Lilly Reports First-Quarter 2015 Results
- Revenue declined 1 percent due to the unfavorable impact of foreign exchange rates and the continuing impact of Cymbalta and Evista patent expirations, largely offset by the inclusion of revenue from
Novartis Animal Health , higher U.S. prices, and increased volume for several products. - First-quarter 2015 earnings per share were
$0.50 (reported), or$0.87 (non-GAAP). - 2015 year-to-date pipeline advancements include an
FDA approval, 2FDA submissions, 2 positive Phase III data readouts, and anFDA decision allowing the resumption of Phase III studies for tanezumab. - 2015 reported EPS guidance was revised to be in the range of
$2.21 to$2.31 ; non-GAAP EPS guidance range was reaffirmed at$3.10 to$3.20 .
$ in millions, except per share data |
First Quarter |
% | ||||||||||||
2015 |
2014 |
Change | ||||||||||||
Revenue - Reported |
$ |
4,644.7 |
$ |
4,683.1 |
(1)% | |||||||||
Net Income - Reported |
529.5 |
727.9 |
(27)% | |||||||||||
EPS - Reported |
0.50 |
0.68 |
(26)% | |||||||||||
Revenue - non-GAAP |
4,644.7 |
4,934.9 |
(6)% | |||||||||||
Net Income - non-GAAP |
923.7 |
797.7 |
16% | |||||||||||
EPS - non-GAAP |
0.87 |
0.74 |
18% | |||||||||||
Certain financial information for 2015 and 2014 is presented on both a reported and a non-GAAP basis. Some numbers in this press release may not add due to rounding. Reported results were prepared in accordance with generally accepted accounting principles (GAAP) and include all revenue and expenses recognized during the period. Non-GAAP measures exclude the items described in the reconciliation tables later in the release. Non-GAAP measures in 2014 include the results of
"While our first-quarter revenue reflects the impact of foreign exchange headwinds and the lingering effects of U.S. patent expirations for Cymbalta and Evista, Lilly remains on track to return to growth in 2015 driven by excellent progress in our innovation-based strategy," said
Key Events Over the Last Three Months
- Cyramza® (ramucirumab) achieved a number of development and commercialization milestones:
- Launched in the U.S. for second-line metastatic non-small cell lung cancer
- Launched in the EU for advanced second-line gastric cancer
- Approved in
Japan for patients with unresectable, advanced or recurrent gastric cancer. The company expects to launch in mid-2015. - Submitted in the U.S. and the EU for second-line metastatic colorectal cancer
- Submitted in the EU for second-line metastatic non-small cell lung cancer.
The U.S. Food and Drug Administration (FDA) approved Glyxambi® (empagliflozin/linagliptin) tablets as an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes when both empagliflozin and linagliptin are appropriate treatments. Glyxambi is part of the company's diabetes collaboration with Boehringer Ingelheim. Glyxambi has now been launched in the U.S.- The company and Boehringer Ingelheim announced that Boehringer Ingelheim has received a positive opinion from the
Committee for Medicinal Products for Human Use of theEuropean Medicines Agency (EMA), recommending approval for a single-pill combination therapy with empagliflozin/metformin hydrochloride for the treatment of adults with type 2 diabetes. If approved, the new therapy will be marketed under the name Synjardy® inEurope . - The company will delay the submission of basal insulin peglispro (BIL), a potential once-daily treatment for type 1 and type 2 diabetes, to regulatory agencies until after 2016. The delay includes filings with the
FDA and the EMA in order to generate additional clinical data to further understand and characterize the potential effects, if any, of changes in liver fat observed with BIL treatment in the Phase III trials. - The company submitted ixekizumab to the
FDA for the treatment of moderate-to-severe plaque psoriasis. - The company announced that the investigational medicine ixekizumab was statistically superior to placebo in the treatment of patients with active psoriatic arthritis, as demonstrated by the proportion of patients achieving an ACR 20 response in a Phase III trial.
