Allergan (AGN) Surpasses Q4 Earnings And Sales Estimates

Allergan plc’s (NYSE:AGN) fourth-quarter results were strong as it beat estimates for both earnings and sales.

Adjusted earnings came in at $5.22 per share, beating the Zacks Consensus Estimate of $4.61. Earnings rose 21.7% year over year driven by higher revenues and lower tax rate.

Revenues came in at $4.35 billion, which exceeded the Zacks Consensus Estimate of $4.1 billion. Revenues rose 6.6% from the year-ago quarter as higher sales of key products like Botox (cosmetic and therapeutics), Juvéderm collection of fillers, Vraylar, Linzess and Lo Loestrin made up for the loss of exclusivity on some brands and currency headwinds.

In the past year, Allergan’s share price has risen 46.2% compared with the industry’s increase of 2.8%.

Segment Discussion

Allergan reports revenues under three segments – U.S. General Medicine, U.S. Specialized Therapeutics and International.

U.S. Specialized net revenues rose 0.7% to $1.82 billion. Strong demand for its facial aesthetics products, Botox and Juvéderm and Botox Therapeutic was offset by decline in sales of Restasis and CoolSculpting.

In Facial Aesthetics, Botox (cosmetic) recorded sales of $271.8 million, up 5.3% year over year. Juvéderm collection of fillers rose 5.1% to $166.4 million. Alloderm sales rose 10.3% to $104.7 million. CoolSculpting sales of $53.3 million declined 34.4% year over year.

In Eye Care, while Ozurdex sales rose 7.8% to $31.6 million, Restasis sales fell 4.9% to $309.0 million. A generic version of Restasis is expected to be launched this year.

Botox Therapeutic revenues were $463.0 million, up 6.9% year over year.

There have been concerns regarding possible new competitors to Botox, especially for the therapeutic indications. Evolus’ (NASDAQ:EOLS) Jeuveau injection, indicated to improve the appearance of glabellar or frown lines, was launched in the United States in May 2019 and is off to an impressive start. It poses strong competition for Botox.

Meanwhile, Revance Therapeutics’ DaxibotulinumtoxinA for Injection (DAXI), a rival treatment to Botox for the frown lines indication, is under review with the FDA. It has demonstrated longer duration of efficacy compared to Botox in late-stage studies.

U.S. General Medicine net revenues were up 15.2% year over year to $1.61 billion in the reported quarter as strong demand for Vraylar, Viibryd, Linzess and Lo Loestrin was offset by lower sales of drugs that lost exclusivity.

Vraylar sales were $283.1 million in the quarter, 88.1% higher than the year-ago quarter. Linzess sales rose 12.7% to $231.2 million. Lo Loestrin sales grew 8.6% to $156.2 million while Bystolic sales rose 11.8% to $169.6 million. Viibryd sales were $114.2 million, up 19.6% from the year-ago quarter.

The International segment recorded net revenues of $917.7 million, up 8.1% from the year-ago period, excluding the impact of foreign exchange due to growth in Facial Aesthetics, Ozurdex and Botox (therapeutic).

Profits Rise

Adjusted operating income rose 8.4% to $2.08 billion in the quarter due to higher revenues and lower R&D costs.

Selling, general and administrative expenses increased 1.9% to $1.16 billion in the quarter, owing to higher marketing spending to support product launches.

Research and development (R&D) expenses declined 4.9% to $414.8 million.

2019 Results

Full-year 2019 sales rose 1.9% to $16.1 billion, beating the Zacks Consensus Estimate of $15.81 billion and ahead of the guided range of $15.63-$15.83 billion.

Adjusted earnings of 2019 of $17.64 per share beat the Zacks Consensus Estimate of $16.89. Earnings rose 5.7% year over year and were well above the guidance of $16.55 per share.

Update on Merger with AbbVie

Allergan is due to be acquired by AbbVie (NYSE:ABBV) in a cash-and-stock deal worth nearly $63 billion per an announcement in June last year. The merger is expected to close this quarter. In connection with the pending merger, last month, Allergan announced a definitive agreement to divest its mid-stage immunology candidate brazikumab and marketed medicine, Zenpep to AstraZeneca (NYSE:AZN) and Nestle, respectively. The closings of the divestures are contingent on approvals from the FTC and European Commission.

The merger with AbbVie could be rewarding for Allergan shareholders. With Restasis expected to face generic competition and fears of new competition to Botox, the merger with AbbVie could prove to be the best way out for Allergan.

Allergan currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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