Lilly Reports Third-Quarter 2012 Results
- Worldwide revenue declined 11 percent to
$5.443 billion , driven by Zyprexa patent expirations. - Cymbalta revenue increased 16 percent due to continued growth in both the U.S. and international markets.
- Third-quarter earnings per share were
$1.18 (reported), or$0.79 (non-GAAP, when excluding income from Amylin payment and asset impairment and restructuring charge). - Data read-outs provided a better understanding of several potential new medicines in Lilly's clinical pipeline.
- 2012 non-GAAP EPS guidance reconfirmed to be in the range of
$3.30 - $3.40 , while reported EPS guidance range revised to$3.68 - $3.78 .
$ in millions, except per share data |
Third Quarter |
% | ||
2012 |
2011 |
Change | ||
Total Revenue — Reported |
|
|
(11)% | |
Net Income — Reported |
1,326.6 |
1,236.3 |
7% | |
EPS — Reported
|
1.18 |
1.11 |
6% | |
Net Income — non-GAAP |
888.3 |
1,253.8 |
(29)% | |
EPS — non-GAAP |
0.79 |
1.13 |
(30)% |
Financial results for 2012 and 2011 are presented on both a reported and a non-GAAP basis. Reported results were prepared in accordance with generally accepted accounting principles (GAAP) and include all revenue and expenses recognized during the period. Non-GAAP results exclude the items described in the reconciliation tables later in the release. The non-GAAP results are presented in order to provide additional insights into the underlying trends in the company's business. The company's 2012 financial guidance is also being provided on both a reported and a non-GAAP basis.
"The third quarter was an eventful one for Lilly, as we gained a better understanding of several potential new medicines in our clinical pipeline, while maintaining focus on delivering solid financial results despite the loss of Zyprexa patent exclusivity," said
Key Events Over the Last Three Months
- The company announced that the primary endpoints, both cognitive and functional, were not met in either of the two phase III, double-blind, placebo-controlled solanezumab EXPEDITION trials in patients with mild-to-moderate Alzheimer's disease. However, a pre-specified secondary analysis of pooled data across both trials showed a 34 percent reduction of cognitive decline in patients with mild Alzheimer's disease. The next steps for solanezumab will be determined after discussions with regulators.
- Following the completion of its acquisition by Bristol-Myers Squibb, Amylin paid to Lilly
$1.259 billion in satisfaction of its revenue-sharing obligation with respect to exenatide. In addition, Amylin also repaid to Lilly a$165 million loan plus accrued interest. The U.S. Court of Appeals for the Federal Circuit affirmed a prior ruling by theU.S. District Court for the District ofDelaware that the company's compound patent for Alimta® is valid. The compound patent provides protection for Alimta in the U.S. through January of 2017.- The company announced positive top-line results of three completed phase III AWARD trials for dulaglutide, an investigational, long-acting glucagon-like peptide 1 (GLP-1) analog being studied as a once-weekly treatment for type 2 diabetes. Primary efficacy endpoints, as measured by reduction in hemoglobin A1c (HbA1c) at the 1.5 mg dose, were met in three studies (AWARD-1, AWARD-3 and AWARD-5). Having met the primary endpoints, superiority for HbA1c lowering was examined, and both doses of dulaglutide (0.75mg and 1.5mg) demonstrated statistically superior reduction in HbA1c from baseline compared to: exenatide twice-daily injection at 26 weeks (AWARD-1); metformin at 26 weeks (AWARD-3); and sitagliptin at 52 weeks (AWARD-5).
- The company announced that the REGARD trial, a phase III study of ramucirumab (IMC-1121B) in patients with metastatic gastric cancer, met its primary endpoint of improved overall survival and its secondary endpoint of increased progression-free survival.
