Financials

Allergan Reports Third Quarter 2014 Operating Results

By Carly Helfand Oct 28, 2014 11:17am

(IRVINE, Calif., October 27, 2014) - Allergan, Inc. (NYSE: AGN) today announced operating results for the quarter ended September 30, 2014. Allergan also announced that its Board of Directors has declared a third quarter dividend of $0.05 per share, payable on December 11, 2014 to stockholders of record on November 20, 2014.

Operating Results Attributable to Stockholders from Continuing Operations
For the quarter ended September 30, 2014:

  • Allergan reported $1.03 diluted earnings per share attributable to stockholders compared to $1.10 diluted earnings per share attributable to stockholders for the third quarter of 2013.
  • Allergan reported $1.78 non-GAAP diluted earnings per share attributable to stockholders compared to $1.23 non-GAAP diluted earnings per share attributable to stockholders for the third quarter of 2013, a 44.7 percent increase.

Product Sales
For the quarter ended September 30, 2014:

  • Allergan reported $1,790.7 million total product net sales. Total product net sales increased 17.2 percent, or 17.6 percent on a constant currency basis, compared to total product net sales in the third quarter of 2013.
    • Total specialty pharmaceuticals net sales increased 14.3 percent, or 14.6 percent on a constant currency basis, compared to total specialty pharmaceuticals net sales in the third quarter of 2013.
    • Total core medical devices net sales increased 30.4 percent, or 31.1 percent on a constant currency basis, compared to total core medical devices net sales in the third quarter of 2013.

"With continuing strong momentum across a broad range of products, Allergan again recorded the strongest increase in absolute dollar sales in any quarter in our history, and again delivered sales and earnings per share growth above the high end of our expectations," said David E.I. Pyott, Allergan's Chairman of the Board and Chief Executive Officer. "Furthermore, we are making excellent progress on the stockholder value enhancements announced in July 2014, which are resulting in enhanced non-GAAP diluted earnings per share growth and thus increased stockholder value."

Product and Pipeline Update
During the third quarter of 2014:

  • On August 4, 2014, Allergan announced that the Company's research and development pipeline has been recognized by the Galien Foundation, which has nominated three of Allergan's products for the 2014 U.S. Prix Galien Awards. The Prix Galien Award is considered the biomedical industry's highest accolade and recognizes the technical, scientific and clinical research skills necessary to develop innovative medicines and devices. The Allergan products that have been nominated for the 2014 U.S. Prix Galien Awards are:
    • Best Biotechnology Product Nominee - BOTOX® (onabotulinumtoxinA) for Chronic Migraine patients
    • Best Pharmaceutical Agent Nominee - OZURDEX® (dexamethasone intravitreal implant) 0.7 mg
    • o Best Medical Technology Nominee - SERI® Surgical Scaffold
  • On August 13, 2014, Allergan and TARIS Holdings LLC announced that Allergan has closed a transaction to acquire worldwide rights to TARIS Biomedical's lead program, LiRIS®, which is currently in Phase 2 trials for the treatment of interstitial cystitis / bladder pain syndrome (IC/BPS). Allergan paid $67.5 million in cash up front, subject to certain adjustments and holdbacks. Allergan has also agreed to pay up to an aggregate of $295 million in development milestone payments and up to an aggregate of $225 million in commercial milestone payments.
  • On September 2, 2014, Allergan announced that the European Commission has extended the Marketing Authorization for OZURDEX® (dexamethasone 700 mcg intravitreal implant in applicator) to treat adult patients with visual impairment due to diabetic macular edema (DME) who are pseudophakic (have an artificial lens implant), or who are considered insufficiently responsive to, or unsuitable for non-corticosteroids therapy. DME is a common complication with diabetes and is the leading cause of sight loss in patients with diabetes.
  • On September 29, 2014, Allergan announced that the U.S. Food and Drug Administration (FDA) removed the limitations on the indication for OZURDEX® (dexamethasone intravitreal implant) 0.7mg, a sustained-release biodegradable steroid implant, for the treatment of diabetic macular edema (DME). OZURDEX® was originally approved in June as a treatment for DME in patients who are pseudophakic (have an artificial lens implant following cataract surgery) or who are phakic (have their natural lens) and are scheduled for cataract surgery.

