Company Provides Fiscal Year 2010 EPS Guidance in the Range of $3.45-$3.55
Per Share
NEW YORK, April 21 /PRNewswire-FirstCall/ -- Forest Laboratories, Inc.
(NYSE: FRX), a U.S.-based pharmaceutical company, today announced that
earnings per share for the fourth quarter of fiscal year 2009 were $0.31 per
share. Excluding the one-time USAO charge described below, non-GAAP earnings
per share for the fourth fiscal quarter equaled $0.76. This compares to last
year's reported earnings per share of $0.55, including a licensing payment to
Novexel, S.A. of $110.1 million, or $0.35 per share and non-GAAP earnings per
share of $0.90.
(Logo: http://www.newscom.com/cgi-bin/prnh/20001011/FORESTLOGO )
The Company has provided a $170 million pretax reserve, or $0.45 per
share, in connection with ongoing discussions with the United States
Department of Justice (DOJ) arising out of the investigations led by the U. S.
Attorney's Office for the District of Massachusetts (USAO) into marketing,
promotional and other activities primarily in connection with Lexapro(R),
Celexa(R) and Levothroid(R). These discussions with the DOJ have not yet
concluded, and there can be no assurance as to when they will conclude or
whether they will lead to a resolution, or the amount of any settlement that
may be reached. Accordingly, until the investigation is resolved, there can
be no assurance that the amount reserved by the Company will be sufficient and
that a larger material amount will not be required. The Company continues to
cooperate with these investigations.
Net sales for the quarter ended March 31, 2009 were $896.7 million,
essentially unchanged from $898.7 million in the prior fiscal year. Sales of
Lexapro (escitalopram oxalate), an SSRI indicated for the initial and
maintenance treatment of major depressive disorder in adults and, most
recently, adolescents and generalized anxiety disorder in adults were $548.5
million, a decline of 5.0% from the year-ago period. Sales of Namenda(R), an
NMDA receptor antagonist for the treatment of moderate and severe Alzheimer's
disease, totaled $243.8 million in the quarter, an increase of 7.7% from last
year's fourth quarter. Sales of Bystolic(TM), a beta-blocker approved for the
treatment of hypertension, launched in late January 2008, were $29.7 million,
just under a twofold increase from the quarter a year ago. Contract revenue
of $55.2 million declined 8.2%, principally from the Benicar(R) (olmesartan
medoxomil) co-promotion income of $50.5 million, which declined 13.2% compared
to last year. Per the agreement with Daiichi Sankyo, active co-promotion of
Benicar ended in the first quarter of fiscal 2009 and the Company now receives
a gradually reducing residual royalty until the end of March 2014. Interest
income of $12.7 million decreased from $31.1 million reported in the prior
year, due to lower interest rates earned on the Company's short duration
portfolio. Other income was essentially unchanged at $0.8 million. Net
revenues for the quarter, which includes net sales, contract revenue, interest
and other income, were $965.5 million, a decrease of 2.6% from $990.9 million
in the prior fiscal year.
Selling, general and administrative expenses during the quarter increased
57.3% to $515.1 million from $327.4 million last year and included a charge of
$170.0 million related to the USAO investigation as well as significant
expenses associated with the launch of Bystolic and pre-launch spending for
Savella(TM), a selective serotonin norepinephrine dual reuptake inhibitor
(SNRI) indicated for the management of fibromyalgia that was approved in
January. Excluding the USAO investigation charge, SG&A expense increased 5.4%
versus the prior year. Research and development spending for the quarter was
$123.8 million as compared to $255.1 million in the year-ago period. Research
and development spending in the prior year included a charge of $110.1 million
for an upfront license payment to Novexel for the development rights to
NXL-104 in the United States.
Income tax expense for the quarter was $26.2 million, reflecting a
quarterly effective tax rate of 22.0%. Reported net income for the quarter
ended March 31, 2009 was $92.8 million compared to $172.8 million in the prior
year.
Diluted shares outstanding for the fourth quarter were 302,123,000, a
reduction of 10,511,000 shares from the year-ago period due mainly to the
Company's share repurchase program. There were no share repurchases during
the current quarter.
Twelve-month Results
Net revenue for the fiscal year ended March 31, 2009 increased 2.3% to
$3,922.8 million from $3,836.3 million in the prior fiscal year. Lexapro
sales increased 0.4% to $2,300.9 million from $2,292.0 million last fiscal
year. Sales of Namenda increased 14.4% to $949.3 million from $829.7 million
and sales of Bystolic reached $69.2 million in its first full year on the
market, while the earnings contribution from Benicar decreased 7.8% to $195.6
million from $212.1 million.
Selling, general and administrative expense increased 27.7% to $1,474.3
million from $1,154.8 million, and included one-time charges of $44.1 million
related to the termination of the Azor co-promotion agreement and $170.0
million related to the USAO investigation. Excluding the impact of the
one-time charges, selling, general and administrative expense increased 9.1%.