- The company made the decision to stop ongoing phase III clinical studies investigating pomaglumetad methionil, also known as mGlu2/3, for the treatment of patients suffering from schizophrenia. The decision was made after an independent futility analysis concluded HBBN, the second of Lilly's two pivotal studies, was unlikely to be positive in its primary efficacy endpoint if enrolled to completion. The decision was not based on any safety signals.
- The company and its partner, Daiichi Sankyo Company, Limited, announced data from the TRILOGY ACS study, a phase III trial comparing prasugrel plus aspirin to clopidogrel plus aspirin in patients with unstable angina (UA) or non-ST elevation myocardial infarction (NSTEMI), who were managed medically without an artery-opening procedure. The study did not demonstrate prasugrel was superior to clopidogrel in these patients.
- The company announced that the phase III POINTBREAK trial did not meet its primary endpoint of improved overall survival for patients with nonsquamous non-small cell lung cancer who were randomized to receive a combination of Alimta with bevacizumab and carboplatin induction followed by Alimta plus bevacizumab maintenance compared to the combination of paclitaxel with bevacizumab and carboplatin followed by bevacizumab maintenance.
- The
Committee for Medicinal Products for Human Use (CHMP) of theEuropean Medicines Agency (EMA) issued a positive opinion recommending approval of Cialis® tablets 5 mg for once a day use for the treatment of the signs and symptoms of benign prostatic hyperplasia (BPH). The U.S. Food and Drug Administration (FDA) approved a supplemental new drug application for Tradjenta® tablets for use as add-on therapy to insulin.Europe 's CHMP issued a positive opinion recommending approval of Trajenta for use as add-on therapy to insulin.- The
FDA approved a change in the label for Alimta to state that patients may receive Alimta as a maintenance therapy following first-line Alimta-cisplatin induction therapy for locally advanced or metastatic nonsquamous non-small cell lung cancer. Europe 's CHMP issued a positive opinion recommending approval of AmyvidTM (Florbetapir F 18) solution for injection as a diagnostic radiopharmaceutical indicated for Positron Emission Tomography (PET) imaging of beta-amyloid neuritic plaque density in the brains of adult patients with cognitive impairment who are being evaluated for Alzheimer's Disease and other causes of cognitive impairment.
Third-Quarter Reported Results
In the third quarter of 2012, worldwide total revenue was
Gross margin decreased 12 percent to
Total operating expense, defined as the sum of research and development, marketing, selling and administrative expenses, decreased 3 percent compared with the third quarter of 2011. Marketing, selling and administrative expenses decreased 8 percent to
In the third quarter of 2012, the company recognized a charge of
Operating income in the third quarter of 2012 was
Other income (expense) was a net income of
The effective tax rate was 29.2 percent in the third quarter of 2012, compared with an effective tax rate of 17.7 percent in the third quarter of 2011. The increase in the third quarter 2012 effective tax rate reflects the tax impact of the payment received from Amylin and the expiration of the R&D tax credit in the U.S. at the end of 2011, while the third quarter 2011 tax rate was lower primarily due to the recognition of a
Net income and earnings per share increased to
Third-Quarter 2012 non-GAAP Results
On a non-GAAP basis, third quarter 2012 operating income decreased 29 percent to
Non-GAAP results exclude items totaling
Third Quarter |
||||
2012 |
2011 |
% Change | ||
Earnings per share (reported) |
|
|
6% | |
Asset impairment, restructuring and other special charges |
.04 |
.02 |
||
