Allergan released its third-quarter financials, with mixed results and plans to make fairly major changes.
Allergan released its third-quarter financials, with mixed results and plans to make fairly major changes.
Allergan reported total net revenues of $4.03 billion, which was an 11.4 percent jump from the third quarter last year. It was driven by Botox, Juvederm, Linzess, Alloderm, CoolSculpting and new products like Vraylar, Namzaric and Viberzi. Unfortunately, it had lower revenues from Minastrin and Asacol because of patent cliffs and the continuing slowdown of Nemenda XR sales.
“We tightly managed our SG&A expenses, and our R&D team is making important progress across key programs, especially in advancing our six ‘stars,’ including the NDA acceptance of Esmya for uterine fibroids,” Brent Saunders, the company’s chairman and chief executive officer, said in a statement. “I continue to be proud of our team and the work they are doing to advance patient care. Their focus and dedication, despite headwinds, is a hallmark of the bold team we have built at Allergan.”
Which just seems to scream out for a “but….” Investors have been notably concerned over the company’s Restasis product, which has and remains involved in patent lawsuits. There are issues there, for sure. First, Allergan sold the Orange Book-listed patents for Restasis to the Saint Regis Mohawk Tribe, which officially closed in September 2017. The tribe then granted Allergan exclusive licenses to the patents. The tribe’s “sovereign immunity” would protect the patents from any patent challenge. Or, as the Los Angeles Times wrote in mid-October, “In the annals of cynical corporate subterfuges, it would be hard to top the effort by the drugmaker Allergan to fend off a patent challenge by selling its drug rights to a rural New York Indian tribe.”
The second issue is that a Texas federal judge in October invalidated four key patents for Restasis.
In the third-quarter filing, Saunders said, “We have strong arguments for an appeal and we filed a notice of appeal with the Court. If a generic product enters the market, Allergan is ready to mitigate that impact by growing our base business, reducing costs and deploying our balance sheet. We will also deliver on our capital commitments, including increasing our dividend and paying down debt.”
The company also reported a GAAP operating loss from continuing operations for the quarter of $4.02 billion.
Because of this, the company has stated it plans to continue to cut costs, and soon. At the conference call, Saunders said, “This team is up for it. I hate to say we know how to take costs out of the business, but we do, and we know how to do that in a way that protects the long-term growth drivers.”
One plan for generating more revenue is to sell off its 100 million shares it received from Teva Pharmaceutical Industries when Teva bought Allergan’s generic arm Actavis in 2016. The deal put a 12-month hold on sales, but that ended on August 2. Teva paid $33 billion in cash for Actavis and the rest with a 9.8 percent stake in Teva, which was worth about $5.3 billion at the time.
Allergan has indicated it will begin selling off the shares over the next few quarters. The shares have lost about 60 percent of their value this year.
Another thing that came up was the possibility of breaking up the company. Some analysts and investors have speculated on it happening, but Saunders shot it down in the conference call. He said, “That’s not on the table. Splitting the company is … at least a few years of work, and that’s not something that we’re focused on right now.”
The company wasn’t specific about its cost-cutting plans, saying they were looking at different proposals. The company has never had a problem cutting jobs when necessary, and it is the time of year when companies start laying off people. Merck recently cut 1,800 sales job, Eli Lilly in September announced 3,500 job cuts, and Teva plans on cutting 7,000 jobs.
