Don't expect Restasis generics till at least next quarter, Allergan CEO says

Allergan CEO Brent Saunders delivered preliminary 2018 financial guidance Monday at the J.P. Morgan Healthcare Conference.

SAN FRANCISCO—Update on those Restasis generics Allergan investors have been seriously dreading: The company now believes they’re “unlikely” to arrive before the second quarter, CEO Brent Saunders says.

What that timeline in mind, Allergan’s now predicting $15 billion to $15.3 billion in revenues for the year, he said Monday at the J.P. Morgan Healthcare Conference. As for non-GAAP earnings per share, Saunders pegged it as at least $15.25. But “if Restasis comes later, that floor goes higher,” he told investors.

One other factor going into that EPS figure? A non-GAAP effective tax rate of no more than 15%, thanks to new U.S. tax reform laws.

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The preliminary guidance marks an update on the scenarios Saunders outlined on Allergan’s third-quarter conference call in November, just a couple of weeks after a court decision paved the way for copies of the dry eye blockbuster. The new EPS estimate is 25 cents per share higher than the most conservative projection he offered up at the time, which were based on knockoffs arriving this month.

Allergan’s hoping the new forecast can lift shareholders’ spirits; their Restasis fears were holding shares back well before the court’s verdict was even announced. Allergan itself was spooked enough about a potential generic entry to strike a controversial IP pact with the Saint Regis Mohawk Tribe that protected the med from the U.S. patent office’s inter partes review.

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Saunders, though, is confident they’ll come around in 2018—and if a recently unveiled cost-cutting drive doesn’t do the trick, he thinks upcoming data readouts on key pipeline products can. “There is a disconnect between our results and the stock price,” he said, adding that “I believe the true value of our business will become more obvious” this year.

Meanwhile, Allergan is also working to fend off investor concerns about forthcoming competition to Botox, its lead product. Saunders, quoting Bloomberg Businessweek, called the product a “$2.8 billion fortress,” adding that “it would take decades of heavy investment” before any potential rival could match its quality and breadth of data.

Not one to shy away from descriptors, Saunders also called the Botox brand “iconic” and characterized the overall medical aesthetics market as “still in the early stages of becoming a supernova.”