Friday, April 25, 2014

AbbVie Reports First-Quarter 2014 Financial Results-Expected 2014 U.S. launch of its HCV therapy

AbbVie Reports First-Quarter 2014 Financial Results
- Reports First-Quarter Adjusted EPS of $0.71, Up 4.4 Percent and Above Previous Guidance Range of $0.67 to $0.69 (Reports GAAP EPS of $0.61)

- Delivers First-Quarter Revenue of $4.563 Billion, an Increase of 5.4 Percent Over First-Quarter 2013 (Up 6.7 Percent On an Operational Basis)

- Revenue Growth Reflects 17.5 Percent Global Reported Sales Growth from HUMIRA (Up 18.4 Percent On an Operational Basis) and Double-Digit Growth from Other Key Products

- Delivers Significant Gross Margin Expansion and Strong Investment Spending in R&D and SG&A

- Recently Submitted U.S. Regulatory Application for Interferon-Free HCV Combination; Continues to Expect U.S. Approval in 2014; EU Submission Planned for Early May

- Pipeline Continues to Advance in 2014 With Numerous Data Milestones, Regulatory Submissions and Phase Transitions, Including Initiation of a Phase 3 Trial for Veliparib in Non-Small Cell Lung Cancer

- Confirms 2014 Adjusted EPS Guidance Range of $3.00 to $3.10 (GAAP EPS Range is $2.63 to $2.73)

NORTH CHICAGO, Ill., April 25, 2014 /PRNewswire/ -- AbbVie (NYSE: ABBV) announced financial results for the first quarter ended March 31, 2014

"AbbVie delivered strong first-quarter results, with sales and earnings per share above our original guidance, significant margin expansion, and increased R&D and SG&A investment to support our existing portfolio and our promising pipeline opportunities," said Richard A. Gonzalez, chairman and chief executive officer, AbbVie.  "As we look ahead to the remainder of 2014, we continue to expect a significant amount of progress from our pipeline.  This includes key data presentations, phase transitions, regulatory submissions, and U.S. approval of our interferon-free HCV combination in 2014." 

First-Quarter Results
  • Worldwide sales were $4.563 billion in the first quarter, up 5.4 percent.  On an operational basis, sales increased 6.7 percent, excluding a 1.3 percent unfavorable impact from foreign exchange rate fluctuations.  Excluding sales from our lipid franchise due to the loss of exclusivity, sales increased 13.5 percent on an operational basis in the quarter.  
  • First-quarter sales growth was driven primarily by the continued strength of HUMIRA.  Global HUMIRA sales increased 17.5 percent, or 18.4 percent on an operational basis, excluding the impact of foreign exchange rate fluctuations.  Total company sales growth was also driven by double-digit growth from key products including Synthroid, Creon and Duodopa.
  • The adjusted gross margin ratio in the first quarter was 78.4 percent, up 220 basis points versus the prior year, excluding intangible asset amortization and other specified items.  The gross margin ratio under U.S. generally accepted accounting principles (GAAP) was 75.9 percent.  
  • Adjusted selling, general and administrative (SG&A) expense was 27.6 percent of sales in the first quarter, up 4.6 percent versus the prior year, reflecting continued investment in our growth brands and the expected HCV launch.  On a GAAP basis, SG&A was 29.4 percent of sales.
  • Adjusted research and development (R&D) was 16.9 percent of sales in the quarter, up 22.0 percent versus the prior year, reflecting funding actions in support of our emerging mid- and late-stage pipeline assets and the continued pursuit of additional HUMIRA indications.  On a GAAP basis, R&D was 16.9 percent of sales, up 21.8 percent.
  • Net interest expense was $65 million, and the adjusted tax rate was 22.3 percent in the quarter.  On a GAAP basis, the first-quarter tax rate was 23.8 percent.
  • First-quarter diluted earnings per share were $0.61 on a GAAP basis.  Adjusted diluted earnings per share, excluding intangible asset amortization expense and other specified items, were $0.71, up  4.4 percent from first-quarter 2013.  
Key Events from the First Quarter
  • AbbVie recently submitted its U.S. regulatory application for its interferon-free combination for patients with genotype 1 hepatitis C virus (HCV).  AbbVie plans to submit applications for regulatory approval of its regimen in the European Union in early May.  The company expects U.S. commercialization in 2014 and European approval in early 2015.
  • AbbVie presented new data from its Phase 3 HCV program at the 2014 International Liver Congress in London, including detailed results from the SAPPHIRE-I, SAPPHIRE-II, PEARL-III, and TURQUOISE-II studies.  Data from TURQUOISE-II, a global, multi-center, randomized, open-label study evaluating the efficacy and safety of 12 weeks or 24 weeks of treatment with AbbVie's regimen with ribavirin (RBV) in adult patients with genotype 1 chronic HCV infection with compensated liver cirrhosis, was presented as a late-breaker.  Patients in the study achieved sustained virologic response rates 12 weeks post-treatment (SVR12) of 91.8 percent and 95.9 percent in the 12-week and 24-week treatment arms, respectively.
  • AbbVie announced the initiation of a global Phase 3 clinical trial evaluating the safety and efficacy of its investigational compound, veliparib (ABT-888), in patients with previously untreated locally advanced or metastatic squamous non-small cell lung cancer (NSCLC).  This randomized, placebo-controlled, double-blind, multi-center trial will recruit approximately 900 patients, and the primary efficacy outcome of the trial is overall survival.  Veliparib is a PARP inhibitor being evaluated in multiple tumor types. 
  • At the recent Conference on Retroviruses and Opportunistic Infections (CROI), AbbVie presented data on its next-generation HCV assets, ABT-493 and ABT-530, showing balanced pan-genotypic coverage.  These next-generation assets are currently in Phase 2 development.  AbbVie also presented the first detailed results from the pivotal Phase 3 study, PEARL-III.  PEARL-III evaluated the efficacy and safety of 12 weeks of treatment with AbbVie's investigational therapy with or without RBV in non-cirrhotic, adult patients with chronic genotype 1b HCV infection who were new to treatment.
  • AbbVie announced the initiation of a pivotal Phase 3 clinical trial that will evaluate the use of HUMIRA as a treatment for fingernail psoriasis in patients with moderate to severe chronic plaque psoriasis, an area of unmet need.  Currently there are no approved treatments for fingernail psoriasis.  The 26-week clinical trial is a multinational, double-blind, placebo-controlled study that is expected to enroll 200 patients with moderate to severe chronic plaque psoriasis with fingernail psoriasis. It will be conducted at approximately 32 sites worldwide.
  • AbbVie announced plans to establish operations in Singapore for small molecule and biologics active drug substance manufacturing.  When completed, the facility will provide manufacturing capacity for compounds within AbbVie's oncology and immunology pipeline to serve markets globally.  The investment will establish AbbVie's manufacturing presence in Asia.
  • On February 20, the AbbVie board of directors increased the company's quarterly cash dividend by  5 percent from $0.40 per share to $0.42 per share.  The cash dividend is payable May 15, 2014 to stockholders of record at the close of business on April 15, 2014.
Full-Year 2014 Outlook
AbbVie is confirming its diluted earnings-per-share guidance for the full-year 2014 of $3.00 to $3.10 on an adjusted basis, or $2.63 to $2.73 on a GAAP basis.  The company's 2014 adjusted diluted earnings-per-share guidance excludes $0.37 per share of intangible asset amortization expense and other specified items primarily associated with certain separation-related costs and ongoing restructuring activities.  AbbVie continues to expect 2014 revenue of approximately $19 billion, excluding any potential revenue from the expected 2014 U.S. launch of its HCV therapy.

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