Lilly Reports First-Quarter 2014 Results
$ in millions, except per share data |
First Quarter |
% | ||
2014 |
2013 |
Change | ||
Total Revenue - Reported |
|
|
(16)% | |
Net Income - Reported |
727.9 |
1,548.0 |
(53)% | |
EPS - Reported
|
0.68 |
1.42 |
(52)% | |
Net Income - non-GAAP |
749.9 |
1,247.7 |
(40)% | |
EPS - non-GAAP |
0.70 |
1.14 |
(39)% |
Certain financial information for 2014 and 2013 are 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. The non-GAAP measures are presented in order to provide additional insights into the underlying trends in the company's business. The company's 2014 financial guidance is also being provided on both a reported and a non-GAAP basis.
"Lilly's first-quarter results reflect the substantial decline in revenue and earnings that we expected to encounter as a result of the recent U.S. patent expirations for Cymbalta and Evista," said
Key Events Over the Last Three Months
The U.S. Food and Drug Administration (FDA) approved Cyramza™ (ramucirumab) as a single-agent treatment for patients with advanced or metastatic gastric cancer or gastroesophageal junction (GEJ) adenocarcinoma with disease progression on or after prior fluoropyrimidine- or platinum-containing chemotherapy.- The company announced an agreement to acquire
Novartis Animal Health in an all-cash transaction that will strengthen and diversify Lilly's own animal health business, Elanco. Under the terms of the agreement, Lilly will acquire all assets ofNovartis Animal Health for a total purchase price of approximately$5.4 billion , including anticipated tax benefits. The transaction is expected to close by the end of the first quarter of 2015, subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act, similar requirements outside the U.S., and other customary closing conditions. - The company and its alliance partner, Boehringer Ingelheim, announced that the
FDA accepted the filing of the New Drug Application (NDA) for the investigational combination tablet of empagliflozin and linagliptin for the treatment of adults with type 2 diabetes. - The company announced positive top-line results for the REVEL trial, a global Phase III study of ramucirumab in combination with chemotherapy in patients with second-line non-small cell lung cancer. The trial results showed a statistically significant improvement in the primary endpoint of overall survival in the ramucirumab-plus-docetaxel arm compared to the control arm of placebo plus docetaxel. REVEL also showed a statistically significant improvement in progression-free survival in the ramucirumab arm compared to the control arm.
- The company announced positive top-line results of the sixth AWARD trial for once-weekly dulaglutide, an investigational, long-acting glucagon-like peptide 1 (GLP-1) receptor agonist being studied as a treatment for type 2 diabetes. In the AWARD-6 study, once-weekly dulaglutide 1.5 mg achieved the primary endpoint of non-inferiority to once-daily liraglutide 1.8 mg, as measured by the reduction of hemoglobin A1c (HbA1c) from baseline at 26 weeks.
- The
Committee for Medicinal Products for Human Use (CHMP) of theEuropean Medicines Agency issued a positive opinion recommending approval of empagliflozin, an investigational sodium glucose co-transporter 2 (SGLT2) inhibitor, as an adjunct to diet and exercise to improve glycemic control, or blood glucose levels, in adults with type 2 diabetes. - The
FDA issued a complete response letter for the NDA of empagliflozin. The company and its partner, Boehringer Ingelheim, continue to expectFDA action in 2014. - U.S. patent exclusivity for Evista® ended in March, 2014, resulting in the entry of generic competition. The company reached a short-term agreement with
Prasco Laboratories to supply an authorized version of raloxifene (Evista). - The company's animal health division, Elanco, announced an agreement to acquire Lohmann SE (
Lohmann Animal Health ) for a purchase price of approximately440 million euros .Lohmann Animal Health , a privately-held company headquartered in Cuxhaven,Germany , is a global leader in poultry vaccines and also markets a range of feed additives. The transaction is expected to close in the second quarter of 2014, contingent upon clearance from regulatory authorities and other customary closing conditions. The U.S. District Court for the Southern District of Indiana ruled in the company's favor on the issues of validity and infringement regarding the vitamin dosage regimen patent for Alimta®. The patent provides intellectual property protection for Alimta in the U.S. until 2022. In addition, the Regional Court of Düsseldorf inGermany ruled in Lilly's favor on the issue of infringement of the vitamin dosage regimen patent for Alimta. The patent provides intellectual property protection for Alimta inGermany until 2021.- In the Actos product liability case of
Terrence Allen , et al. v.Takeda Pharmaceuticals North America, Inc. et al., a jury found in favor of the plaintiffs and awarded$1.475 million in compensatory damages. The allocation of liability was 75 percent Takeda and 25 percent Lilly. The jury also awarded$6 billion in punitive damages from Takeda and$3 billion from Lilly. Lilly disagrees with the verdict and intends to vigorously challenge this outcome through all available legal means. The agreement between Lilly and Takeda calls for Takeda to defend and indemnify Lilly for losses and expenses with respect to the U.S. litigation in accordance with the terms of the agreement. After the verdict was entered inAllen , Takeda notified Lilly that it was reserving its right to challenge its obligations to defend and indemnify Lilly with respect to the Allen case only. Lilly believes it is entitled to full defense and indemnification of its losses and expenses related to Allen and in all other U.S. cases. - A lawsuit was filed against the company by Sanofi-Aventis in the
U.S. District Court for the District of Delaware alleging patent infringement with respect to LY2963016, a new insulin glargine product for which Lilly is currently seeking approval from theFDA . Lilly respects the intellectual property of others and does not believe the application for approval of its new insulin glargine product infringes any valid claim of the asserted patents.