Income from early payment of Amylin revenue-sharing obligation |
(.43) |
- |
||
Earnings per share (non-GAAP) |
|
|
(30)% |
Year-to-Date Results
For the first nine months of 2012, worldwide total revenue was
Non-GAAP results exclude items totaling
Year-to-date |
% Change | |||
2012 |
2011 |
|||
Earnings per share (reported) |
|
|
(7)% | |
In-process research and development charges associated with Boehringer Ingelheim collaboration |
- |
.23 |
||
Asset impairment, restructuring and other special charges |
.05 |
.18 |
||
Income from early payment of Amylin revenue-sharing obligation |
(.43) |
- |
||
Earnings per share (non-GAAP) |
|
|
(28)% |
Revenue Highlights | |||||||||||
(Dollars in millions) |
Third Quarter |
% Change Over/(Under) |
Year-to-Date |
% Change | |||||||
2012 |
2011 |
2011 |
2012 |
2011 |
2011 | ||||||
Cymbalta® |
|
|
16% |
|
|
20% | |||||
Alimta |
643.6 |
629.7 |
2% |
1,909.9 |
1,823.0 |
5% | |||||
Humalog® |
575.8 |
593.2 |
(3)% |
1,779.5 |
1,705.5 |
4% | |||||
Cialis |
482.1 |
469.8 |
3% |
1,413.4 |
1,381.4 |
2% | |||||
Zyprexa |
374.5 |
1,182.3 |
(68)% |
1,316.6 |
3,872.4 |
(66)% | |||||
Forteo® |
288.7 |
240.3 |
20% |
836.4 |
687.3 |
22% | |||||
Humulin® |
285.4 |
301.5 |
(5)% |
896.1 |
903.2 |
(1)% | |||||
Evista® |
247.0 |
270.1 |
(9)% |
769.2 |
799.7 |
(4)% | |||||
Strattera® |
145.6 |
153.2 |
(5)% |
457.5 |
449.5 |
2% | |||||
Effient® |
109.7 |
83.5 |
31% |
336.6 |
211.5 |
59% | |||||
|
479.4 |
451.0 |
6% |
1,482.4 |
1,210.4 |
22% | |||||
Total Revenue |
|
|
(11)% |
|
|
(9)% | |||||
Cymbalta
For the third quarter of 2012, Cymbalta generated
Alimta
For the third quarter of 2012, Alimta generated sales of
Humalog
For the third quarter of 2012, worldwide Humalog sales decreased 3 percent, to
Cialis
Cialis sales for the third quarter of 2012 increased 3 percent to
Zyprexa
In the third quarter of 2012, Zyprexa sales totaled
Forteo
Third-quarter sales of Forteo were
Humulin
Worldwide Humulin sales decreased 5 percent in the third quarter of 2012, to
Evista
Evista sales for the third quarter of 2012 decreased 9 percent to
Strattera
During the third quarter of 2012, Strattera generated
Effient
Effient sales were
Erbitux®
Lilly recognizes net royalties received from its Erbitux collaboration partners and revenue from manufactured product sold to these partners. For the third quarter of 2012, Lilly recognized total revenue of
Worldwide sales of animal health products in the third quarter of 2012 were
2012 Financial Guidance
The company has updated its 2012 earnings per share guidance and now expects full-year 2012 earnings per share to be in the range of
2012 Expectations |
2011 Results |
% Change | |||
Earnings per share (reported) |
|
|
(6)% to (3)% | ||
Income from early payment of Amylin revenue-sharing obligation |
(.43) |
- |
|||
In-process research and development charge associated with Boehringer Ingelheim collaboration |
- |
.23 |
|||
Asset impairment, restructuring, other special charges |
.05 |
.29 |
|||
Earnings per share (non-GAAP) |
|
|
(25)% to (23)% |
Numbers in the 2011 full-year column do not add due to rounding.
The company still anticipates 2012 revenue of between
The company still anticipates that gross margin as a percent of revenue will be approximately 78 percent in 2012.
As a result of ongoing productivity efforts, the company still expects to keep 2012 operating expenses essentially flat compared to 2011. Marketing, selling and administrative expenses are still expected to decline and be in the range of
On a reported basis, other income and deductions is now expected to be in a range between
On a reported basis, the 2012 tax rate is still expected to be approximately 23.5 percent. On a non-GAAP basis, the 2012 tax rate is still expected to be approximately 21 percent. Both tax rates assume the extension of the R&D tax credit for the full year 2012.