- The company and Incyte Corporation announced that the investigational medicine baricitinib demonstrated a statistically significant improvement compared to placebo in a second consecutive Phase III trial in rheumatoid arthritis. The study included patients with moderately to severely active rheumatoid arthritis who had an inadequate response to, or were intolerant of, at least one conventional disease-modifying antirheumatic drug.
- The company and Pfizer Inc. announced that the Phase III clinical program for tanezumab, a potential treatment for chronic pain, will resume. As a result, Lilly paid
$200 million to Pfizer in accordance with the collaboration agreement. This announcement follows a decision by theFDA to lift the partial clinical hold on the tanezumab development program after a review of a robust body of nonclinical data characterizing the sympathetic nervous system's response to tanezumab. - Enrollment in the Phase III clinical study for the investigational medicine solanezumab is now complete. Solanezumab is the company's monoclonal antibody being studied as a potential therapy for patients with mild Alzheimer's disease. The company now expects the last patient visit to occur in
October 2016 . - The company and
Innovent Biologics Inc. (Innovent) announced one of the largest biotech drug development collaborations inChina to date between a multinational and domestic company. Lilly and Innovent will collaborate to support the development and potential commercialization of at least three cancer treatments over the next decade. - The company and Hanmi Pharmaceutical Co., Ltd. (Hanmi) announced an exclusive license and collaboration agreement for the development and commercialization of Hanmi's oral Bruton's tyrosine kinase (BTK) inhibitor for the treatment of autoimmune and other diseases. This small molecule is ready to enter Phase II trials.
- The company has restructured its agreement with Bristol-Myers Squibb Company to transfer rights of Erbitux® (cetuximab) in
North America , including the U.S.,Canada , andPuerto Rico , from Bristol-Myers Squibb to Lilly. Rights include, but are not limited to, full commercialization and manufacturing operational responsibilities. The transition is expected to be completed in the fourth quarter of 2015. The German Court of Appeal has ruled that the company's vitamin regimen patent for Alimta® (pemetrexed disodium) would not be infringed by a generic competitor that intends to market a dipotassium salt form of pemetrexed inGermany once the compound patent expires inDecember 2015 . The company has asked for permission to appeal this ruling to theGerman Supreme Court .
First-Quarter Reported Results
In the first quarter of 2015, worldwide revenue was
Gross margin remained relatively flat at
Operating expenses in the first quarter of 2015, defined as the sum of research and development, and marketing, selling, and administrative expenses, were
In the first quarter of 2015, the company recognized acquired in-process research and development charges of
In the first quarter of 2015, the company recognized asset impairment, restructuring, and other special charges of
Operating income in the first quarter of 2015 was
Other income (expense) was income of
The effective tax rate was 14.3 percent in the first quarter of 2015, compared with 18.3 percent in the first quarter of 2014. The decrease in the effective tax rate for the first quarter of 2015 is primarily due to the tax impact of acquired in-process research and development charges and asset impairment, restructuring, and other special charges. The effective tax rate for the first quarter of 2014 includes a discrete tax benefit of approximately
In the first quarter of 2015, net income decreased 27 percent to
First-Quarter 2015 Non-GAAP Measures
On a non-GAAP basis, worldwide revenue was
Gross margin declined 1 percent to
Operating expenses in the first quarter of 2015 were
Other income (expense) was income of
The effective tax rate increased to 22.9 percent, compared with 19.9 percent in the first quarter of 2014 due to a discrete tax benefit of approximately
Net income increased 16 percent to
For further detail, see the reconciliation below as well as the Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information table later in this release.
