Allergan Reports Third Quarter 2019 Financial Results

• Q3 2019 GAAP Net Revenues of $4.05 Billion
• Q3 2019 GAAP Loss Per Share of $2.40; Non-GAAP Performance Net Income Per Share of $4.25
• Q3 2019 GAAP Operating Loss of $596.6 Million; Non-GAAP Operating Income of $1.76 Billion
• Q3 2019 GAAP Net Revenue Driven by Growth in Top Promoted Products Including VRAYLAR®, BOTOX®, JUVÉDERM® Collection, OZURDEX® and Lo LOESTRIN®
• Continues to Advance R&D Pipeline on Key Programs Including BLA Filing for Abicipar for Wet Age-Related Macular Degeneration (AMD); Ubrogepant for Migraine and Bimatoprost SR for Glaucoma NDAs Under FDA Review
• Raises Guidance for Full-Year 2019 Net Revenue; Reaffirms Guidance for Full-Year 2019 Non-GAAP Performance Net Income Per Share

DUBLIN, Nov. 5, 2019 /PRNewswire/ -- Allergan plc (NYSE: AGN) today reported its third quarter 2019 financial results including GAAP net revenues of $4.05 billion, a 3.6 percent increase from the prior year quarter.

THIRD QUARTER 2019 FINANCIAL RESULTS

Executive Commentary

"The third quarter 2019 results demonstrate our commitment to continued strong operational performance. The core business has grown and has been bolstered by significant pipeline progress, with three new molecular entities currently under regulatory review," said Brent Saunders, Chairman and CEO of Allergan. "VRAYLAR^®, BOTOX^® Cosmetic, JUVÉDERM^®, BOTOX^® Therapeutic, OZURDEX^® and Lo LOESTRIN^® continue to lead the way, with VRAYLAR^® growing 70 percent and U.S. BOTOX^® Cosmetic growing 10 percent in the third quarter from the prior year."

Third Quarter 2019 Results

GAAP operating loss in the third quarter of 2019 was $596.6 million compared to GAAP operating income of $257.5 million in the prior year quarter. Non-GAAP operating income in the third quarter of 2019 was $1.76 billion, a decrease of 7.7 percent versus the prior year quarter, partially impacted by divestitures, products that lost or are at risk of losing exclusivity and an increase in operating expenses. GAAP cash flow from operations for the third quarter of 2019 totaled $2.92 billion. Cash flow from operations in the third quarter includes a one-time tax refund of $1.6 billion of capital gains taxes previously paid and attributable to tax losses recorded in prior periods.

Operating Expenses

Total GAAP Selling, General and Administrative (SG&A) Expense was $1.99 billion for the third quarter of 2019, compared to $1.04 billion in the prior year quarter. Total non-GAAP SG&A expense was $1.18 billion for the third quarter of 2019, an increase of 14.3 percent from the prior year quarter, primarily related to an increase in spending to support key products and new product launches. GAAP R&D investment for the third quarter of 2019 was $474.5 million, compared to $424.2 million in the third quarter of 2018. Non-GAAP R&D investment for the third quarter of 2019 was $448.9 million, an increase of 14.0 percent compared to the prior year quarter, due to increased direct project spend to support pipeline advancement and new product launches.

Amortization, Tax and Capitalization

Amortization expense for the third quarter of 2019 was $1.54 billion, compared to $1.59 billion in the third quarter of 2018. The Company's GAAP tax rate was -2.4 percent in the third quarter of 2019. The Company's non-GAAP adjusted tax rate was 11.2 percent in the third quarter of 2019. As of September 30, 2019, Allergan had cash and marketable securities of $4.56 billion and outstanding indebtedness of $22.5 billion.

Operating Charges and Impairments

Allergan recorded a pre-tax charge of $750 million in the three months ended September 30, 2019 related to a settlement reached in principle by subsidiaries Forest Laboratories, LLC, Forest Laboratories, Inc. and Forest Laboratories Holdings Ltd. with direct purchasers of Namenda, resolving the class action litigation filed by that class of purchasers in the U.S. District Court for the Southern District of New York. The Company excludes operating charges, asset sales and impairments, net and in-process research and development impairments from its Non-GAAP performance net income attributable to shareholders as well as Adjusted EBITDA and Non-GAAP Operating Income.

