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For the second quarter, net income of New York-based Forest Lab dropped to $186.66 million or $0.61 per share from $244.09 million or $0.80 per share in the same quarter a year ago.
Excluding items, earnings were $0.85 per share for the quarter, compared to $0.80 per share recorded in the prior-year quarter. On average, 25 analysts polled by Thomson Reuters expected earnings of $0.86 per share for the quarter. Analysts' estimate typically excludes one-time items.
Non-GAAP results excludes licensing payment of $100 million or $0.33 per share made to Nycomed for gaining marketing rights of Daxas in the US, and a payment of $20 million or $0.04 per share made to settle the legal proceeding with Caraco related to Lexapro. Results also excludes an upfront licensing payment received from AstraZeneca for Ceftaroline amounting to $40 million or $0.13 per share for co-developing and commercializing the drug in all markets outside the United States, Canada and Japan.
Forest lab's revenue for the quarter rose to $1.06 billion from $992.51 million in the year-earlier quarter, surpassing Street estimates of $1.02 billion for the quarter.
Sequentially, in the first quarter, Forest Laboratories reported an 8% rise in profit to $262.9 million or $0.87 per share, bolstered by strong sales performance across most of its major drugs and absence of a year-ago charge. Net revenues rose 4.3% to $1.01 billion.
For the quarter under review, sales of Lexapro, a maintenance treatment of major depressive disorder in adults and adolescents , declined 3.1% to $566 million, while sales of Namenda, a treatment of moderate and severe Alzheimer's disease, increased 11.9% to $275.3 million from the year-ago quarter.
Sales of hypertension treatment Bystolic launched in January 2008 was $40.7 million, while sales in last year's fiscal second quarter were $14.2 million.
Meanwhile, sales of Savella, a treatment for the management of fibromyalgia, launched in late April 2009, recorded sales of $10.2 million.
Net sales rose 4.01% to $962.71 million, while contract revenue rose 7.2% to $50.59 million, principally due to Benicar co-promotion income of $46.6 million, an increase of 2.7% compared to last year's second quarter.
Forest Laboratories also said it now receives only a gradually diminishing residual royalty from Daiichi Sankyo due to the expiry of active co-promotion agreement related to Benicar in the first quarter. Payment will end in March 2014.
For the quarter, interest income more than halved to $9.41 million from $19.19 million in the year-ago quarter, due to lower interest rates earned on the company's short duration portfolio.
Income tax expense for the quarter was $68.1 million, reflecting a quarterly effective tax rate of 26.7%. Selling, general and administrative expense decreased to $324.9 million from $326.3 million in the year-ago quarter. Spending reflects activities to support currently marketed products including Bystolic and Savella.
Research and development spending for the current quarter was $263.1 million, compared to $146.4 million in the second quarter of the prior fiscal year, reflecting payment made to Nycomed.
Amongst others in the industry, pharmaceutical and healthcare company Wyeth (WYE | Quote | Chart | News | PowerRating), in its second quarter, reported a rise in profit reflecting the global performance of Enbrel, Prevnar and nutritional products, despite a 4% decline in revenues. Net income for the quarter was $1.27 billion or $0.94 per share and revenues were $5.70 billion.
Another player, GlaxoSmithKline Plc (GSK ,GSK.L), , in its second quarter, reported a rise in profit aided by strong performances in emerging markets and increased sales from new products and flu drug Relenza. Profit attributable to shareholders were GBP 1.46 billion or 28.1 pence per share. Total pharmaceutical sales were down 4% at GBP 5.58 billion.
For the six-month period, net income of Forest Laboratories decreased 7.7% to $449.6 million from $487.0 million in the year-ago period. On a per share basis, earnings dropped 6.9% to $1.48 from $1.59 in the prior-year period. Non-GAAP earnings was $1.72 per share, compared to $1.67 per share for the period. Revenues increased 5.8% to $2.1 billion from $1.9 billion in the prior year.
Looking ahead to fiscal year 2010, the company now expects earnings in the range of $3.40 to $3.50 per share, excludes net one-time charges of $0.24 per share. Previous forecast earnings were in the range of $3.45 to $3.55 per share. Forecast for revenues, however, were kept unchanged at $4.1 billion.
Street currently expects earnings of $3.51 per share on revenues of $4.10 billion for the year.
Forecast for fiscal 2010 revenue excludes the AstraZeneca license payment, and reflects incremental SG&A expense attributable to pre-launch spending for Daxas and total R&D spending, and total milestone expense of $80 million.
Forest Laboratories also said it completed the two important product collaborations during the quarter, the first being with AstraZeneca to co-develop and commercialize novel broad-spectrum cephalosporin, ceftaroline, in all markets outside of the United States, Canada and Japan. While, the second is with Nycomed to commercialize Daxas in the United States. The company also indicated that it made important progress with three other products currently in development.
On October 2, 2009, brokerage Jefferies & Co. initiated a 'Buy' rating on Forest Laboratories shares, with a mean target of $30.16. FRX is currently trading at $28.82, down $1.43 or 4.73%, on a volume of 1.97 million shares. In the last 52-week period, the stock traded in the range of $18.37 or $30.56, with a three-month average volume of 2.36 million shares.
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