First Quarter |
||||||||||||||
2015 |
2014 |
% Change | ||||||||||||
Earnings per share (reported) |
$ |
0.50 |
$ |
0.68 |
(26)% | |||||||||
|
— |
(.03) |
||||||||||||
|
.04 |
— |
||||||||||||
Amortization of intangible assets |
.10 |
.08 |
||||||||||||
Acquired in-process research and development |
.15 |
— |
||||||||||||
Asset impairment, restructuring, and other special charges |
.07 |
.02 |
||||||||||||
Earnings per share (non-GAAP) |
$ |
0.87 |
$ |
0.74 |
18% | |||||||||
Numbers do not add due to rounding. |
Select Revenue Highlights |
|||||||||||||||||
(Dollars in millions) |
|||||||||||||||||
First Quarter |
|||||||||||||||||
% |
Change | ||||||||||||||||
2015 |
2014 |
||||||||||||||||
Humalog |
$ |
684.0 |
$ |
650.0 |
5% | ||||||||||||
Alimta |
573.0 |
632.0 |
(9)% | ||||||||||||||
Cialis® |
538.3 |
532.4 |
1% | ||||||||||||||
Humulin® |
315.7 |
316.2 |
0% | ||||||||||||||
Forteo® |
293.0 |
300.4 |
(2)% | ||||||||||||||
Cymbalta |
287.0 |
478.2 |
(40)% | ||||||||||||||
Zyprexa® |
219.5 |
283.1 |
(22)% | ||||||||||||||
Strattera® |
173.7 |
154.4 |
13% | ||||||||||||||
Effient® |
121.8 |
119.3 |
2% | ||||||||||||||
Trajenta®(a) |
82.3 |
76.9 |
7% | ||||||||||||||
Cyramza |
67.5 |
— |
NM | ||||||||||||||
Evista |
66.8 |
150.1 |
(55)% | ||||||||||||||
|
749.8 |
527.4 |
42% | ||||||||||||||
Total Revenue |
$ |
4,644.7 |
$ |
4,683.1 |
(1)% | ||||||||||||
(a) Trajenta revenue includes Jentadueto® | |||||||||||||||||
NM - not meaningful |
Humalog
For the first quarter of 2015, worldwide Humalog sales increased 5 percent to
Alimta
For the first quarter of 2015, Alimta generated sales of
Cialis
Cialis sales for the first quarter of 2015 increased 1 percent to
Humulin
Worldwide Humulin sales of
Forteo
First-quarter 2015 sales of Forteo were
Cymbalta
For the first quarter of 2015, Cymbalta generated
Zyprexa
In the first quarter of 2015, Zyprexa sales totaled
Strattera
During the first quarter of 2015, Strattera generated
Effient
Effient sales were
Evista
Evista sales for the first quarter of 2015 were
In the first quarter of 2015, worldwide animal health sales totaled
Including the sales of
2015 Financial Guidance
The company has revised certain elements of its 2015 financial guidance on a reported basis. Full-year 2015 earnings per share are now expected to be in the range of
2015 Expectations | |
Earnings per share (reported) |
|
Amortization of intangible assets including the impact of the transfer of Erbitux rights |
.39 |
Acquired in-process research and development charges associated with Pfizer, Innovent, and Hanmi collaborations |
.19 |
Asset impairment, restructuring, integration, and inventory step-up costs, primarily related to the acquisition of |
.31 |
Earnings per share (non-GAAP) |
|
Amortization and inventory step-up costs associated with the
The company still anticipates 2015 revenue of between
The company now anticipates that gross margin as a percent of revenue will be approximately 74.5 percent on a reported basis due to the impact of the transfer of Erbitux rights. On a non-GAAP basis, gross margin as a percent of revenue is still expected to be approximately 78.0 percent, reflecting the exclusion of inventory step-up costs associated with the acquisition of
Marketing, selling, and administrative expenses on a reported basis are now expected to be in the range of
Other income (expense) is still expected to be in a range between
The 2015 tax rate is now expected to be approximately 16.5 percent on a reported basis due to the tax impact of acquired in-process research and development charges and asset impairment, restructuring, and other special charges. The non-GAAP tax rate is still expected to be approximately 21.5 percent. Both rates assume a full-year 2015 benefit of the R&D tax credit and other tax provisions up for extension. If these items are not extended, the non-GAAP 2015 tax rate would be approximately 1.5 percentage points higher.