Operating cash flows in 2012 are still expected to be more than sufficient to fund capital expenditures of approximately
Webcast of Conference Call
As previously announced, investors and the general public can access a live webcast of the third-quarter 2012 financial results conference call through a link on Lilly's website at www.lilly.com. The conference call will be held today from
Lilly, a leading innovation-driven corporation, is developing a growing portfolio of pharmaceutical products by applying the latest research from its own worldwide laboratories and from collaborations with eminent scientific organizations. Headquartered in
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. For example, the statements in the section entitled "2012 Financial Guidance" constitute forward-looking statements. Actual results may differ materially from these and other forward-looking statements 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. Pharmaceutical products can develop unexpected safety or efficacy concerns. The company's results may also be affected by such factors as competitive developments affecting current products; market uptake of recently launched products; the timing of anticipated regulatory approvals and launches of new products; regulatory actions regarding currently marketed products; issues with product supply; regulatory changes or other developments; regulatory compliance problems or government investigations; patent disputes; changes in patent law or regulations related to data-package exclusivity; other litigation involving current or future products; the impact of governmental actions regarding pricing, importation, and reimbursement for pharmaceuticals, including U.S. health care reform; changes in tax law; asset impairments and restructuring charges;
acquisitions and business development transactions; and the impact of exchange rates and global macroeconomic conditions. For additional information about the factors that could cause actual results to differ materially from forward-looking statements, please see the company's latest Form 10-Q and Form 10-K filed with the
Alimta® (pemetrexed, Lilly)
Amyvid™ (florbetapir, Lilly)
Cialis® (tadalafil, Lilly)
Cymbalta® (duloxetine hydrochloride, Lilly)
Effient® (prasugrel, Lilly)
Erbitux® (cetuximab,
Evista® (raloxifene hydrochloride, Lilly)
Forteo® (teriparatide of recombinant DNA origin injection, Lilly)
Humalog® (insulin lispro injection of recombinant DNA origin, Lilly)
Humulin® (human insulin of recombinant DNA origin, Lilly)
Strattera® (atomoxetine hydrochloride, Lilly)
Tradjenta® (linagliptin, Boehringer Ingelheim)
Zyprexa® (olanzapine, Lilly)
|
||
|
| |
Worldwide Employees |
38,600 |
38,080 |
| ||||||||||||||||
Operating Results (Unaudited) — REPORTED | ||||||||||||||||
(Dollars in millions, except per share data) | ||||||||||||||||
Three Months Ended |
Nine Months Ended | |||||||||||||||
|
| |||||||||||||||
2012 |
2011 |
% Chg. |
2012 |
2011 % Chg. | ||||||||||||
Total Revenue |
$ |
5,443.3 |
$ |
6,147.9 |
(11)% |
$ |
16,646.0 |
$ |
18,239.9 |
(9)% | ||||||
Cost of sales |
1,203.6 |
1,338.1 |
(10)% |
3,548.2 |
3,746.2 |
(5)% | ||||||||||
Research and development |
1,342.8 |
1,280.9 |
5% |
3,815.0 |
