AbbVie Reports Third-Quarter 2014 Financial Results

NORTH CHICAGO, Ill., Oct. 31, 2014 /PRNewswire/ -- AbbVie (NYSE: ABBV) today announced financial results for the third quarter ended Sept. 30, 2014.

“Our third-quarter results reflect the strong performance of our business with double-digit growth from HUMIRA and several other key brands. Our underlying business grew nearly 14 percent in the quarter excluding lipids,” said Richard A. Gonzalez, chairman and chief executive officer, AbbVie. “We exceeded our outlook for the quarter and have significantly raised our original 2014 guidance. In the fourth quarter, we look forward to the U.S. approval of our interferon-free HCV combination, which will further accelerate sales and earnings growth in 2015 and beyond.”

Third-Quarter Results

• Worldwide sales were $5.019 billion in the third quarter, up 7.8 percent. On an operational basis, sales increased 8.3 percent, excluding a 0.5 percent unfavorable impact from foreign exchange rate fluctuations. Excluding sales from our lipid franchise due to the loss of exclusivity, sales increased 13.5 percent on an operational basis in the quarter.
• Third-quarter sales growth was driven primarily by the continued strength of HUMIRA. Global HUMIRA sales increased 17.5 percent, or 17.8 percent on an operational basis, excluding the impact of foreign exchange rate fluctuations. Total company sales growth was also driven by strong growth from key products including Kaletra, Synthroid, Creon, Synagis and Duodopa.
• The adjusted gross margin ratio in the third quarter was 81.1 percent, excluding intangible asset amortization and other specified items, up 140 basis points versus third-quarter 2013. The gross margin ratio under U.S. generally accepted accounting principles (GAAP) was 78.2 percent.
• Adjusted selling, general and administrative (SG&A) expense was 26.4 percent of sales in the third quarter, up 9.1 percent from the prior year, reflecting continued investment in our growth brands and the expected HCV launch. On a GAAP basis, SG&A was 31.8 percent of sales.
• Adjusted research and development (R&D) was 16.2 percent of sales in the quarter, up 14.4 percent from the prior year, reflecting funding actions in support of our mid- and late-stage pipeline and the continued pursuit of additional HUMIRA indications. On a GAAP basis, R&D was also 16.2 percent of sales.
• Net interest expense was $53 million on an adjusted basis and $128 million on a GAAP basis. The adjusted tax rate was 22.4 percent in the quarter and 26.3 percent on a GAAP basis.
• Third-quarter diluted earnings per share were $0.31 on a GAAP basis. Adjusted diluted earnings per share, excluding intangible asset amortization expense and other specified items, were $0.89.