Capital expenditures are still expected to be approximately
The following table summarizes the company's 2015 financial guidance:
2015 Guidance | |||||
Prior |
Revised | ||||
Revenue |
|
| |||
Gross Margin % of Revenue (reported) |
Approx. 75.0% |
Approx. 74.5% | |||
Gross Margin % of Revenue (non-GAAP) |
Approx. 78.0% |
Approx. 78.0% | |||
Marketing, Selling, & Admin (reported) |
|
| |||
Marketing, Selling, & Admin (non-GAAP) |
|
| |||
Research & Development |
|
| |||
Other Income/(Expense) |
|
| |||
Tax Rate (reported) |
Approx. 18.5% |
Approx. 16.5% | |||
Tax Rate (non-GAAP) |
Approx. 21.5% |
Approx. 21.5% | |||
Earnings per share (reported) |
|
| |||
Earnings per share (non-GAAP) |
|
| |||
Capital Expenditures |
Approx. |
Approx. | |||
The company's 2015 financial guidance is subject to final acquisition accounting adjustments for the acquisitions of
Webcast of Conference Call
As previously announced, investors and the general public can access a live webcast of the first-quarter 2015 financial results conference call through a link on Lilly's website at www.lilly.com. The conference call will begin at
Lilly is a global healthcare leader that unites caring with discovery to make life better for people around the world. We were founded more than a century ago by a man committed to creating high-quality medicines that meet real needs, and today we remain true to that mission in all our work. Across the globe, Lilly employees work to discover and bring life-changing medicines to those who need them, improve the understanding and management of disease, and give back to communities through philanthropy and volunteerism. To learn more about Lilly, please visit us at www.lilly.com and http://newsroom.lilly.com/social-channels. F-LLY
This press release contains management's current intentions and expectations for the future, all of which are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "estimate," "project," "intend," "expect," "believe," "target," and similar expressions are intended to identify forward-looking statements. Actual results may differ materially due to various factors. There are significant risks and uncertainties in pharmaceutical research and development. There can be no guarantees with respect to pipeline products that the products will receive the necessary clinical and manufacturing regulatory approvals or that they will prove to be commercially successful. The company's results may also be affected by such factors as the timing of anticipated regulatory approvals and launches of new
products; market uptake of recently launched products; competitive developments affecting current products; the expiration of intellectual property protection for certain of the company's products; the company's ability to protect and enforce patents and other intellectual property; the impact of governmental actions regarding pricing, importation, and reimbursement for pharmaceuticals, including U.S. health care reform; regulatory compliance problems or government investigations; regulatory actions regarding currently marketed products; unexpected safety or efficacy concerns associated with the company's products; issues with product supply stemming from manufacturing difficulties or disruptions; regulatory changes or other developments; changes in patent law or regulations related to data-package exclusivity; litigation involving current or future products; the extent to which
third-party indemnification obligations relating to product liability litigation and similar matters will be performed; unauthorized disclosure of trade secrets or other confidential data stored in the company's information systems and networks; changes in tax law and regulations; changes in inflation, interest rates, and foreign currency exchange rates; asset impairments and restructuring charges; changes in accounting standards promulgated by the
