|Endo CEO Rajiv De Silva|
Endo's ($ENDP) turnaround effort continues, as the embattled company embarks upon big changes to address its declining fortunes. The company reported last night that its chief scientific officer is out, and a few hours later, it reported earnings with a 22% fall in revenues. All of this comes days after the company agreed to pay $193 million to settle an off-label marketing issue pressed by U.S. authorities.
The Malvern, PA-based drugmaker said Ivan P. Gergel, its executive vice president of research and development and chief scientific officer, would depart the company at the end of March, as Endo prepares to shift its R&D operation to its new global headquarters in Dublin. As for earnings, fourth-quarter revenues fell to $585 million, down 22% from the same period a year ago, and a net loss in the quarter of $776 million that widened from a loss of $716 million in the year-ago period.
The company's total revenues for 2013 dropped 7% to $2.6 billion, while its net loss came in at $685 million, versus $740 million in 2012. Endo did point out one bright spot: Its 2013 adjusted diluted earnings per share of $4.79 beat its previously issued guidance by 4 cents.
Endo's fourth-quarter loss was attributable largely to a $495 million charge related to its acquisition of American Medical Systems, and a $316 million charge to boost its product liability reserve for lawsuits related to its vaginal mesh implants. The implants were developed by American Medical, which Endo bought in 2011 for $2.9 billion.
Last year, Endo cut 700 jobs amid a string of setbacks, including a failed third attempt to get its long-acting testosterone injection, Aveed, approved by the FDA. Persisting, the company returned for a fourth time, and the FDA is supposed to give Endo a decision today on whether it will approve Aveed. Endo also faced generic competition on its two top-selling pain medications, Opana ER and Lidoderm. In September, Actavis ($ACT) launched its generic version of the Lidoderm patch.
Challenges have followed it into this year. On Monday, the company said it would pay $192.7 million in exchange for a deferred prosecution agreement to settle claims that it had marketed Lidoderm, a patch approved to treat shingles pain, for off-label uses. The penalties include a $20.8 million forfeiture and payments of $171.9 million to settle claims with the federal government and the states and the District of Columbia.
In an effort to refocus its business, Endo has completed a series of acquisitions and divestitures. It recently sold its urologics unit, HealthTronics, to Altaris Capital Partners for $130 million. Last August, it bulked up its generics business by buying Boca Pharmacal for $225 million.
"We re-oriented the company in a new strategic direction, completed a significant restructuring, implemented a new more efficient operating model and completed a series of transactions that have transformed the company while improving our focus," said Endo CEO Rajiv De Silva in the earnings release.
The company said today it expects 2014 revenues of between $2.5 billion and $2.62 billion. Its shares dropped 3% in premarket trading to $79.
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