First-Quarter Reported Results
In the first quarter of 2014, worldwide total revenue was
Gross margin decreased 22 percent to
Total operating expenses in the first quarter of 2014, defined as the sum of research and development, marketing, selling and administrative expenses, were
In the first quarters of 2014 and 2013, the company recognized asset impairment, restructuring and other special charges of
Operating income in the first quarter of 2014 was
Other income (expense) was income of
The effective tax rate was 18.3 percent in the first quarter of 2014, compared with 20.7 percent in the first quarter of 2013. The effective tax rate for the first quarter of 2014 includes a discrete tax benefit of approximately
In the first quarter of 2014, net income decreased 53 percent and earnings per share decreased 52 percent to
First-Quarter 2014 non-GAAP Measures
On a non-GAAP basis, first-quarter 2014 operating income decreased
Non-GAAP measures exclude items totaling
First Quarter |
||||
2014 |
2013 |
% Change | ||
Earnings per share (reported) |
|
|
(52)% | |
Asset impairment, restructuring and other special charges |
.02 |
.01 |
||
Income related to termination of the exenatide collaboration with Amylin |
- |
(.29) |
||
Earnings per share (non-GAAP) |
|
|
(39)% |
Revenue Highlights
(Dollars in millions) |
First Quarter |
% Change | ||||
2014 |
2013 |
Over/(Under) | ||||
Humalog® |
|
|
3% |
|||
Alimta |
632.0 |
616.8 |
2% |
|||
Cialis® |
532.4 |
515.0 |
3% |
|||
Cymbalta |
478.2 |
1,328.2 |
(64)% |
|||
Humulin® |
316.2 |
311.9 |
1% |
|||
Forteo® |
300.4 |
281.5 |
7% |
|||
Zyprexa® |
283.1 |
284.8 |
(1)% |
|||
Strattera® |
154.4 |
166.7 |
(7)% |
|||
Evista |
150.1 |
240.6 |
(38)% |
|||
Effient® |
119.3 |
115.9 |
3% |
|||
|
527.4 |
499.1 |
6% |
|||
Total Revenue |
|
|
(16)% |
Humalog
For the first quarter of 2014, worldwide Humalog sales increased 3 percent, to
Alimta
For the first quarter of 2014, Alimta generated sales of
Cialis
Cialis sales for the first quarter of 2014 increased 3 percent to
Cymbalta
For the first quarter of 2014, Cymbalta generated
Humulin
Worldwide Humulin sales increased 1 percent in the first quarter of 2014, to
Forteo
First-quarter 2014 sales of Forteo were
Zyprexa
In the first quarter of 2014, Zyprexa sales totaled
Strattera
During the first quarter of 2014, Strattera generated
Evista
Evista sales for the first quarter of 2014 decreased 38 percent to
Effient
Effient sales were
In the first quarter of 2014, worldwide animal health sales totaled
2014 Financial Guidance
The company has revised certain elements of its 2014 financial guidance. Full-year 2014 earnings per share are now expected to be in the range of
2014 Expectations |
2013 Results |
% Change | |||
Earnings per share (reported) |
|
|
(38)% to (36)% | ||
Asset impairment, restructuring and other special charges |
.02 |
.08 |
|||
Income related to termination of the exenatide collaboration with Amylin |
- |
(.29) |
|||
Acquired in-process research and development charge associated with CGRP antibody |
- |
.03 |
|||
Earnings per share (non-GAAP) |
|
|
(34)% to (33)% |
The company has updated specific line-items of its 2014 financial guidance to reflect the impact of the Lohmann acquisition, as well as movements in foreign exchange rates and the discrete tax benefit recorded in the first quarter of 2014.
The company now anticipates 2014 revenue of between
The company now anticipates that gross margin as a percent of revenue will be approximately 73 percent in 2014.
Total operating expenses in 2014 are expected to decrease substantially compared to 2013. Marketing, selling and administrative expenses are now expected in the range of
Other income (expense) is still expected to be in a range between
The 2014 tax rate is now expected to be approximately 19 percent, assuming a full-year 2014 benefit of the R&D tax credit and other tax provisions up for extension. If these items are not extended, the 2014 tax rate would be approximately 2 percentage points higher.