THIRD QUARTER 2019 BUSINESS SEGMENT RESULTS

U.S. Specialized Therapeutics

U.S. Specialized Therapeutics net revenues were $1.67 billion in the third quarter of 2019, a decrease of 2.1 percent versus the prior year quarter. Demand growth in BOTOX^® and JUVÉDERM^® Collection was offset by a decline in sales of CoolSculpting^® compared to the prior year quarter and the divestiture of the Company's Medical Dermatology business on September 20, 2018. Segment gross margin for the third quarter of 2019 was 91.0 percent. Segment contribution for the third quarter of 2019 was $1.08 billion.

Medical Aesthetics

• Facial Aesthetics
  • BOTOX^® Cosmetic net revenues in the third quarter of 2019 were $237.6 million, an increase of 10.0 percent from the prior year quarter.
  • JUVÉDERM^® Collection (defined as JUVÉDERM^®, VOLUMA^® and other fillers) net revenues in the third quarter of 2019 were $134.8 million, an increase of 6.0 percent versus the prior year quarter.
• Regenerative Medicine
  • ALLODERM^® net revenues in the third quarter of 2019 were $95.0 million, a decrease of 10.2 percent versus the prior year quarter.
• Body Contouring
  • CoolSculpting^® net revenues (including both CoolSculpting^® Systems/Applicators and Consumables) in the third quarter of 2019 were $53.0 million, a decrease of 37.6 percent from the prior year quarter.

Neurosciences & Urology

• BOTOX^® Therapeutic net revenues in the third quarter of 2019 were $431.6 million, an increase of 5.9 percent versus the prior year quarter.

Eye Care

• RESTASIS^® net revenues in the third quarter of 2019 were $286.8 million, a decrease of 3.8 percent versus the prior year quarter.
• ALPHAGAN^®/COMBIGAN^® net revenues in the third quarter of 2019 were $90.9 million, a decrease of 4.7 percent versus the prior year quarter.
• OZURDEX^® net revenues in the third quarter of 2019 were $33.7 million, an increase of 17.8 percent versus the prior year quarter.

U.S. General Medicine

U.S. General Medicine net revenues in the third quarter of 2019 were $1.52 billion, an increase of 9.9 percent versus the prior year quarter. Demand growth in VRAYLAR^®, VIIBRYD^® and Lo LOESTRIN^® was partially offset by lower revenues from products that lost exclusivity. Segment gross margin for the third quarter of 2019 was 83.9 percent. Segment contribution for the third quarter of 2019 was $967.2 million.

Central Nervous System

• VRAYLAR^® net revenues were $234.6 million in the third quarter of 2019, an increase of 70.0 percent from the prior year quarter.
• VIIBRYD^®/FETZIMA^® net revenues in the third quarter of 2019 were $105.1 million, an increase of 18.8 percent from the prior year quarter.

Gastrointestinal, Women's Health & Diversified Brands

• LINZESS^® net revenues in the third quarter of 2019 were $214.7 million, an increase of 4.8 percent versus the prior year quarter.
• Lo LOESTRIN^® net revenues in the third quarter of 2019 were $161.4 million, an increase of 14.1 percent versus the prior year quarter.
• BYSTOLIC^®/BYVALSON^® net revenues in the third quarter of 2019 were $152.2 million, an increase of 0.7 percent from the prior year quarter.

International

International net revenues in the third quarter of 2019 were $835.1 million, an increase of 5.0 percent versus the prior year quarter excluding foreign exchange impact. Growth in Facial Aesthetics and BOTOX^® Therapeutic was partially offset by declines in textured breast implants. OZURDEX^® growth was primarily related to a 2018 recall of OZURDEX^® in certain international markets. Segment gross margin for the third quarter of 2019 was 82.7 percent. Segment contribution was $437.6 million.