Unsolicited Proposal from Valeant

  • On August 1, 2014, Allergan filed a lawsuit in the United States District Court for the Central District of California against Valeant Pharmaceuticals International, Inc. ("Valeant"), Pershing Square Capital Management, L.P. ("Pershing Square") and its principal, William A. Ackman, alleging that Valeant, Pershing Square and Mr. Ackman violated federal securities laws prohibiting insider trading, engaged in other fraudulent practices, and failed to disclose legally required information. After careful consideration, Allergan decided to file the lawsuit in order to ensure that all of its stockholders have the opportunity to make decisions regarding their investment in the Company based on compliant, full and fair disclosures, and to ensure that any stockholders voting on corporate matters acquired their shares in accordance with the law.
  • On August 11, 2014, Allergan announced that it received a request for additional information (a "Second Request") under the Hart-Scott-Rodino Act from the U.S. Federal Trade Commission in connection with Valeant's unsolicited acquisition proposal of Allergan. Allergan intends to respond fully in connection with the ongoing investigation. The Company noted that Second Request investigations typically take some time to conclude, and Allergan cannot predict how long this investigation will take or how it might otherwise develop.
  • On September 15, 2014, Allergan announced that it reached an agreement with Pershing Square and Valeant under which Allergan agreed to hold the Special Meeting of Stockholders (the "Special Meeting") on the already scheduled date of December 18, 2014, without restriction, and Pershing Square and Valeant dismissed their pending litigation before the Delaware Court of Chancery. Allergan has established an October 30, 2014 record date for stockholders entitled to vote at the Special Meeting.

Outlook
For the full year of 2014, Allergan expects:

  • Total product net sales between $7,080 million and $7,155 million, excluding any future anticipated revenue from the transition services agreements related to the sale of the obesity intervention business.
    • Total specialty pharmaceuticals net sales between $5,990 million and $6,045 million.
    • Total core medical devices net sales between $1,050 million and $1,070 million.
    • ALPHAGAN® franchise product net sales between $500 million and $510 million.
    • LUMIGAN® franchise product net sales between $650 million and $670 million.
    • RESTASIS® product net sales between $1,070 million and $1,090 million.
    • BOTOX® product net sales between $2,200 million and $2,240 million.
    • LATISSE® product net sales at approximately $100 million.
    • Breast aesthetics product net sales between $400 million and $410 million.
    • Facial aesthetics product net sales between $650 million and $660 million
  • Non-GAAP cost of sales to product net sales ratio at approximately 12%.
  • Non-GAAP other revenue at approximately $110 million.
  • Non-GAAP selling, general and administrative expenses to product net sales ratio at approximately 37%.
  • Non-GAAP research and development expenses to product net sales ratio at approximately 16%.
  • Non-GAAP diluted earnings per share attributable to stockholders between $6.27 and $6.30.
  • Diluted shares outstanding at approximately 304 million.
  • Effective tax rate on non-GAAP earnings at approximately 26%.

For the fourth quarter of 2014, Allergan expects:

  • Total product net sales between $1,845 million and $1,920 million, excluding any future anticipated revenue from the transition services agreements related to the sale of the obesity intervention business.
  • Non-GAAP diluted earnings per share attributable to stockholders between $1.80 and $1.83.

In this press release, Allergan reports certain historical and expected non-GAAP results, including earnings attributable to Allergan, Inc., non-GAAP basic and diluted earnings per share attributable to stockholders as well as non-GAAP other revenue, non-GAAP cost of sales, non-GAAP selling, general and administrative expenses, non-GAAP research and development expenses, non-GAAP amortization of intangible assets, non-GAAP impairment of intangible assets and related costs, non-GAAP restructuring charges, non-GAAP interest expense, non-GAAP other, net, non-GAAP earnings before income taxes from continuing operations, non-GAAP provision for income taxes, non-GAAP earnings from discontinued operations, non-GAAP loss on sale of discontinued operations, non-GAAP net earnings and non-GAAP net sales reported in constant currency. Non-GAAP financial measures are reconciled to the most directly comparable GAAP financial measure in the financial tables of this press release and the accompanying footnotes. The information that accompanies the financial tables of this press release also includes an explanation of why Allergan uses these non-GAAP financial measures, certain limitations associated with the use of these non-GAAP financial measures, the manner in which Allergan management compensates for those limitations, and the reasons why Allergan management believes that these non-GAAP financial measures provide useful information to investors.

