Allergan CEO: Company Looking at All Options to Boost Share Price
In the midst of a number of investor concerns over falling share prices at Allergan, Chief Executive Officer Brent Saunders said he and the company’s board of directors are responding with a sense of urgency to create value for the company.
Saunders comments were made during a call with investors and analysts Tuesday after the company released its quarterly report that showed a 2 percent dip in revenue for the quarter. Allergan posted net revenue of $3.59 billion for the three month period, down from $3.67 billion in the same quarter last year. One of the reasons for the drop in revenue was declining sales of its blockbuster eye treatment, Restasis. Net revenues in the quarter were $231.7 million, a decrease of 9.4 percent versus the prior year quarter, Allergan said. Those net earnings could have been lower as generic versions of Restasis have just begun to hit the market but have not had time to carve away from Allegan’s market share.
Botox continues to be a strong driver for Allergan. The medication brought in more than $600 million in the quarter.
Earlier this year, key Allergan investor Appaloosa LP, helmed by billionaire David Tepper, called on the company to make changes to its board of directors, including replacing Saunders as chairman. That call came about a month after Appaloosa called for the separation of the role of CEO and chairman of the board.
During Tuesday’s call, Saunders said he has taken the criticisms of Tepper and other disappointed shareholders seriously. He said the company has “benefited from the candid and constructive shareholder feedback” and noted that the company is focused on creating more value at Allergan. He said the company’s “focus and interests” are aligned with the shareholders who want more value.
“We have been on this transformation journey for almost three years since the sale of our generics business. Since then, we have worked to grow our key products, add depth and breadth to our pipeline, and build scale to compete in four therapeutic areas,” Saunders said, according to a transcript of the call. “I share in the disappointment that the value creation has not materialized yet. But when I look at the strength of our core business, the potential of our pipeline and the dedication of our team and board, I have great confidence that it will.”
Saunders outlined several ways the company could boost its value. He said it will focus on growing its core business and “realizing value” through its pipeline by hitting key R&D milestones. He pointed out that the company’s core business has grown over the past year as a key revenue driver. In 2017, Allergan’s core business drove 79 percent of revenue and in 2018 that increased to 87 percent of revenue. He expects that growth to continue over the next 18 months. During that period, Saunders said Allergan is “well-positioned with five anticipated FDA approvals.”
Allergan anticipates regulatory approval for bipolar medication cariprazine later this month and a December decision on its migraine medication ubrogepant. The company will also seek approval for wet age-related macular degeneration treatment abicipar later this year. By the end of the year, Allergan anticipates launching its muscle toning system CoolTone, which is part of its CoolSculpting family. In 2020, Saunders said Allergan anticipates seeking regulatory approval for dropless glaucoma therapy Bimatoprost SR.
Saunders did point to the failure of its Phase III failure of Rapastinel, an adjunctive treatment for major depressive disorder. He said the company was disappointed in the results but remains committed to bringing new medications to patients in need, noting that “… our pipeline supports this commitment.
“The sense of urgency to create value is high and the board is actively and continuously reviewing alternative avenues that could unlock value in the near term. I assure you that the board, management team and I recognize the urgency and we will take decisive action to drive value-enhancing opportunities,” Saunders said.