Key Events from the Third Quarter

• On Oct. 20, AbbVie and Shire agreed to terminate their proposed merger following the decision by AbbVie’s board of directors on Oct. 15 to withdraw support for the proposed transaction. The Company’s decision was based upon its assessment of the Sept. 22, 2014 notice issued by the U.S. Department of Treasury. This notice included changes that negatively impacted the economics of the transaction. As a result, the original price for the proposed transaction could no longer be justified. The notice also introduced an unacceptable level of risk and uncertainty given the magnitude of the proposed changes and the stated intention of the Department of Treasury to continue to revise tax principles to further impact such transactions.
• On Oct. 20, the AbbVie board of directors authorized a new $5 billion stock repurchase program and increased the company’s quarterly cash dividend by nearly 17 percent from $0.42 per share to $0.49 per share, payable on Feb. 13, 2015 to stockholders of record as of Jan. 15, 2015. Additionally, on Sept. 19, the board of directors declared a quarterly cash dividend of $0.42 per share, payable Nov. 17, 2014 to stockholders of record at the close of business on Oct. 15, 2014.
• AbbVie and Infinity Pharmaceuticals entered into a global collaboration to develop and commercialize duvelisib (IPI-145), Infinity’s oral inhibitor of phosphoinositide-3-kinase (PI3K)-delta and PI3K-gamma. Duvelisib has shown clinical activity across a broad range of blood cancers, including indolent non-Hodgkin lymphoma (iNHL) and chronic lymphocytic leukemia (CLL). Infinity is conducting registration-focused trials evaluating the safety and efficacy of duvelisib, including DYNAMO, a Phase 2 study in patients with iNHL, and DUO, a Phase 3 study in patients with CLL.
• AbbVie and Calico announced a novel R&D collaboration intended to help the two companies discover, develop and bring to market new therapies for patients with age-related diseases, including for neurodegeneration and cancer. Under the agreement, the companies will combine their complementary strengths to accelerate the availability of new therapies: Calico will use its scientific expertise to establish a world-class research and development facility, with a focus on drug discovery and early drug development; and AbbVie will provide scientific and clinical development expertise and its strong commercial execution to bring new discoveries to market.
• The European Medicines Agency (EMA) and the U.S. Food and Drug Administration (FDA) granted orphan drug designation to AbbVie’s investigational compound ABT-414, an anti-epidermal growth factor receptor antibody drug conjugate, which is being evaluated for safety and efficacy in patients with glioblastoma multiforme. Glioblastoma multiforme is the most common and most aggressive type of malignant primary brain tumor and has a five year survival rate of approximately 4 percent.
• AbbVie announced results from a Phase 3 pivotal study demonstrating that HUMIRA is effective in reducing common clinical signs and symptoms in moderate-to-severe hidradenitis suppurativa (HS), specifically the number of abscesses and inflammatory nodules. These data were presented at the European Society for Dermatological Research (ESDR) meeting. Results from the PIONEER I study show that HS patients treated with HUMIRA 40 mg weekly achieved a significantly greater response versus those on placebo at week 12. AbbVie also recently presented new results from PIONEER II, a second pivotal HS study, at the 23rd Congress of the European Academy of Dermatology and Venereology (EADV) meeting. The results of this study, in combination with results from PIONEER I, will contribute to worldwide regulatory filings for an expanded use of HUMIRA.
• AbbVie and Biogen Idec announced the full results from the Phase 3 DECIDE clinical trial, which show ZINBRYTA (daclizumab high-yield process), dosed subcutaneously once a month, demonstrated a statistically significant improvement in reducing disease activity in people with relapsing-remitting multiple sclerosis (RRMS) compared to AVONEX (interferon beta-1a). These results were presented at the Sixth Triennial Joint Meeting of the Americas Committee for Treatment and Research in Multiple Sclerosis and the European Committee for Treatment and Research in Multiple Sclerosis (ACTRIMS-ECTRIMS) in Boston. We are engaged with worldwide authorities regarding the regulatory filings for ZINBRYTA. We continue to expect the submissions to occur in the first half of 2015.
• The FDA approved HUMIRA for reducing signs and symptoms, and achieving and maintaining clinical remission, in pediatric Crohn’s disease patients 6 years of age and older when certain other treatments have not worked well enough. This FDA approval represents the eighth indication for HUMIRA in the United States and makes it the first and only biologic treatment approved for use in this patient population that can be administered at home. Additionally, the FDA approved the extension of the HUMIRA indication for moderately to severely active polyarticular juvenile idiopathic arthritis (JIA) to reducing signs and symptoms in patients ages 2 and older.
• AbbVie announced that data from its ongoing Phase 1 through Phase 3 hepatitis C clinical development programs will be presented at the Annual Meeting of the American Association for the Study of Liver Diseases (AASLD) in Boston, November 7-11. Abstracts will be presented highlighting results from AbbVie’s investigational treatment combining three direct-acting antivirals (ABT-450/ritonavir, ombitasvir and dasabuvir) with or without ribavirin (RBV) in patients with genotype 1 chronic HCV infection. These abstracts include a Phase 2/3 study in patients co-infected with human immunodeficiency virus type 1 (TURQUOISE-I) and a Phase 2 study in liver transplant recipients without cirrhosis (CORAL-I). Additionally, Phase 2 data will be presented from investigational studies evaluating the combination of ABT-450/ritonavir and ombitasvir with or without RBV in genotype 4 patients (PEARL-I). AbbVie will also be presenting data from its two additional pipeline HCV compounds, ABT-493 and ABT-530.
• AbbVie released interim results from an ongoing Phase 2 study of its investigational compound veliparib in combination with chemotherapy, which showed a 35 percent improvement in progression-free survival and a 30 percent improvement in overall survival in patients with previously untreated metastatic or advanced non-small cell lung cancer (NSCLC). These results, which evaluated veliparib as a potential treatment for metastatic or advanced NSCLC, were presented for the first time at the 2014 Annual Congress of the European Society for Medical Oncology (ESMO) in Madrid, Spain.

Full-Year 2014 Outlook

Today, AbbVie is raising its adjusted diluted earnings-per-share guidance for the full-year 2014 to $3.25 to $3.27 from $3.06 to $3.16. AbbVie’s 2014 outlook continues to exclude any potential revenue from the expected 2014 U.S. launch of its HCV therapy. The company’s 2014 adjusted diluted earnings-per-share guidance excludes $2.10 per share of intangible asset amortization expense and other specified items primarily associated with separation costs, acquired IPR&D, Shire transaction costs and the Branded Prescription Drug Fee. Including these items, AbbVie’s diluted earnings-per-share guidance is $1.15 to $1.17 on a GAAP basis.

About AbbVie

AbbVie is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories. The company’s mission is to use its expertise, dedicated people and unique approach to innovation to develop and market advanced therapies that address some of the world’s most complex and serious diseases. AbbVie employs approximately 25,000 people worldwide and markets medicines in more than 170 countries. For further information on the company and its people, portfolio and commitments, please visit www.abbvie.com. Follow @abbvie on Twitter or view careers on our Facebook or LinkedIn page.

Conference Call

AbbVie will host an investor conference call today at 8:00 a.m. Central time to discuss our third-quarter performance. Participating on the call will be Rick Gonzalez, chairman and chief executive officer; Bill Chase, executive vice president and chief financial officer; Laura Schumacher, executive vice president, business development, external affairs and general counsel; Mike Severino, executive vice president, research and development and chief scientific officer; and Larry Peepo, vice president, investor relations. The call will be webcast through AbbVie’s Web site at www.abbvieinvestor.com.

Non-GAAP Financial Results

Financial results for 2013 and 2014 are presented on both a reported and a non-GAAP basis. Reported results were prepared in accordance with GAAP and include all revenue and expenses recognized during the period. Non-GAAP results adjust for certain non-cash items and for factors that are unusual or unpredictable, and exclude those costs, expenses, and other specified items presented in the reconciliation tables later in this release. AbbVie’s management believes non-GAAP financial measures provide useful information to investors regarding AbbVie’s results of operations and assist management, analysts, and investors in evaluating the performance of the business. Non-GAAP financial measures should be considered in addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP.

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