Forward-Looking Statements
This press release contains "forward-looking statements," including but not limited to the statements by Mr. Pyott, as well as Allergan's earnings per share, product net sales, revenue forecasts and any other statements that refer to Allergan's expected, estimated or anticipated future results. 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 the end of the applicable reporting period. 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.

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, the following: changing competitive, market and regulatory conditions; Allergan's ability to obtain and maintain adequate protection for its intellectual property rights; 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, tax 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, political instability, 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, fluctuations or devaluations in the value of sovereign government debt, as well as the general impact of continued economic volatility, 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 U.S. Securities and Exchange Commission, including the discussion under the heading "Risk Factors" in Allergan's 2013 Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. Copies of Allergan's press releases and additional information about Allergan are available at www.allergan.com or you can contact the Allergan Investor Relations Department by calling 714-246-4636.

Important Additional Information
This communication does not constitute an offer to buy or solicitation of an offer to sell any securities. Allergan has filed a solicitation/recommendation statement on Schedule 14D-9, as amended, with the SEC that has been mailed to Allergan's stockholders. In addition, Allergan has filed a preliminary proxy statement with the SEC on October 6, 2014, and intends to file a definitive proxy statement. Any definitive proxy statement will be mailed to Allergan's stockholders. INVESTORS AND STOCKHOLDERS OF ALLERGAN ARE ENCOURAGED TO READ THESE AND ANY OTHER RELEVANT DOCUMENTS THAT THE COMPANY MAY FILE WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and stockholders will be able to obtain free copies of these documents as they become available and any other documents filed with the SEC by Allergan at the SEC's website at www.sec.gov. In addition, copies will also be available at no charge at the Investors section of Allergan's website at www.allergan.com. Copies of these materials may also be requested from Allergan's information agent, Innisfree M&A Incorporated, toll-free at 877-800-5187.

Allergan, its directors and certain of its officers and employees are participants in solicitations of Allergan stockholders. Information regarding the names of Allergan's directors and executive officers and their respective interests in Allergan by security holdings or otherwise is set forth in Allergan's proxy statement for its 2014 annual meeting of stockholders, filed with the SEC on March 26, 2014, as supplemented by the proxy information filed with the SEC on April 22, 2014. Additional information can be found in Allergan's Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on February 25, 2014 and its Quarterly Report on Form 10-Q for the quarters ended March 31, 2014 and June 30, 2014, filed with the SEC on May 7, 2014 and August 5, 2014, respectively. To the extent holdings of Allergan's securities have changed since the amounts printed in the proxy statement for the 2014 annual meeting of stockholders, such changes have been reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC.

About Allergan, Inc.
Allergan is a multi-specialty health care company established more than 60 years ago with a commitment to uncover the best of science and develop and deliver innovative and meaningful treatments to help people reach their life's potential. Today, we have approximately 11,500 highly dedicated and talented employees, global marketing and sales capabilities with a presence in more than 100 countries, a rich and ever-evolving portfolio of pharmaceuticals, biologics, medical devices and over-the-counter consumer products, and state-of-the-art resources in R&D, manufacturing and safety surveillance that help millions of patients see more clearly, move more freely and express themselves more fully. From our beginnings as an eye care company to our focus today on several medical specialties, including eye care, neurosciences, medical aesthetics, medical dermatology, breast aesthetics and urologics, Allergan is proud to celebrate more than 60 years of medical advances and proud to support the patients and physicians who rely on our products and the employees and communities in which we live and work. For more information regarding Allergan, go to: www.allergan.com.

Allergan Contacts
Joann Bradley (714) 246-4766 (investors)
David Nakasone (714) 246-6376 (investors)
Bonnie Jacobs (714) 246-5134 (media)
Cathy Taylor (714) 246-5551 (media)

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