Alimta® (pemetrexed disodium, Lilly)
Cialis® (tadalafil, Lilly)
Cymbalta® (duloxetine hydrochloride, Lilly)
Cyramza® (ramucirumab, Lilly)
Effient® (prasugrel, Lilly)
Erbitux® (cetuximab, Bristol-Myers Squibb Company)
Evista® (raloxifene hydrochloride, Lilly)
Forteo® (teriparatide of recombinant DNA origin injection, Lilly)
Glyxambi® (empagliflozin/linagliptin, Boehringer Ingelheim)
Humalog® (insulin lispro injection of recombinant DNA origin, Lilly)
Humulin® (human insulin of recombinant DNA origin, Lilly)
Jardiance® (empagliflozin, Boehringer Ingelheim)
Jentadueto® (linagliptin/metformin, Boehringer Ingelheim)
Sentinel® (lufenuron and milbemycin oxime, Virbac)
Strattera® (atomoxetine hydrochloride, Lilly)
Synjardy® (empagliflozin/metformin, Boehringer Ingelheim)
Trajenta® (linagliptin, Boehringer Ingelheim)
TrulicityTM (dulaglutide, Lilly)
Zyprexa® (olanzapine, Lilly)
| ||
|
| |
Worldwide Employees |
41,300* |
39,135 |
*Employment totals as of |
| |||||||||||||||||||||||||||||
Operating Results (Unaudited) - REPORTED | |||||||||||||||||||||||||||||
(Dollars in millions, except per share data) | |||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
2015 |
2014 |
% Chg. | |||||||||||||||||||||||||||
Revenue |
$ |
4,644.7 |
$ |
4,683.1 |
(1)% | ||||||||||||||||||||||||
Cost of sales |
1,192.7 |
1,222.7 |
(2)% | ||||||||||||||||||||||||||
Research and development |
1,039.3 |
1,109.3 |
(6)% | ||||||||||||||||||||||||||
Marketing, selling and administrative |
1,523.5 |
1,484.9 |
3% | ||||||||||||||||||||||||||
Acquired in-process research |
256.0 |
— |
NM | ||||||||||||||||||||||||||
Asset impairment, restructuring, and other special charges |
108.0 |
31.4 |
NM | ||||||||||||||||||||||||||
Operating income |
525.2 |
834.8 |
(37)% | ||||||||||||||||||||||||||
Net interest income (expense) |
(19.5) |
(3.4) |
|||||||||||||||||||||||||||
Other income - Special |
— |
— |
|||||||||||||||||||||||||||
Net other income (expense) |
112.2 |
59.4 |
|||||||||||||||||||||||||||
Other income (expense) |
92.7 |
56.0 |
66% | ||||||||||||||||||||||||||
Income before income taxes |
617.9 |
890.8 |
(31)% | ||||||||||||||||||||||||||
Income taxes |
88.4 |
162.9 |
(46)% | ||||||||||||||||||||||||||
Net income |
$ |
529.5 |
$ |
727.9 |
(27)% | ||||||||||||||||||||||||
Earnings per share - diluted |
$ |
0.50 |
$ |
0.68 |
(26)% | ||||||||||||||||||||||||
Dividends paid per share |
$ |
0.50 |
$ |
0.49 |
2% | ||||||||||||||||||||||||
Weighted-average shares outstanding (thousands) - diluted |
1,067,036 |
1,075,836 |
|||||||||||||||||||||||||||
NM - not meaningful |
|
||||||||||||||||||
Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited)(a) |
||||||||||||||||||
(Dollars in millions, except per share data) |
||||||||||||||||||
Three Months Ended |
Three Months Ended | |||||||||||||||||
GAAP Reported |
Adjustments(c) |
Non-GAAP Adjusted |
GAAP Reported |
Adjustments(d) |
Non-GAAP Adjusted | |||||||||||||
Revenue |
$ |
4,644.7 |
$ |
— |
$ |
4,644.7 |
$ |
4,683.1 |
$ |
251.8 |
$ |
4,934.9 |
||||||
Cost of sales |
1,192.7 |
(180.4) |
1,012.3 |
1,222.7 |
30.8 |
1,253.5 |
||||||||||||
Operating expenses(b) |
2,562.8 |
(35.8) |
2,527.0 |
2,594.2 |
127.6 |
2,721.8 |
||||||||||||
Acquired in-process research and development |
256.0 |
(256.0) |
— |
— |
— |
— |
||||||||||||
Asset impairment, restructuring and other special charges |
108.0 |
(108.0) |
— |
31.4 |
(31.4) |
— |
||||||||||||
Other income (expense) |
92.7 |
— |
92.7 |
56.0 |
(20.2) |
35.8 |
||||||||||||
Income taxes |
88.4 |
186.0 |
274.4 |
162.9 |
34.7 |
197.6 |
||||||||||||
Net income |
$ |
529.5 |
$ |
394.2 |
$ |
923.7 |
$ |
727.9 |
$ |
69.8 |
$ |
797.7 |
||||||
Earnings per share - diluted |
