- Revenue up 17%, 36% at constant exchange rates
- GAAP EPS $0.37, adjusted Cash EPS $0.46
- Cash Flow from operations $51 million
- Increased guidance for 2009, Cash EPS to $1.70 - 1.90
ALISO VIEJO, Calif., May 5 /PRNewswire-FirstCall/ -- Valeant Pharmaceuticals International today announced first quarter financial results for 2009.
“This quarter demonstrated the strength of our core businesses and their product portfolios,” stated J. Michael Pearson, chairman and chief executive officer. “The impact of the business changes implemented last year can begin to be seen in these financial results and show both the top line growth and the earnings potential of our various businesses.”
Revenues:
Total revenue was $177.9 million in the first quarter of 2009 as compared to $152.0 million in the first quarter of 2008, an increase of 17%.
Specialty Pharmaceutical product sales were $86.3 million in the first quarter of 2009, as compared to $80.0 million in the first quarter of 2008, an increase of 8% primarily due to product sales of $11.4 million from acquisitions completed in 2008, partially offset by $8.1 million of generic erosion in Efudex and by unfavorable currency fluctuations. At constant exchange rates, specialty pharmaceutical product sales in the first quarter of 2009 increased 14% as compared to the first quarter of 2008. Product sales in the first quarter of 2008 included $3.5 million from operations divested later in 2008. Excluding the impact of acquisitions, divestitures and currency, specialty pharmaceutical product sales increased 5%.
Product sales in Branded Generics - Latin America in the 2009 first quarter increased 47% to $31.2 million as compared to $21.2 million in the same period in 2008. Product sales in the first quarter of 2008 were adversely affected by issues in our Mexican operations which have been addressed as a result of our turnaround plan. Product sales in the first quarter of 2009 were impacted by unfavorable currency fluctuations of $10.1 million as compared to the first quarter of 2008. At constant exchange rates, product sales in Latin America in the first quarter of 2009 increased 94% as compared to the first quarter of 2008.
Product sales in Branded Generics - Europe were $35.3 million in the 2009 first quarter as compared to $38.0 million in the same period in the prior year, a decrease of 7% due to unfavorable currency fluctuations of $13.9 million. At constant exchange rates, product sales in the first quarter of 2009 increased 30% as compared to the first quarter in 2008.
In December 2008, as part of our acquisition of Dow Pharmaceutical Sciences, Inc., (Dow), we acquired a services business that works with external sponsors for the formulation and development of topical therapies. Service revenue generated by Dow was $6.7 million in the first quarter of 2009. No service revenue was recorded in the same period in 2008.
Total alliance revenue, including $3.3 million in revenue from the GlaxoSmithKline (GSK) collaboration and $1.9 million from dermatology royalties related to the Dow acquisition, increased 44% to $18.4 million in the first quarter of 2009 as compared to $12.8 million in the first quarter of 2008.
Operating Expenses/Earnings:
The company’s cost of goods sold was 26% for both the first quarter of 2009 and the first quarter of 2008. The company’s cost of services was 64% for the first quarter of 2009, while no cost of services was recorded for the first quarter of 2008.
Selling, General and Administrative expenses decreased 8% in the first quarter of 2009 to $64.2 million as compared to $69.4 million in the first quarter of 2008, primarily attributable to the benefit of cost reduction activities, and to a lesser extent exchange rates, partially offset by SG&A at newly acquired Coria Laboratories Ltd., DermaTech Pty Ltd and Dow. First quarter 2009 SG&A charges included a $1.7 million write-down of an investment and a $1.6 million transfer tax.
Research and development costs decreased 70% to $8.7 million in the first quarter of 2009 as compared to $29.3 million reported in the same period in 2008. This decrease is due to the effect of the GSK collaboration, cost reduction efforts, our ability to leverage Dow Services and the timing of certain clinical trial activities. Under collaboration accounting, R&D spending in the quarter on the GSK collaboration was offset by a credit from the initial upfront payment.
Income from continuing operations was $30.8 million for the first quarter of 2009, or $0.37 per diluted share as compared to income from continuing operations of $2.5 million, or $0.03 per diluted share for the first quarter of 2008. On a non-GAAP Cash EPS basis, adjusted income from continuing operations was $38.1 million, or $0.46 per diluted share, in the first quarter of 2009 as compared to $7.0 million, or $0.08 per diluted share, in the first quarter of 2008.
