May 11, 2016
By Alex Keown, BioSpace.com Breaking News Staff
DUBLIN – Shares of Allergan are up this morning following the company’s announcement that it intends to buy back up to $10 billion of its own stock after a revenue jump of 48 percent in the first quarter, driven by an increase in sales of Botox and Restasis, as well as growth from newer drugs like Linzess, which is used for irritable bowel syndrome.
Allergan expects full-year revenue of $17 billion.
“Our branded business continues to grow at a fast pace and is very well positioned in each of our seven therapeutic areas. As we look ahead, we see durable global brands with strong fundamentals, broad-based geographic expansion, and many opportunities to continue growing our innovative business,” Brent Saunders, president and chief executive officer of Allergan, said in a statement.
Allergan’s shares were trading at $230.37 this morning. The company’s stock repurchase program of up to $10 billion of common stock is contingent on the close of its generics unit sale to Teva Pharmaceuticals . Allergan expects to execute $4 to $5 billion in open market repurchases over four to six months, subject to favorable market conditions.
“We believe there is no greater investment than Allergan stock, given our powerful growth prospects,” Saunders said. “As we think about our capital deployment options post the close of the Teva transaction, in addition to the stock repurchase program, we will have the ability to pay down debt to maintain our investment grade credit ratings and preserve significant firepower to invest for growth.”
Allergan’s deal with Teva is expected to close in June. Teva and Allergan struck a $40.5 billion agreement in June 2015.
Additionally, Allergan intends to streamline its executive leadership under Saunders. Bill Meury, who oversaw the company’s branded drug sales, will become Allergan’s new chief commercial officer and supply-chain executive Bob Stewart will be Allergan’s new chief operating officer. Some other roles will be consolidated under existing positions.
Allergan reported revenue of $3.8 billion in the first quarter, which fell short of Wall Street expectations, the Associated Press reported. Analysts were expecting revenue of $3.95 billion. Saunders told Fox News the miss of the projected $3.95 billion was due to one-time events such as “its drug distribution unit’s expected loss of Target Corp.‘s pharmacy business.”
Allergan, which had been one of the biggest deal makers of the past few years, is looking inwardly after its planned merger with Pfizer fell apart. Although, even in the wake of what would have been one of the biggest mergers in the pharma industry, Allergan has still been aggressive in its M&A practices. In April, Allergan acquired Boston-based Topokine Therapeutics and its lead product, XAF5, a first-in-class topical agent to treat steatoblepharon, better known as “bags under the eyes.” One day after the Pfizer deal fell through, Allergan entered into an agreement with Heptares Therapeutics for exclusive global rights to a portfolio of novel subtype-selective muscarinic receptor agonists for the treatment of several neurological disorders, including Alzheimer’s disease.
