Allergan Reports Fourth Quarter 2012 Operating Results

IRVINE, Calif.--(BUSINESS WIRE)--Feb 5, 2013 - Allergan, Inc. (NYSE: AGN) today announced operating results for the quarter ended December 31, 2012. Allergan also announced that its Board of Directors has declared a fourth quarter dividend of $0.05 per share, payable on March 21, 2013 to stockholders of record on February 28, 2013.

Operating Results Attributable to Stockholders

For the quarter ended December 31, 2012:

 

  • Allergan reported $1.06 diluted earnings per share attributable to stockholders compared to $0.90 diluted earnings per share attributable to stockholders for the fourth quarter of 2011.
  • Allergan reported $1.15 non-GAAP diluted earnings per share attributable to stockholders compared to $1.00 non-GAAP diluted earnings per share attributable to stockholders for the fourth quarter of 2011, a 15.0 percent increase.
  • Diluted and non-GAAP diluted earnings per share for the fourth quarter of 2012 exclude the full year 2012 impact of the U.S. Research and Development tax credit, which was signed into law on January 2, 2013 and retroactively reinstated to January 1, 2012. The estimated impact of the Research and Development tax credit on net earnings attributable to Allergan for the full year 2012, which will be reported in Allergan's operating results in the first quarter of 2013, was approximately $17.3 million, or $0.06 diluted earnings per share based on weighted average diluted shares outstanding of 307.1 million for the full year 2012.

Product Sales

For the quarter ended December 31, 2012:

 

  • Allergan reported $1,484.6 million total product net sales. Total product net sales increased 7.4 percent compared to total product net sales in the fourth quarter of 2011. On a constant currency basis, total product net sales increased 8.1 percent compared to total product net sales in the fourth quarter of 2011.
    • Total specialty pharmaceuticals net sales increased 8.2 percent, or 9.0 percent on a constant currency basis, compared to total specialty pharmaceuticals net sales in the fourth quarter of 2011.
    • Total medical devices net sales increased 2.9 percent, or 3.6 percent on a constant currency basis, compared to total medical devices net sales in the fourth quarter of 2011.

“Evidenced by our recent acquisitions of SkinMedica and MAP Pharmaceuticals and our decision to declare our obesity intervention assets as a discontinued business, we are dynamically managing our portfolio to drive long term sales growth,” said David E.I. Pyott, Allergan's Chairman of the Board, President and Chief Executive Officer. “In 2013, we look forward to making a notable increase in R&D investment, to secure several regulatory approvals and to growing our markets.”

Based on internal information and assumptions, full year 2012 therapeutic sales accounted for approximately 52% of total BOTOX® (onabotulinumtoxinA) sales and increased approximately 13% compared to 2011. Full year 2012 aesthetic sales accounted for approximately 48% of total BOTOX® sales and increased approximately 8% compared to 2011.

Product and Pipeline Update

During the fourth quarter of 2012:

 

  • On November 16, 2012, Allergan announced that it had entered into a definitive agreement with SkinMedica, Inc. to acquire the privately held company's topical aesthetics skin care business. On December 19, 2012, Allergan announced completion of the acquisition of SkinMedica, Inc. Under the terms of the agreement, Allergan paid approximately $350 million (subject to certain adjustments) for the business, which includes a variety of “physician dispensed” non-prescription aesthetic skin care products and prescription products.
  • On November 19, 2012, Allergan received the European Commission decision for a new preservative-free formulation of LUMIGAN® (Bimatoprost Ophthalmic Solution) 0.03% in single-dose containers for the 27 countries of the European Union. LUMIGAN® is licensed for the reduction of elevated intraocular pressure (IOP) in adults with chronic open-angle glaucoma and ocular hypertension and is now available in a formulation for those patients who require a preservative-free treatment.
  • In December 2012, the U.S. District Court in Santa Ana, California granted Allergan's summary judgment motions, finding that Lifetech's Rapidlash®, Cosmetic Alchemy's LiLash®, and Rocasuba's neuLash® lines of products are drugs sold without approval and are therefore misbranded in violation of California law as well as the federal statutes which California law incorporates. On October 12, 2012, the court denied a motion by Athena Cosmetics, Inc. for reconsideration of the court's decision to grant Allergan's motion for summary judgment against Athena Cosmetics, Inc. on our unfair competition cause of action. In July 2012, the court granted Allergan's summary judgment motion, finding that Athena's Revitalash® line of products are drugs sold without approval and are therefore misbranded in violation of California law as well as the federal statutes which California law incorporates.
  • On December 19, 2012, Allergan announced that BOTOX® (botulinum toxin type A) received a positive opinion from the Irish Medicines Board for the treatment of idiopathic overactive bladder (OAB) with symptoms of urinary incontinence, urgency and frequency in adult patients who have an inadequate response to, or are intolerant of, anticholinergic medications. This is an important step towards securing national licenses in the 14 European countries involved in the Mutual Recognition Procedure.
  • Allergan submitted a supplemental biologics license application (sBLA) with the U.S. Food and Drug Administration (FDA) for the use of BOTOX® Cosmetic (onabotulinumtoxinA) for the temporary improvement in the appearance of moderate to severe lateral canthal lines (crow's feet lines) in adults treated either alone or simultaneously with glabellar lines.