Facial Aesthetics

• BOTOX^® Cosmetic net revenues in the third quarter of 2019 were $165.6 million, an increase of 5.8 percent versus the prior year quarter excluding foreign exchange impact.
• JUVÉDERM^® Collection net revenues in the third quarter of 2019 were $144.7 million, an increase of 7.3 percent versus the prior year quarter excluding foreign exchange impact.

Eye Care

• LUMIGAN^®/GANFORT^® net revenues in the third quarter of 2019 were $89.7 million, a decrease of 1.4 percent versus the prior year quarter excluding foreign exchange impact.
• OZURDEX^® net revenues in the third quarter of 2019 were $63.8 million, an increase of 159.3 percent versus the prior year quarter excluding foreign exchange impact.

Botox^® Therapeutic

• BOTOX^® Therapeutic net revenues in the third quarter of 2019 were $93.9 million, an increase of 5.3 percent versus the prior year quarter excluding foreign exchange impact.

PIPELINE UPDATE

Allergan R&D continues to advance its pipeline. During the third quarter of 2019, the Company's key clinical developments included:

• The U.S. Food and Drug Administration (FDA) approved Allergan's supplemental Biologics License Application (sBLA) to expand the BOTOX^® (onabotulinumtoxinA) label for the treatment of pediatric patients ages two years and older with lower limb spasticity, excluding spasticity caused by cerebral palsy. This marks the 14th approved indication for BOTOX^® and BOTOX^® Cosmetic combined in the U.S., and the 11th BOTOX^® therapeutic indication. The FDA approved BOTOX^® (onabotulinumtoxinA) for pediatric upper limb spasticity in the second quarter of 2019.
• The FDA accepted a Biologics License Application (BLA) for Abicipar pegol, a novel, investigational DARPin^® therapy, in patients with neovascular (wet) age-related macular degeneration (nAMD). The FDA is expected to take action on the BLA mid-2020, with launch expected to follow. The European Medicines Agency (EMA) is also reviewing a Marketing Authorisation Application (MAA) for Abicipar in patients with nAMD. A decision from the European Commission is expected in the second half of 2020.
• Allergan received FDA approval for the use of Juvéderm VOLUMA^® XC, a hyaluronic acid gel dermal filler, with a TSK STERiGLIDE™ cannula for cheek augmentation to correct age-related volume deficit in the mid-face in adults over 21.
• Allergan dosed the first patient in a Phase 2b clinical trial of botulinum neurotoxin serotype E (BoNT/E) EB-001 for the treatment of glabellar frown lines.
• Allergan completed enrollment of Part 1 of the Phase 3 AURORA NASH study in adults with stages 2/3 liver fibrosis.

In addition to third quarter 2019 pipeline developments and the anticipated launch of abicipar listed above, Allergan expects three additional significant launches in the next twelve months:

• Allergan anticipates a regulatory decision from the FDA in December 2019 for the Company's New Drug Application (NDA) for ubrogepant, an oral CGRP receptor antagonist for the acute treatment of migraine. Launch is expected to follow in the first half of 2020.
• Allergan expects to launch CoolTone™, a body contouring device that uses magnetic muscle stimulation, or MMS technology, to strengthen, tone and firm the muscles of the abdomen, buttocks and thighs, in the fourth quarter of 2019, following FDA clearance in the second quarter of 2019.
• FDA action is expected in the first half of 2020 on Allergan's NDA for Bimatoprost Sustained-Release, a biodegradable implant for the reduction of intraocular pressure in patients with open-angle glaucoma or ocular hypertension. Launch is expected to follow in the first half of 2020.

UPDATE ON PROPOSED ABBVIE TRANSACTION

On October 14, 2019, Allergan shareholders voted to approve the proposed acquisition of Allergan by AbbVie. Additionally, both companies received a Request for Additional Information and Documentary Material (Second Request) from the U.S. Federal Trade Commission. Allergan and AbbVie continue to expect to close the transaction in early 2020, subject to customary closing conditions and regulatory approvals.