Cash flow from operations for the first quarter of 2009 was $51.1 million.
2009 Guidance
The company has provided an update to its previous Cash EPS target and is now targeting Cash EPS between $1.70 and $1.90 in 2009, up from the prior guidance of $1.35 to $1.60. The calculation of Cash EPS excludes acquired IPR&D, restructuring costs, asset impairments and dispositions, amortization expense, and the tax effect of such changes, and the new non-cash accounting charge for interest on the convertible debt related to FSP APB 14-1.
GSK Collaboration Update
The company, along with its collaboration partner, GSK, is currently targeting a third quarter 2009 New Drug Application (NDA) submission and is committed to completing this event in 2009. The Marketing Authorization Application (MAA) submission is targeted for one month later.
“GSK is committed to submitting an NDA for retigabine as expeditiously as possible and our GSK - Valeant team is currently working diligently to compile a high quality file,” stated Atul Pande, senior vice president and Medicines Development Center Head for Neurosciences at GlaxoSmithKline. “I am pleased to report that we are making excellent progress in this regard and I look forward to both the NDA and MAA being submitted to the regulatory authorities later this year.”
Upcoming scientific forums where representatives from GSK and Valeant will be in attendance to discuss retigabine include the MOA Preclinical Roundtable Meeting in New York on June 5, 2009, the International Epilepsy Congress (IEC) in Budapest on June 28, 2009 and the European Federation of Neurological Societies (EFNS) in Florence, September 12-15, 2009.
Conference Call and Webcast Information:
Valeant will host a conference call and a live Internet webcast along with a slide presentation today at 10:00 a.m. EDT (7:00 a.m. PDT) to discuss its 2009 first quarter results. The dial-in number to participate on this call is (877) 295-5743, confirmation code 94235206. International callers should dial (973) 200-3961, confirmation code 94235206. A replay will be available approximately two hours following the conclusion of the conference call through May 12, 2009 and can be accessed by dialing (800) 642-1687, or (706) 645-9291, confirmation code 94235206. The company will webcast the conference call live over the Internet. The webcast may be accessed through the investor relations section of Valeant’s corporate Web site at www.valeant.com.
About Valeant:
Valeant Pharmaceuticals International is a multinational specialty pharmaceutical company that develops and markets a broad range of pharmaceutical products primarily in the areas of neurology and dermatology. More information about Valeant can be found at www.valeant.com.
Forward-looking Statements:
This press release contains forward-looking statements, including, but not limited to, statements regarding guidance with respect to expected non-GAAP cash earnings per share and the growth and future development of the company. These statements are based upon the current expectations and beliefs of management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, risks and uncertainties related to the company’s ability to realize the benefits of its strategic restructuring plan, market conditions, currency fluctuations and other risks and uncertainties as set forth under the caption Risk Factors in the company’s most recent annual or quarterly report filed with the SEC, which factors are incorporated herein by reference. Valeant wishes to caution the reader that these factors are among the factors that could cause actual results to differ materially from the expectations described in the forward-looking statements. Valeant also cautions the reader that undue reliance should not be placed on any of the forward-looking statements, which speak only as of the date of this release. The company undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this release or to reflect actual outcomes.
Non-GAAP Information:
To supplement the consolidated financial results prepared in accordance with generally accepted accounting principles (GAAP), the company uses non-GAAP financial measures that exclude certain items, such as in-process research and development, restructuring, amortization, APB 14-1 interest, gain or loss on early extinguishment of debt, and certain taxes. Management does not consider the excluded items part of day-to-day business or reflective of the core operational activities of the company as they result from transactions outside the ordinary course of business. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provide investors with a more meaningful, consistent comparison of the company’s core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. The company has provided guidance with respect to Cash Earnings Per Share, which is a non-GAAP financial measure that represents earnings per share, excluding acquired in-process research and development, restructuring assets impairments and dispositions, amortization expense, APB 14-1 interest, gain or loss on early extinguishment of debt and the tax effect of such charges. The company has not provided a reconciliation of these forward-looking non-GAAP financial measures due to the difficulty in forecasting and quantifying the exact amount of the restructuring charge and the related tax benefits that will be included in the comparable GAAP measures.
Financial Tables, including a reconciliation of GAAP to non-GAAP financial measures, follow.
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CONTACT: Laurie W. Little of Valeant Pharmaceuticals International,
+1-949-461-6002, laurie.little@valeant.com
Web site: http://www.valeant.com/