The company now expects 2014 net income to be at least
The company's 2014 financial guidance assumes that the acquisition of
Webcast of Conference Call
As previously announced, investors and the general public can access a live webcast of the first-quarter 2014 financial results conference call through a link on Lilly's website at www.lilly.com. The conference call will be held today from
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. Pharmaceutical products can develop unexpected safety or efficacy concerns. 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; changes in inflation, interest rates, and foreign currency exchange rates; asset impairments and restructuring charges; changes in accounting standards promulgated by the
# # #
Actos® (pioglitazone hydrochloride, Takeda)
Alimta® (pemetrexed, Lilly)
Cialis® (tadalafil, Lilly)
Cymbalta® (duloxetine hydrochloride, Lilly)
Cyramza™ (ramucirumab, Lilly)
Effient® (prasugrel, Lilly)
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)
Trajenta® (linagliptin, Boehringer Ingelheim)
Zyprexa® (olanzapine, Lilly)
| ||
|
| |
Worldwide Employees |
38,120 |
37,925 |
| ||||||||||||||||
Operating Results (Unaudited) - REPORTED | ||||||||||||||||
(Dollars in millions, except per share data) | ||||||||||||||||
Three Months Ended |
||||||||||||||||
|
||||||||||||||||
2014 |
2013 |
% Chg. | ||||||||||||||
Total revenue |
$ |
4,683.1 |
$ |
5,602.0 |
(16)% | |||||||||||
Cost of sales |
1,222.7 |
1,158.3 |
6% | |||||||||||||
Research and development |
1,109.3 |
1,348.1 |
(18)% | |||||||||||||
Marketing, selling and administrative |
1,484.9 |
1,652.0 |
(10)% | |||||||||||||
Asset impairment, restructuring and other special charges |
31.4 |
21.7 |
NM | |||||||||||||
Operating income |
834.8 |
1,421.9 |
(41)% | |||||||||||||
Net interest income (expense) Other income - Special |
(3.4)
|
(16.7)
|
||||||||||||||
- |
495.4 |
|||||||||||||||
Net other income (expense) |
59.4 |
50.5 |
||||||||||||||
Other income (expense) |
56.0 |
529.2 |
NM | |||||||||||||
Income before income taxes |
890.8 |
1,951.1 |
(54)% | |||||||||||||
Income taxes |
162.9 |
403.1 |
(60)% | |||||||||||||
Net income |
$ |
727.9 |
$ |
1,548.0 |
(53)% | |||||||||||
Earnings per share - diluted |
$ |
0.68 |
$ |
1.42 |
(52)% | |||||||||||
Dividends paid per share |
$ |
0.49 |
$ |
0.49 |
0% | |||||||||||
Weighted-average shares outstanding (thousands) - diluted |
1,075,836 |
1,091,876 |
NM - not meaningful
|
||||||||||||
Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited) |
||||||||||||
(Dollars in millions, except per share data) |
||||||||||||
Three Months Ended |
Three Months Ended | |||||||||||
GAAP Reported |
Adjustments |
Non-GAAP Adjusted(a) |
GAAP Reported |
Adjustments |
Non-GAAP Adjusted(a) | |||||||
Total revenue |
$ |
4,683.1 |
$ |
- |
$ |
4,683.1 |
$ |
5,602.0 |
$ |
- |
$ |
5,602.0 |
Cost of sales |
1,222.7 |
- |
1,222.7 |
1,158.3 |
- |
1,158.3 | ||||||
Operating expenses(b) |
2,594.2 |
- |
2,594.2 |
3,000.1 |
- |
3,000.1 | ||||||
Asset impairment, restructuring and other special charges(c) |
31.4 |
(31.4) |
- |
21.7 |
(21.7) |
- | ||||||
Other income (expense) (d) |
56.0 |
- |
56.0 |
529.2 |
(495.4) |
33.8 | ||||||
Income taxes |
162.9 |
9.4 |
172.3 |
403.1 |
(173.4) |
229.7 | ||||||
Net income |
727.9 |
22.0 |
749.9 |
1,548.0 |
(300.3) |
1,247.7 | ||||||
Earnings per share - diluted |
0.68 |
0.02 |
0.70 |
1.42 |
(0.28) |
1.14 | ||||||
Numbers do 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 items that are excluded when non-GAAP measures or expectations provided 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. The company believes that these non-GAAP measures provide useful information to investors. Among other things, they may help investors evaluate the company's ongoing operations. They can assist in making meaningful period-over-period comparisons and in identifying operating trends that would otherwise be masked or distorted by the items subject to the adjustments. Management uses these non-GAAP measures internally to evaluate the performance of the business, including to allocate resources and to evaluate results relative to incentive compensation targets. Investors should consider these non-GAAP measures in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP.
(b) Operating expenses include research and development, marketing, selling and administrative expenses.
(c) Certain GAAP reported measures have been adjusted to eliminate asset impairment, restructuring and other special charges. During the three months ended
(d) Certain GAAP reported measures have been adjusted to eliminate a portion of other income (expense). During the three months ended
Refer to:
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(317) 655-6874 -
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