NEW YORK--Forest Laboratories, Inc. (NYSE: FRX), an international pharmaceutical manufacturer and marketer, today announced that reported earnings per share equaled $0.72 in the fourth quarter of fiscal 2012. Reported earnings per share in the fourth quarter of fiscal 2011 were $1.12. Excluding acquisition related amortization, non-GAAP EPS in the fourth fiscal quarter of 2012 equaled $0.78 as compared with $1.14 in the fourth quarter of fiscal 2011.
Net sales for the quarter decreased 8.7% to $996.9 million, from $1.1 billion in the year-ago period. Namenda® (memantine HCl), an NMDA receptor antagonist for the treatment of moderate and severe Alzheimer's disease, recorded sales of $393.1 million during the quarter, an increase of 19.5% from last year's fourth quarter. Sales of Bystolic® (nebivolol), a beta-blocker for the treatment of hypertension, were $96.9 million, an increase of 32.6% over the year-ago period. Sales of Savella® (milnacipran HCl), a selective serotonin norepinephrine dual reuptake inhibitor (SNRI) for the management of fibromyalgia, were $25.3 million, an increase of 6.5% from last year's fourth quarter. The Company's newest products, Daliresp® and Viibryd®, were formally launched in August 2011. Daliresp (roflumilast), a PDE4 enzyme inhibitor for the treatment to reduce the risk of exacerbations in patients with chronic obstructive pulmonary disease (COPD) recorded sales of $13.1 million. Viibryd (vilazodone HCl), an SSRI and a partial agonist at serotonergic 5-HT1A receptors for the treatment of adults with major depressive disorder (MDD) recorded sales of $24.9 million. Teflaro® (ceftaroline fosamil), a broad-spectrum bactericidal cephalosporin antibiotic for the treatment of adults with community-acquired bacterial pneumonia and with acute bacterial skin and skin structure infections recorded sales of $7.9 million. Teflaro was launched in March 2011. Sales of Lexapro® (escitalopram oxalate), a selective serotonin reuptake inhibitor (SSRI) for the initial and maintenance treatment of MDD in adults and adolescents and generalized anxiety disorder in adults were $355.8 million compared with $594.8 million in the year-ago period. Patent protection for Lexapro expired on March 14, 2012.
Contract revenue was $46.8 million in the current quarter compared to $36.9 million last year. Benicar® (olmesartan medoxomil) co-promotion income totaled $29.6 million, a decrease of $4.4 million compared to $34.0 million in last year's fourth quarter. Per the agreement with Daiichi Sankyo, Forest's active co-promotion of Benicar ended in the first quarter of fiscal 2009 and the Company receives a residual royalty until the end of March 2014. Contract revenue also included $17.0 million of income from a distribution agreement with Mylan, Inc. wherein we have authorized Mylan to sell a generic version of Lexapro and we retain a portion of the profits from those sales.
Cost of sales as a percentage of sales was 21.8%, unchanged as compared with last year's fourth quarter. Selling, general and administrative expense for the current quarter was $410.5 million as compared to $351.7 million in the year-ago quarter. The current level of spending reflects the resources and activities required to support our currently marketed products, particularly our newest products: Teflaro, Daliresp and Viibryd.
Research and development spending for the current quarter was $213.9 million compared with $140.9 million in last year's fourth quarter. The current quarter includes product development milestone charges of $5.0 million. The prior year quarter did not include any product development milestone expenses.
Income tax expense for the quarter was $21.0 million, reflecting a quarterly effective tax rate of 9.8% which included certain adjustments from prior year tax reserves. Reported net income for the quarter ended March 31, 2012 was $192.7 million or $0.72 per share compared to $322.5 million or $1.12 per share reported for last year's fourth quarter.
Diluted shares outstanding at March 31, 2012 were approximately 268,465,000 a reduction of approximately 20.2 million shares compared to the year-ago period primarily due to the Company's accelerated share repurchase programs.
Twelve-month Results
Revenues for the twelve months ended March 31, 2012 increased 3.8% to $4.6 billion from $4.4 billion in the prior year.
Net income for the twelve months ended March 31, 2012 decreased 6.5% to $979.1 million from $1.0 billion reported in the prior year. Reported earnings per share decreased 0.6% to $3.57 in the current year's twelve months as compared to earnings per share of $3.59 in last year's twelve months.
Howard Solomon, Chairman and Chief Executive Officer of Forest, said: "The Company just completed a remarkably successful fiscal year in which we further progressed our late stage R&D pipeline, launched Daliresp and Viibryd, our two most recent new primary care product introductions, and reported solid financial performance.
