted
Gross profit $ 667,568 $ 12,046 $ 679,614 Selling,
general and administrative 443,863 40,206 403,657 Research and
development 185,424 - 185,424
Earnings before provision for
taxes 38,281 52,252 90,533 Provision for taxes 15,003 - 15,003
Earnings after provision for taxes $ 23,278 $ 52,252 $
75,530 Weighted average number of shares outstanding: 268,420 -
268,420
Three Months Ended June 30, 2012 (In
thousands)
GAAPReported
SpecifiedItems
Non-GAAPAdjusted
Gross profit $ 652,904 $ 8,858 $ 661,762 Selling,
general and administrative 382,309 10,939 371,370 Research and
development 195,166 - 195,166
Earnings before provision for
taxes 75,429 19,797 95,226 Provision for taxes 20,144 - 20,144
Earnings after provision for taxes $ 55,285 $ 19,797 $
75,082 Weighted average number of shares outstanding: 268,972 -
268,972
Forest Laboratories, Inc. Reconciliation of GAAP
EPS to Non-GAAP EPS For the Three Months Ended June 30, 2013
and 2012 Three Months EndedJune 30,
2013 2012 Reported Net income
(loss): $ 23,278 $ 55,285 Specified items net of tax:
Amortization arising from business combinations and acquisitions of
product rights Recorded in Cost of sales 12,046 8,858 Recorded in
Selling, general and administrative 14,024 10,939 Write-off
of Nabriva note receivable 26,182 - Impact of specified
items on provision for income taxes - -
Adjusted Non-GAAP earnings: $ 75,530
$ 75,082
Reported Diluted earnings
per share:
$
0.09
$
0.21
Specified items net of tax: Amortization arising from business
combinations and acquisitions of product rights Recorded in Cost of
sales
0.04
0.03
Recorded in Selling, general and administrative
0.05
0.04
Write-off of Nabriva note receivable
0.10
-
Impact of specified items on provision for income taxes
-
-
Adjusted Non-GAAP
earnings per share
$
0.28
$
0.28
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
August 23, 2013 at both websites and also by dialing (855) 859-2056
(US or Canada) or +1 (404) 537-3406 (international), Conference ID:
13783632.
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 ENDED JUNE 30, (In thousands,
except per share amounts)
2013
2012
Revenues: Net sales $ 796,853 $ 751,766 Contract revenue
31,918 65,835 Interest income and other
4,164
3,526 Net revenues $
832,935 $ 821,127
Costs and expenses: Cost of goods sold 165,367 168,223
Selling, general and administrative 443,863 382,309 Research and
development
185,424 195,166
794,654 745,698
Income before income tax expense 38,281 75,429 Income tax
expense
15,003 20,144
Net income $ 23,278 $
55,285 Net income per share: Basic $
0.09 $ 0.21 Diluted $ 0.09 $ 0.21
Weighted average number
of shares outstanding: Basic 267,115 268,389 Diluted 268,420
268,972
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