Operating Results Attributable to Stockholders
For the quarter ended June 30, 2009:
Allergan reported $0.58 diluted earnings per share attributable to stockholders compared to $0.47 diluted earnings per share attributable to stockholders reported for the second quarter of 2008. Allergan’s non-GAAP diluted earnings per share attributable to stockholders were $0.75 in the second quarter of 2009, compared to non-GAAP diluted earnings per share attributable to stockholders of $0.63 in the second quarter of 2008, a 19.0 percent year-over-year increase.
Product Sales
For the quarter ended June 30, 2009:
Allergan’s total product net sales were $1,118.7 million. Total product net sales decreased 3.2 percent as compared to total product net sales in the second quarter of 2008. On a constant currency basis, total product net sales increased 2.2 percent compared to total product net sales in the second quarter of 2008. Total specialty pharmaceuticals net sales decreased 0.6 percent as compared to total specialty pharmaceuticals net sales in the second quarter of 2008. On a constant currency basis, total specialty pharmaceuticals net sales increased 4.8 percent compared to total specialty pharmaceuticals net sales in the second quarter of 2008. Total medical devices net sales decreased 13.9 percent, or 8.5 percent on a constant currency basis, compared to total medical devices net sales in the second quarter of 2008.
“Our balanced portfolio of products, the contribution from recently launched products, disciplined execution of our operating plans and management’s attention to cost have all contributed to strong financial performance in the second quarter,” said David E.I. Pyott, Allergan’s Chairman of the Board and Chief Executive Officer. “Furthermore, we are excited by the recent FDA approval of OZURDEX™ (dexamethasone intravitreal implant) 0.7 mg and look forward to entering the rapidly growing retina market with the first FDA-approved drug treatment for macular edema following retinal vein occlusion.”
Product and Pipeline Update
During the second quarter of 2009:
On April 15, 2009, Allergan received approval in Canada for LUMIGAN® (bimatoprost ophthalmic solution) 0.01% for the reduction of elevated intraocular pressure in patients with open-angle glaucoma or ocular hypertension. On April 30, 2009, Allergan commented on the U.S. Food and Drug Administration’s (FDA) requested class labeling for botulinum toxin treatments.
On May 26, 2009, Allergan announced that it received a complete response letter from the FDA regarding Allergan's Supplemental Biologics License Application (sBLA) for BOTOX® (Botulinum Toxin Type A) to treat upper limb spasticity. On June 18, 2009, Allergan announced that the FDA approved OZURDEX™ (dexamethasone intravitreal implant) 0.7 mg as the first drug therapy indicated for the treatment of macular edema following branch retinal vein occlusion or central retinal vein occlusion.
Allergan presented to the FDA the results from its two Phase III studies on the use of BOTOX® for the prophylactic treatment of headache in adults suffering from chronic migraine and completed an end-of-Phase III meeting and discussions with the FDA. Incorporating feedback from the FDA, Allergan intends to file its sBLA with the FDA for the use of BOTOX® in chronic migraine by the end of the third quarter of 2009.
Following the end of the second quarter of 2009:
On July 7, 2009, Senju Pharmaceutical Co., Ltd received approval from the Japanese Ministry of Health, Labour and Welfare for LUMIGAN™ Ophthalmic Solution 0.03% for the treatment of glaucoma or ocular hypertension. Allergan and Senju had previously entered into an exclusive licensing agreement in Japan to market and develop LUMIGAN™ within the ophthalmic specialty area. Senju will pay Allergan a royalty based on LUMIGAN™ sales in Japan.
On July 14, 2009, Allergan announced Korea Food and Drug Administration (KFDA) approval of LATISSE® (bimatoprost ophthalmic solution) 0.03%, a novel treatment for eyelash hypotrichosis or inadequate eyelashes. LATISSE® is the first and only science-based treatment approved by the FDA and KFDA to enhance eyelash prominence as measured by increases in length, thickness and darkness of eyelashes.
On July 23, 2009, Allergan announced FDA approval of ACUVAIL™ (ketorolac tromethamine ophthalmic solution) 0.45%, an advanced, preservative-free formulation of ketorolac, a nonsteroidal anti-inflammatory drug indicated for the treatment of pain and inflammation following cataract surgery.
A joint venture was created in Korea with Samil Pharmaceutical Co. Ltd. following decades of partnership to establish a leading position in ophthalmic pharmaceuticals.