In just four years we have introduced a total of five new products - Bystolic, Savella, Teflaro, Daliresp and Viibryd, three of which launched during this past calendar year. In addition, New Drug Applications (NDAs) for two more primary care products, aclidinium, a novel long-acting inhaled anticholinergic bronchodilator for the long-term, maintenance treatment of bronchospasm associated with chronic obstructive pulmonary disease (COPD), and linaclotide, a guanylate cyclase type-C (GC-C) receptor, for the treatment of irritable bowel syndrome with constipation (IBS-C) and chronic constipation (CC) have been submitted to the FDA, with imminent decisions in the coming months and active preparations underway to launch them both. Finally, during the quarter we completed the clinical development of two additional important products, cariprazine for the treatment of schizophrenia and acute mania associated with bipolar I disorder, and levomilnacipran for the treatment of major depressive disorder (MDD). Accordingly we plan to submit the NDAs for both products later this year.
Assuming approval of aclidinium and linaclotide, we will have, perhaps, one of the largest group of new primary care and specialty product offerings in the industry with the potential to add two more product launches, cariprazine and levomilnacipran, next year. This potential portfolio of these nine new products would cover six major therapeutic areas - anti-infective, cardiovascular, central nervous system, gastrointestinal, respiratory and pain. Several of these products are already being developed in logical combinations with other drugs, i.e. Bystolic and valsartan, aclidinium and formoterol and Teflaro with avibactam.
We expect that some of these new products will be especially successful and that together these nine products will enable us to grow well beyond our present cliffs with a group of products with patent expiry in the next decade and some well into that decade. And, of course, we expect to continue to feed our hungry pipeline."
Fiscal 2013 Guidance
Regarding the fiscal year ending March 31, 2013, the Company expects that diluted earnings per share will be in a range of $0.90 to $1.05 including acquisition related amortization, the estimated impact of increased investments for marketing to support the new product launches of aclidinium and linaclotide which we expect to launch during the fourth calendar quarter of 2012, the continued launches of Teflaro, Daliresp and Viibryd and research and development to support the ongoing progress of our late stage product development pipeline. This guidance also reflects planned research and development milestone payments related to existing pipeline products but does not include any licensing or milestone payments which may be made for additional product development transactions or acquisitions that may occur during the fiscal year. Excluding acquisition related amortization diluted earnings per share will be in the range of $1.20 to $1.35.
Key assumptions supporting the fiscal year 2013 forecast include the following:
*Namenda sales growth of approximately 17% over the $1.4 billion reported in fiscal 2012.
*Bystolic sales growth of approximately 29% over the $347.8 million reported in fiscal 2012.
*Savella sales growth of approximately 5% over the $102.8 million reported in fiscal 2012.
*Teflaro sales of approximately $65 million versus the $22.4 million reported in fiscal 2012.
*Daliresp sales of approximately $85 million versus the $31.2 million reported in fiscal 2012.
*Viibryd sales of approximately $175 million versus the $56.5 million reported in fiscal 2012.
*Aclidinium sales of approximately $35 million.
*Linaclotide sales of approximately $60 million.
*Lexapro sales of approximately $250 million; and income from authorized generic sales of Lexapro of approximately $115 million.
*Benicar earnings decline of approximately 10% from $129.3 million reported in fiscal 2012.
*Total net revenue (includes product sales as well as the earnings contribution from Benicar, authorized generic sales of Lexapro, interest income and other income) of approximately $3.4 billion, compared with $4.6 billion reported in fiscal 2012.
*Selling, general and administrative expense of approximately $1.6 billion. This expense includes funding continued competitive levels of support behind currently promoted products including Bystolic, Savella, Teflaro, Daliresp and Viibryd. In addition, the estimate includes spending for the upcoming launches of aclidinium and linaclotide.
*Research and development spending of approximately $850 million in support of the late-stage product pipeline. This projection includes planned milestone payments of approximately $65 million and represents, in total, an increase of around 12% from last year's spend levels excluding initial licensing payments.
*An effective tax rate for fiscal 2013 of approximately 26.4% which reflects shifts in the mix of earnings among jurisdictions and the expiration of the U.S. R&D tax credit in December 2011.
*Diluted shares outstanding will average approximately 268,000,000 for the fiscal year ending March 31, 2013.
Use of Non-GAAP Financial Information
Non-GAAP earnings per share information adjusted to exclude certain costs, expenses and other specified items as summarized in the table below. This information is intended to enhance an investor's overall understanding of the Company's past financial performance and prospects for the future. This information is not intended to be considered in isolation or as a substitute for earnings per share prepared in accordance with GAAP.