Following the end of the fourth quarter of 2012:

 

  • On January 18, 2013, Allergan announced that the FDA approved BOTOX® (onabotulinumtoxinA) for the treatment of overactive bladder with symptoms of urge urinary incontinence, urgency and frequency in adults who have had an inadequate response to or are intolerant of an anticholinergic medication.
  • On January 22, 2013, Allergan and MAP Pharmaceuticals announced that they entered into a definitive merger agreement whereby Allergan will acquire 100% of the shares of MAP Pharmaceuticals for a price of $25.00 per share. MAP Pharmaceuticals is a biopharmaceutical company focused on developing and commercializing new therapies in Neurology, including Levadex®, an orally inhaled drug for the potential acute treatment of migraine in adults. Levadex® is currently under review with the FDA.
  • In January 2013, Allergan restructured its collaboration agreement with Spectrum Pharmaceuticals, Inc. (“Spectrum”) pursuant to which Spectrum reacquired all rights from Allergan under the collaboration agreement in exchange for agreeing to pay Allergan a royalty on future net sales of specified products. Going forward, Allergan will have no further obligations under the agreement to share development costs or perform any development, regulatory or other activities.
  • On February 1, 2013, Allergan completed its previously announced review of strategic options for maximizing the value of its obesity intervention business, and has formally committed to pursue a sale of that business unit. Accordingly, Allergan will begin to consider offers for the sale of that business unit and currently expects to execute a signed agreement in the first half of 2013. As a result of Allergan's approved plan to sell its obesity intervention business unit, beginning in the first quarter of 2013, Allergan expects to report the financial results from that business unit in discontinued operations in its statement of earnings and balance sheet, and intends to retrospectively adjust its prior period statements of earnings and its balance sheet as of December 31, 2012 to reflect the classification of assets and liabilities held for sale as discontinued operations. In the first quarter of 2013, Allergan expects to report income from discontinued operations and a separate expected disposal loss from the write-down to fair value of the net assets held for sale. Allergan is currently unable to estimate the range of the expected disposal loss. As previously stated, Allergan intends to offset any potential earnings dilution related to this transaction.

Outlook

For the full year of 2013, Allergan expects:

 

  • Total product net sales between $5,900 million and $6,200 million, which excludes the obesity intervention business.
    • Total specialty pharmaceuticals net sales between $5,100 million and $5,340 million.
    • Total medical devices net sales between $800 million and $860 million.
    • ALPHAGAN® franchise product net sales between $440 million and $470 million.
    • LUMIGAN® franchise product net sales between $630 million and $660 million.
    • RESTASIS® product net sales between $830 million and $870 million.
    • BOTOX® product net sales between $1,900 million and $2,000 million.
    • LATISSE® product net sales at approximately $110 million.
    • Breast aesthetics product net sales between $390 million and $420 million.
    • Facial aesthetics product net sales between $410 million and $440 million.
  • Non-GAAP cost of sales to product net sales ratio at approximately 13.5%.
  • Non-GAAP other revenue at approximately $90 million.
  • Non-GAAP selling, general and administrative expenses to product net sales ratio between 37% and 38%.
  • Non-GAAP research and development expenses to product net sales ratio at approximately 16.5%.
  • Non-GAAP amortization of intangible assets at approximately $25 million. This expectation excludes the amortization of certain intangible assets associated with business combinations, asset purchases and product licenses.
  • Non-GAAP diluted earnings per share attributable to stockholders between $4.75 and $4.83, which excludes the 2012 impact of the Research and Development tax credit, which was signed into law on January 2, 2013 and retroactively reinstated to January 1, 2012, and excludes the dilutive impact of the proposed acquisition of MAP Pharmaceuticals as discussed on the January 23, 2013 conference call.
  • Diluted shares outstanding at approximately 303 million.
  • Effective tax rate on non-GAAP earnings between 26% and 27%.