Research and development spending decreased 1.4% to $661.3 million, including
development milestone expenses of $59.5 million and total licensing payments
of $150.0 million related to the Phenomix and Pierre Fabre collaboration
agreements. This compares to last fiscal year spending of $671.0 million,
including development milestone expenses of $51.0 million and total license
payments of $180.0 million related to Ironwood Pharmaceuticals and Novexel
collaboration agreements. Excluding the impact of the license agreement
payments, research and development expense increased 4.2%.
Income tax expense was $202.8 million, reflecting a full-year effective
tax rate of 20.9%. Reported net income for the fiscal year ended March 31,
2009 decreased 20.7% to $767.7 million from net income of $968.0 million
reported in the prior fiscal year. Reported diluted earnings per share for
the fiscal year totaled $2.52 per share as compared to reported earnings per
share of $3.06 in fiscal 2008. Excluding the licensing payments made to
Phenomix and Pierre Fabre, the Azor termination fee and the charge taken
related to the USAO investigation, adjusted non-GAAP net income and earnings
per share for the fiscal year ended March 31, 2009 would be $1,052.4 million,
or $3.46 per diluted share, compared to $1,124.1 million, or $3.56 per diluted
share in the prior fiscal year. During fiscal year 2009 the Company
repurchased approximately 10.2 million shares under its currently authorized
repurchase program. There is authorization to repurchase an additional 5.7
million shares under this program which has no expiration date.
Fiscal 2010 Guidance
Regarding the fiscal year ending March 31, 2010, the Company expects that
diluted earnings per share will be in a range of $3.45 to $3.55, including
planned research and development milestone payments related to existing
pipeline products but not including any licensing or milestone payments which
may be made for additional product development transactions or acquisitions
that may occur during the fiscal year.
Key assumptions supporting the fiscal year 2010 forecast include the
following:
*Lexapro sales projection of approximately $2.3 billion which is unchanged
from $2.3 billion in fiscal 2009. The Company projects an increase in overall
prescription volume for the underlying SSRI/SNRI antidepressant market as a
whole of approximately 1.5% and a decrease in Lexapro's total prescription
market share of approximately 1.5 share points. Also included in the
projection is a price increase which was realized in January 2009.
*Namenda sales growth of approximately 12% over the $949.3 million
reported in fiscal 2009.
*Bystolic sales of approximately $195.0 million as compared with $69.2
million reported in fiscal 2009.
*Savella sales of approximately $30.0 million.
*Benicar earnings decline of approximately 5% from $195.6 million reported
in fiscal 2009.
*Total net revenue (includes product sales as well as the earnings
contribution from Benicar, interest income and other income) of approximately
$4.1 billion, representing growth of 4% from the $3.92 billion reported in
fiscal 2009 and net sales growth of 6%.
*Selling, general and administrative expense of approximately $1.3
billion. This expense includes funding continued competitive levels of
support behind currently promoted products, continued launch expenses for
Bystolic, our beta-blocker for the treatment of hypertension that was launched
in January 2008, and launch expenses to support Savella, an SNRI indicated for
the management of fibromyalgia.
*Research and development spending of approximately $575.0 million in
support of a significant late-stage product pipeline. This projection
includes planned milestone payments of approximately $70.0 million and
represents, in total, an increase of around 13% from last year's spend levels
excluding initial licensing payments.
* An effective tax rate for fiscal 2010 of approximately 21.5%
* Diluted shares outstanding will average approximately 303,000,000 for
the fiscal year ending March 31, 2010.
Howard Solomon, Chairman and Chief Executive Officer of Forest, said:
"Fiscal 2009 was a year of solid performance from our key promoted products,
including a stronger than anticipated first year performance from Bystolic.
During the year we were granted two important marketing approvals from the
FDA. Firstly, Savella was approved for the management of fibromyalgia,
following a first cycle review. Savella is a valuable new treatment option
for patients with the chronic and often debilitating condition of
fibromyalgia. Also, Lexapro received approval for the important additional
indication for the acute and maintenance treatment of major depressive
disorder in adolescents, 12 to 17 years of age. Further, we received a patent
term extension for Namenda which extends its exclusivity to April, 2015.
Along with the steady progress of our product pipeline, we were also very
pleased to announce the addition of two late-stage products. We partnered
with the Phenomix Corporation to develop and commercialize dutogliptin, for
the treatment of Type 2 diabetes mellitus and with Pierre Fabre Medicament to
develop and commercialize levomilnacipran for the treatment of depression.
In fiscal 2010, we will continue to advance our product development
pipeline, which includes six products in Phase III development and two
products currently in Phase II-b development that we expect to progress into
Phase III later this year. Very shortly we will begin additional Phase III
studies of aclidinium, for the treatment of COPD, to provide further support
for higher and/or more frequent dosage regimens which we expect will
significantly increase the potential clinical utility of this novel compound.