$ |
0.50 |
$ |
0.37 |
$ |
0.87 |
$ |
0.68 |
$ |
0.06 |
$ |
0.74 |
Numbers may not add due to rounding. | |
(a) |
The company uses non-GAAP financial measures that differ from financial statements reported |
in conformity with U.S. generally accepted accounting principles (GAAP). The company's non-GAAP measures adjust reported results to exclude items that are typically highly variable, difficult to predict, and of a size that could have a substantial impact on the company's reported operations for a period. Non-GAAP adjusted amounts for 2014 assume the | |
(b) |
Operating expenses include research and development, marketing, selling and administrative expenses. |
(c) |
Adjustments to certain GAAP reported measures for the three months ended |
(Dollars in millions, except per share data) |
Amortization(i) |
IPR&D(ii) |
Inventory step-up(iii) |
Other specified items(iv) |
Total Adjustments | ||||||||||
Revenue |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
|||||
Cost of sales |
(116.9) |
— |
(63.5) |
— |
(180.4) |
||||||||||
Operating expenses |
(35.8) |
— |
— |
— |
(35.8) |
||||||||||
Acquired in-process research and development |
— |
(256.0) |
— |
— |
(256.0) |
||||||||||
Asset impairment, restructuring and other special charges |
— |
— |
— |
(108.0) |
(108.0) |
||||||||||
Other income (expense) |
— |
— |
— |
— |
— |
||||||||||
Income taxes |
50.4 |
89.6 |
18.1 |
27.9 |
186.0 |
||||||||||
Net income |
$ |
102.3 |
$ |
166.4 |
$ |
45.4 |
$ |
80.1 |
$ |
394.2 |
|||||
Earnings per share - diluted |
$ |
0.10 |
$ |
0.15 |
$ |
0.04 |
$ |
0.07 |
$ |
0.37 |
Numbers may not add due to rounding. | |
i. |
Exclude amortization of intangibles primarily associated with costs of marketed products acquired or licensed from third parties. |
ii. |
Exclude costs associated with upfront payments for acquired in-process research and development projects acquired in a transaction other than a business combination. These costs include a |
iii. |
Exclude inventory step-up costs associated with the acquisition of |
iv. |
Exclude costs associated with restructuring to reduce the company's cost structure, asset impairments, and integration costs associated with the acquisition of |
(d) Adjustments to certain GAAP reported measures for the three months ended | ||||||||||||
(Dollars in millions, except per share data) |
|
Legacy Amortization(ii) |
Other specified items(iii) |
Total Adjustments | ||||||||
Revenue |
$ |
251.8 |
$ |
— |
$ |
— |
$ |
251.8 |
||||
Cost of sales |
123.3 |
(92.4) |
— |
30.8 |
||||||||
Operating expenses |
164.0 |
(36.4) |
— |
127.6 |
||||||||
Acquired in-process research and development |
— |
— |
— |
— |
||||||||
Asset impairment, restructuring and other special charges |
— |
— |
(31.4) |
(31.4) |
||||||||
Other income (expense) |
(20.2) |
— |
— |
(20.2) |
||||||||
Income taxes |
(18.8) |
44.1 |
9.4 |
34.7 |
||||||||
Net income |
$ |
(36.9) |
$ |
84.7 |
$ |
22.0 |
$ |
69.8 |
||||
Earnings per share - diluted |
$ |
(0.03) |
$ |
0.08 |
$ |
0.02 |
$ |
0.06 |
Numbers may not add due to rounding. | |
i. |
Inclusion of the results of |
1. Exclude results associated with the Sentinel® canine parasiticide franchise in the U.S., which was divested following the closing of the acquisition | |
2. Exclude amortization of intangibles | |
3. Exclude integration and inventory step-up costs | |
4. Other miscellaneous adjustments. | |
ii. |
Exclude legacy amortization of intangibles primarily associated with costs of marketed products acquired or licensed from third parties. |
iii. |
Exclude costs primarily associated with restructuring to reduce the company's cost structure. |
Refer to: (317) 277-6524; lauren_zierke@lilly.com;
(317) 655-6874; johnson_philip_l@lilly.com;
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