For the first quarter of 2013, Allergan expects:

 

  • Total product net sales between $1,375 million and $1,450 million, which excludes the obesity intervention business.
  • Non-GAAP diluted earnings per share attributable to stockholders between $0.94 and $0.96, which excludes the 2012 impact of the Research and Development tax credit, which was signed into law on January 2, 2013 and retroactively reinstated to January 1, 2012, and excludes the dilutive impact of the proposed acquisition of MAP Pharmaceuticals as discussed on the January 23, 2013 conference call.

In this press release, Allergan reports certain historical and expected non-GAAP results, including earnings attributable to Allergan, Inc., non-GAAP basic and diluted earnings per share attributable to stockholders as well as non-GAAP other revenue, non-GAAP cost of sales, non-GAAP selling, general and administrative expenses, non-GAAP research and development expenses, non-GAAP amortization of intangible assets, non-GAAP impairment of intangible assets and related costs, non-GAAP restructuring charges, non-GAAP interest expense, non-GAAP other, net, non-GAAP earnings before income taxes, non-GAAP provision for income taxes, non-GAAP net earnings and non-GAAP net sales reported in constant currency. Non-GAAP financial measures are reconciled to the most directly comparable GAAP financial measure in the financial tables of this press release and the accompanying footnotes. The information that accompanies the financial tables of this press release also includes an explanation of why Allergan uses these non-GAAP financial measures, certain limitations associated with the use of these non-GAAP financial measures, the manner in which Allergan management compensates for those limitations, and the reasons why Allergan management believes that these non-GAAP financial measures provide useful information to investors.

Forward-Looking Statements

This press release contains forward-looking statements, including but not limited to the statements by Mr. Pyott and other statements regarding product development, external corporate development initiatives and strategic partnering transactions, market potential, expected growth and regulatory approvals as well as Allergan's earnings per share, product net sales, revenue forecasts and any other statements that refer to Allergan's expected, estimated or anticipated future results. Because forecasts are inherently estimates that cannot be made with precision, Allergan's performance at times differs materially from its estimates and targets, and Allergan often does not know what the actual results will be until after the end of the applicable reporting period. Therefore, Allergan will not report or comment on its progress during a current quarter except through public announcement. Any statement made by others with respect to progress during a current quarter cannot be attributed to Allergan.

All forward-looking statements in this press release reflect Allergan's current analysis of existing trends and information and represent Allergan's judgment only as of the date of this press release. Actual results may differ materially from current expectations based on a number of factors affecting Allergan's businesses, including, among other things, the following: changing competitive, market and regulatory conditions; the timing and uncertainty of the results of both the research and development and regulatory processes; domestic and foreign health care and cost containment reforms, including government pricing, tax and reimbursement policies; technological advances and patents obtained by competitors; the performance, including the approval, introduction, and consumer and physician acceptance of new products and the continuing acceptance of currently marketed products; the effectiveness of advertising and other promotional campaigns; the timely and successful implementation of strategic initiatives; the results of any pending or future litigation, investigations or claims; the uncertainty associated with the identification of and successful consummation and execution of external corporate development initiatives and strategic partnering transactions; and Allergan's ability to obtain and successfully maintain a sufficient supply of products to meet market demand in a timely manner. In addition, U.S. and international economic conditions, including higher unemployment, financial hardship, consumer confidence and debt levels, taxation, changes in interest and currency exchange rates, international relations, capital and credit availability, the status of financial markets and institutions, fluctuations or devaluations in the value of sovereign government debt, as well as the general impact of continued economic volatility, can materially affect Allergan's results. Therefore, the reader is cautioned not to rely on these forward-looking statements. Allergan expressly disclaims any intent or obligation to update these forward-looking statements except as required to do so by law.