In the coming months we expect to file a sNDA for Bystolic for the treatment
of congestive heart failure, which if approved, will further enhance the sales
potential of this already successful recent product launch. By mid-year we
expect to report Phase III clinical data for ceftaroline, a broad-spectrum
cephalosporin antibiotic with activity against gram-positive bacteria,
including MRSA and gram-negative bacteria, for the treatment of community
acquired pneumonia (CAP). If the CAP data is positive, we will submit an NDA,
together with the positive results that we have already reported for the
treatment of complicated skin and skin structure infections, around the end of
this calendar year. We are in the process of initiating additional Phase III
studies for dutogliptin, for the treatment of Type 2 diabetes mellitus. Also
around mid-year we expect to begin Phase III studies for levomilnacipran, for
the treatment of depression. We have commenced Phase III studies for
linaclotide, for the treatment of chronic constipation and shortly, we expect
to begin Phase III trials for the additional indication of constipation
predominant irritable bowel syndrome. Linaclotide is a promising novel
compound that may offer a much needed therapy for this very large and
underserved patient population. Later this year we anticipate receiving Phase
II-b data for cariprazine, for the treatment of schizophrenia, and if
positive, we expect to initiate Phase III studies for the treatment of
patients with acute mania associated with bipolar I disorder. We also expect
to receive Phase II clinical data for oglemilast, for the treatment of COPD,
later this year.
As is evident from our pipeline of both late and earlier stage products,
Forest continues to have access, often preferential access, to the many new
compounds initially developed by other companies, some also based in the U.S.
and others outside the U.S. Importantly, Forest is viewed as a highly
desirable development and marketing partner, often precisely because of our
size and past performance. Accordingly, we expect to enter into additional
development agreements for product opportunities during this and subsequent
years. We believe that supporting our currently marketed products and seeking
additional compounds through our business development efforts will deliver the
sales and earnings necessary to both replace and exceed the revenues lost due
to the expiry of marketing exclusivity for Lexapro and Namenda."
Use of Non-GAAP Financial Information
This press release contains 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 diluted earnings per share
prepared in accordance with GAAP.
FOREST LABORATORIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
THREE MONTHS TWELVE MONTHS
ENDED MARCH 31 ENDED MARCH 31
2008 2009 2008 2009
Reported Diluted Earnings
Per Share: $0.55 $0.31 $3.06 $2.52
Specified items, per share,
net of tax:
USAO Investigation - 0.45 - 0.45
Azor Deal Termination - - - 0.08
Research and Development
Ironwood Licensing Payment - 0.15 -
Novexel Licensing Payment 0.35 - 0.35 -
Phenomix and Pierre Fabre
Licensing Payments - - - 0.41
Adjusted Non-GAAP Diluted
Earnings Per Share: $0.90 $0.76 $3.56 $3.46
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 May 5, 2009 at both websites and also by dialing
1-800-642-1687 (US investors) or +1-706-645-9291 (international investors)
Conference Call ID 92011267.
About Forest Laboratories
Forest Laboratories (NYSE: FRX) is a U.S.-based pharmaceutical company
with a long track record of building partnerships and developing and marketing
products that make a positive difference in people's lives. In addition to
its well-established franchises in therapeutic areas of the central nervous
and cardiovascular systems, Forest's current pipeline includes product
candidates in all stages of development and across a wide range of therapeutic
areas. The Company is headquartered in New York, NY. To learn more about
Forest Laboratories, 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 Reports on Form 10-K, Quarterly Reports on Form 10-Q, and
any subsequent SEC filings.
FOREST LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS TWELVE MONTHS
ENDED MARCH 31 ENDED MARCH 31
2009 2008 2009 2008
(In thousands, except per share amounts)
Revenues:
Net sales $896,726 $898,703 $3,636,055 $3,501,802
Contract revenue 55,203 60,105 209,000 216,500
Interest income 12,751 31,148 74,409 108,680
Other income 797 897 3,318 9,347
Net revenues 965,477 990,853 3,922,782 3,836,329
Costs and expenses:
Cost of goods sold 207,684 210,376 816,680 800,114
Selling, general and
Administrative 515,090 327,426 1,474,274 1,154,845
Research and development 123,774 255,081 661,294 670,973
846,548 792,883 2,952,248 2,625,932
Income before
income tax expense 118,929 197,970 970,534 1,210,397
Income tax expense 26,166 25,200 202,791 242,464
Net income $92,763 $172,770 $767,743 $967,933
Net income per share:
Basic $0.31 $0.55 $2.53 $3.08
Diluted $0.31 $0.55 $2.52 $3.06
Weighted average number of
shares outstanding:
Basic 301,614 311,390 303,609 314,660
Diluted 302,123 312,634 304,400 316,133
CONTACT: Frank J. Murdolo, Vice President, Investor Relations of Forest
Laboratories, Inc., +1-212-224-6714, or Frank.Murdolo@frx.com