Outlook
For the full year of 2009, Allergan estimates:
Total product net sales between $4,200 million and $4,300 million.
Total specialty pharmaceuticals net sales between $3,505 million and $3,560 million.
Total medical devices net sales between $695 million and $740 million.
ALPHAGAN® Franchise product net sales between $360 million and $380 million.
LUMIGAN® Franchise product net sales between $430 million and $450 million.
RESTASIS® product net sales between $490 million and $510 million.
SANCTURA® Franchise product net sales at approximately $70 million.
BOTOX® product net sales between $1,200 million and $1,220 million.
LATISSE® product net sales at approximately $60 million.
Breast aesthetics product net sales between $265 million and $280 million.
Obesity intervention product net sales between $245 million and $260 million.
Facial aesthetics product net sales between $185 million and $200 million.
Non-GAAP cost of sales to product net sales ratio between 17.0% and 17.5%.
Other revenue at approximately $60 million.
Non-GAAP selling, general and administrative expenses to product net sales ratio at approximately 39%.
Non-GAAP research and development expenses to product net sales ratio between 16% and 17%.
Amortization of acquired intangible assets at approximately $20 million. This guidance excludes the amortization of acquired intangible assets associated with the Inamed, Cornéal, EndoArt, Esprit, and Samil acquisitions and the ACZONE® asset purchase.
Non-GAAP diluted earnings per share attributable to stockholders guidance between $2.71 and $2.75.
Diluted shares outstanding between approximately 304 million and 306 million.
Effective tax rate on non-GAAP earnings at approximately 29%.
For the third quarter of 2009, Allergan estimates:
Total product net sales between $1,050 million and $1,100 million.
Non-GAAP diluted earnings per share attributable to stockholders guidance between $0.67 and $0.69.
On January 1, 2009, Allergan adopted Financial Accounting Standards Board Staff Position APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)(FSP APB 14-1), which requires retrospective application to prior periods. The impact from the adoption of this accounting rule on the previously reported GAAP results for the second quarter and first six months of 2008 was a reduction of diluted earnings per share attributable to stockholders of $0.01 and $0.02, respectively, from the amounts previously reported. Non-GAAP diluted earnings per share attributable to stockholders for the second quarter and first six months of 2008 were not impacted.
Historical non-GAAP basic and diluted earnings per share attributable to stockholders and guidance amounts for non-GAAP diluted earnings per share attributable to stockholders, non-GAAP cost of sales, non-GAAP selling, general and administrative expenses, non-GAAP research and development expenses, non-GAAP amortization of acquired intangible assets as well as non-GAAP net sales reported in constant currency are presented as non-GAAP financial measures. A reconciliation of each of these measures to the most directly comparable GAAP financial measure is included in the financial tables of this press release and the accompanying footnotes. The reconciliation for the guidance amounts in the financial tables includes historical non-GAAP adjustments and an estimate of the future effect from amortization of acquired intangible assets and non-cash interest expense associated with amortization of convertible debt discount.
All prior period information in the financial tables of this press release has been retrospectively revised due to the adoptions of FSP APB 14-1 and Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51.
Forward-Looking Statements
In this press release, the statements regarding product development, market potential, expected growth, anticipated product filings, approvals and labeling, the statements by Mr. Pyott as well as Allergan’s earnings per share, product net sales, revenue forecasts, future investment allocations, and any other future performance, among other statements above, are forward-looking statements. 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 a quarter’s end and year’s end. 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.
Any other statements in this press release that refer to Allergan’s expected, estimated or anticipated future results are forward-looking statements. 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, 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 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, as well as the general impact of the current economic crisis, 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 Securities and Exchange Commission, including the discussion under the heading “Risk Factors” in Allergan’s 2008 Form 10-K and Allergan’s Form 10-Q for the quarter ended March 31, 2009. Copies of Allergan’s press releases and additional information about Allergan is available at www.allergan.com or you can contact the Allergan Investor Relations Department by calling 714-246-4636.
About Allergan, Inc.
Founded in 1950, Allergan, Inc., with headquarters in Irvine, California, is a multi-specialty health care company that discovers, develops and commercializes innovative pharmaceuticals, biologics and medical devices that enable people to live life to its greatest potential – to see more clearly, move more freely, express themselves more fully. The Company employs more than 8,000 people worldwide and operates state-of-the-art R&D facilities and world-class manufacturing plants. In addition to its discovery-to-development research organization, Allergan has global marketing and sales capabilities with a presence in more than 100 countries.