Additional information concerning the above-referenced risk factors and other risk factors can be found in press releases issued by Allergan, as well as Allergan's public periodic filings with the U.S. Securities and Exchange Commission, including the discussion under the heading “Risk Factors” in Allergan's 2011 Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. Copies of Allergan's press releases and additional information about Allergan are available at www.allergan.com or you can contact the Allergan Investor Relations Department by calling 714-246-4636.

About Allergan, Inc.

Allergan is a multi-specialty health care company established more than 60 years ago with a commitment to uncover the best of science and develop and deliver innovative and meaningful treatments to help people reach their life's potential. Today, we have approximately 10,800 highly dedicated and talented employees, global marketing and sales capabilities with a presence in more than 100 countries, a rich and ever-evolving portfolio of pharmaceuticals, biologics, medical devices and over-the-counter consumer products, and state-of-the-art resources in R&D, manufacturing and safety surveillance that help millions of patients see more clearly, move more freely and express themselves more fully. From our beginnings as an eye care company to our focus today on several medical specialties, including eye care, neurosciences, medical aesthetics, medical dermatology, breast aesthetics, obesity intervention and urologics, Allergan is proud to celebrate more than 60 years of medical advances and proud to support the patients and physicians who rely on our products and the employees and communities in which we live and work. For more information regarding Allergan, go to: www.allergan.com.

® and ™ marks owned by Allergan, Inc.
Revitalash® is a registered trademark of Athena Cosmetics, Inc.
Rapidlash® is a registered trademark of Lifetech Resources
LiLash® is a registered trademark of Kurt Wasserman Consulting
neuLash® is a registered trademark of Lifetech Resources
Levadex® is a registered trademark of MAP Pharmaceuticals, Inc.

ALLERGAN, INC.
Condensed Consolidated Statements of Earnings and
Reconciliation of Non-GAAP Adjustments
(Unaudited)
   
        Three months ended
In millions, except per share amounts

 

      December 31, 2012       December 31, 2011
              Non-GAAP                   Non-GAAP      
        GAAP     Adjustments     Non-GAAP       GAAP     Adjustments     Non-GAAP
Revenues                                          
Product net sales       $ 1,484.6       $ --       $ 1,484.6         $ 1,382.8       $ --       $ 1,382.8  
Other revenues         24.3         --         24.3           19.5         --         19.5  
          1,508.9         --         1,508.9           1,402.3         --         1,402.3  
                                           
Operating costs and expenses                                          
Cost of sales (excludes amortization of intangible assets)

 

        189.2

 

        --

 

        189.2

 

          182.0

 

        --

 

        182.0

 

 
Selling, general and administrative         557.9         6.9

 

(a)(b)(c)(d)

 

      564.8           551.9         (12.3 )(k)(l)(m)

 

      539.6  
Research and development         239.3         --         239.3           226.4       (0.2

 

)(n)

 

      226.2  
Amortization of intangible assets         33.2         (27.4 )(e)

 

      5.8           32.0         (26.1 )(e)

 

      5.9  
Impairment of intangible assets and related costs         22.3         (22.3 )(f)

 

      --           --         --         --  
Restructuring charges         1.0         (1.0 )(g)

 

      --           --         --         --  
                                           
Operating income         466.0         43.8         509.8           410.0         38.6         448.6  
                                           
Non-operating income (expense)                                          
Interest income         1.9         --         1.9           1.3         --         1.3  
Interest expense         (14.8 )       0.1

 

(h)

 

      (14.7 )         (16.7 )       --         (16.7 )
Other, net         (3.8 )       0.1

 

(i)

 

      (3.7 )         (10.9 )     3.6

 

(o)(p)(q)

 

      (7.3 )
          (16.7 )       0.2         (16.5 )         (26.3 )       3.6         (22.7 )
                                           
Earnings before income taxes         449.3         44.0         493.3           383.7         42.2         425.9  
                                           
Provision for income taxes         124.1         17.0

 

(j)

 

      141.1           104.0       10.9

 

(r)

 

      114.9  
                                           
Net earnings         325.2         27.0         352.2           279.7         31.3         311.0  
                                           
Net earnings (loss) attributable to noncontrolling interest         1.0         --         1.0           (0.1 )       --         (0.1 )
                                           
Net earnings attributable to Allergan, Inc.       $ 324.2       $ 27.0       $ 351.2         $ 279.8       $ 31.3       $ 311.1

Posted: February 2013


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