3,665.5 |
4% | ||||||||||
Marketing, selling and administrative |
1,757.4 |
1,917.8 |
(8)% |
5,536.0 |
5,746.5 |
(4)% | ||||||||||
Acquired in-process research and development |
- |
- |
NM |
- |
388.0 |
NM | ||||||||||
Asset impairments, restructuring and other special charges |
53.3 |
25.2 |
NM |
77.1 |
233.8 |
(67)% | ||||||||||
Operating income |
1,086.2 |
1,585.9 |
(32)% |
3,669.7 |
4,459.9 |
(18)% | ||||||||||
Net interest income (expense) |
(21.3) |
(22.8) |
(56.3) |
(80.4) |
||||||||||||
Other income (expense) — Special |
787.8 |
- |
787.8 |
- |
||||||||||||
Net other income (expense) |
22.0 |
(60.6) |
(5.5) |
(71.8) |
||||||||||||
Other income (expense) |
788.5 |
(83.4) |
NM |
726.0 |
(152.2) |
NM | ||||||||||
Income before income taxes |
1,874.7 |
1,502.5 |
25% |
4,395.7 |
4,307.7 |
2% | ||||||||||
Income taxes |
548.1 |
266.2 |
NM |
1,134.4 |
818.2 |
39% | ||||||||||
Net income |
$ |
1,326.6 |
$ |
1,236.3 |
7% |
3,261.3 |
3,489.5 |
(7)% | ||||||||
Earnings per share — basic and diluted |
$ |
1.18 |
$ |
1.11 |
6% |
2.92 |
3.13 |
(7)% | ||||||||
Dividends paid per share |
$ |
.49 |
$ |
.49 |
0% |
1.47 |
1.47 |
0% | ||||||||
Weighted-average shares outstanding (thousands) — basic |
1,119,617 |
1,113,820 |
1,118,395 |
1,113,324 |
||||||||||||
Weighted-average shares outstanding (thousands) — diluted |
1,119,641 |
1,113,841 |
1,118,420 |
1,113,347 |
||||||||||||
NM — not meaningful |
Operating Results (Unaudited) — Non-GAAP | |||||||||||||
(Dollars in millions, except per share data) | |||||||||||||
Three Months Ended |
Nine Months Ended | ||||||||||||
|
| ||||||||||||
2012(a) |
2011(b) |
% Chg. |
2012(a) |
2011(b) % Chg. | |||||||||
Total Revenue |
$ |
5,443.3 |
$ |
6,147.9 |
(11)% |
$ |
16,646.0 |
$ |
18,239.9 |
(9)% | |||
Cost of sales |
1,203.6 |
1,338.1 |
(10)% |
3,548.2 |
3,746.2 |
(5)% | |||||||
Research and development |
1,342.8 |
1,280.9 |
5% |
3,815.0 |
3,665.5 |
4% | |||||||
Marketing, selling and administrative |
1,757.4 |
1,917.8 |
(8)% |
5,536.0 |
5,746.5 |
(4)% | |||||||
Operating income |
1,139.5 |
1,611.1 |
(29)% |
3,746.8 |
5,081.7 |
(26)% | |||||||
Net interest income (expense) |
(21.3) |
(22.8) |
(56.3) |
(80.4) |
|||||||||
Net other income (expense) |
22.0 |
(60.6) |
(5.5) |
(71.8) |
|||||||||
Other income (expense) |
0.7 |
(83.4) |
NM |
(61.8) |
(152.2) |
(59)% | |||||||
Income before income taxes |
1,140.2 |
1,527.7 |
(25)% |
3,685.0 |
4,929.5 |
(25)% | |||||||
Income taxes |
251.9 |
273.9 |
(8)% |
846.2 |
984.9 |
(14)% | |||||||
Net income |
$ |
888.3 |
$ |
1,253.8 |
(29)% |
$ |
2,838.8 |
$ |
3,944.6 |
(28)% | |||
Earnings per share — basic and diluted |
$ |
.79 |
$ |
1.13 |
(30)% |
$ |
2.54 |
$ |
3.54 |
(28)% | |||
Dividends paid per share |
$ |
.49 |
$ |
.49 |
0% |
$ |
1.47 |
$ |
1.47 |
0% | |||
Weighted-average shares outstanding (thousands) — basic |
1,119,617 |
1,113,820 |
1,118,395 |
1,113,324 |
|||||||||
Weighted-average shares outstanding (thousands) — diluted |
1,119,641 |
1,113,841 |
1,118,420 |
1,113,347 |
|||||||||
(a) The third quarter 2012 financial statements have been adjusted to eliminate a charge of
(b) The third quarter 2011 has been adjusted to eliminate a restructuring charge of
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