FULL YEAR 2019 GUIDANCE

ADDITIONAL THIRD QUARTER DETAILS

Due to the proposed acquisition of Allergan by AbbVie, Allergan is not hosting a conference call to discuss its third quarter results. For additional materials related to Allergan's third quarter results, please visit Allergan's Investor Relations website at https://www.allergan.com/investors/events-presentations.

About Allergan plc

Allergan plc (NYSE: AGN), headquartered in Dublin, Ireland, is a global pharmaceutical leader focused on developing, manufacturing and commercializing branded pharmaceutical, device, biologic, surgical and regenerative medicine products for patients around the world. Allergan markets a portfolio of leading brands and best-in-class products primarily focused on four key therapeutic areas including medical aesthetics, eye care, central nervous system and gastroenterology. As part of its approach to delivering innovation for better patient care, Allergan has built one of the broadest pharmaceutical and device research and development pipelines in the industry.

With colleagues and commercial operations located in approximately 100 countries, Allergan is committed to working with physicians, healthcare providers and patients to deliver innovative and meaningful treatments that help people around the world live longer, healthier lives every day.

For more information, visit Allergan's website at www.Allergan.com.

Forward-Looking Statement

Statements contained in this press release that refer to future events or other non-historical facts are forward-looking statements that reflect Allergan's current perspective on existing trends and information as of the date of this release. Actual results may differ materially from Allergan's current expectations depending upon a number of factors affecting Allergan's business. These factors include, among others, the difficulty of predicting the timing or outcome of FDA approvals or actions, if any; the impact of competitive products and pricing; market acceptance of and continued demand for Allergan's products; the impact of uncertainty around timing of generic entry related to key products, including RESTASIS^®, on our financial results; risks associated with divestitures, acquisitions, mergers and joint ventures; risks related to impairments; uncertainty associated with financial projections, projected debt reduction, projected cost reductions, projected synergies, restructurings, increased costs, and adverse tax consequences; difficulties or delays in manufacturing; risks related to the proposed transaction between AbbVie and Allergan, such as, but not limited to, failure to complete the possible transaction, failure to realize the expected benefits of the possible transaction, and general economic and business conditions affecting the combined company following the consummation of the possible transaction; and other risks and uncertainties detailed in Allergan's periodic public filings with the Securities and Exchange Commission, including but not limited to Allergan's Annual Report on Form 10-K for the year ended December 31, 2018 and Allergan's Quarterly Report on Form 10-Q for the period ended June 30, 2019. Except as expressly required by law, Allergan disclaims any intent or obligation to update these forward-looking statements.

Statements Required by the Irish Takeover Rules

The non-GAAP performance net income per share guidance for the twelve months ending December 31, 2019 of >$16.55 represents a "profit forecast" for the purposes of the Irish Takeover Rules (the "Allergan Profit Forecast"). The basis of preparation of the Allergan Profit Forecast and the principal assumptions upon which the Allergan Profit Forecast is based are set out on pages 213 to 215 of the proxy statement sent to Allergan shareholders on or around September 16, 2019, a copy of which is available on Allergan's website, www.allergan.com. The reports on the Allergan Profit Forecast, as required by Rule 28.3 of the Irish Takeover Rules, have been prepared by (i) PricewaterhouseCoopers Ireland and (ii) J.P. Morgan Securities LLC. Copies of those reports have previously been mailed to Allergan shareholders with the above-mentioned proxy statement and are also available on Allergan's website, www.allergan.com.

Except as described immediately above, no statement in this press release is intended to constitute a profit forecast for any period, nor should any statements be interpreted to mean that earnings or earnings per share will necessarily be greater or lesser than those for the relevant preceding financial periods for Allergan. No statement in this press release constitutes an asset valuation.

The directors of Allergan accept responsibility for the information contained in this press release. To the best of the knowledge and belief of the directors of Allergan (who have taken all reasonable care to ensure that such is the case), the information contained in this press release is in accordance with the facts and does not omit anything likely to affect the import of such information.

Any holder of 1% or more of any class of relevant securities of Allergan may have disclosure obligations under Rule 8.3 of the Irish Takeover Panel Act, 1997, Takeover Rules 2013.

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SOURCE Allergan plc

Company Codes: NYSE:AGN