Allergan Management Discusses Q1 2012 Results - Earnings Call Transcript

Allergan (AGN)

Q1 2012 Earnings Call

May 02, 2012 11:00 am ET


James M. Hindman - Chief Financial Officer

David E.I. Pyott - Chairman, Chief Executive officer and President

Jeffrey L. Edwards - Chief Financial Officer and Executive Vice President of Finance & Business Development

Joann Bradley -


Larry Biegelsen - Wells Fargo Securities, LLC, Research Division

Gregory Waterman - Goldman Sachs Group Inc., Research Division

Gary Nachman - Susquehanna Financial Group, LLLP, Research Division

Marc Goodman - UBS Investment Bank, Research Division

Douglas D. Tsao - Barclays Capital, Research Division

David G. Buck - The Buckingham Research Group Incorporated

Annabel Samimy - Stifel, Nicolaus & Co., Inc., Research Division

John T. Boris - Citigroup Inc, Research Division

Seamus Fernandez - Leerink Swann LLC, Research Division

Aaron Gal - Sanford C. Bernstein & Co., LLC., Research Division

Gregory B. Gilbert - BofA Merrill Lynch, Research Division

Shibani Malhotra - RBC Capital Markets, LLC, Research Division

David Risinger - Morgan Stanley, Research Division

Ken Cacciatore - Cowen and Company, LLC, Research Division

Catherine J. Arnold - Crédit Suisse AG, Research Division

Steve Willoughby - Cleveland Research Company

Frank H. Pinkerton - SunTrust Robinson Humphrey, Inc., Research Division

David Amsellem - Piper Jaffray Companies, Research Division



Hello, and welcome to the Allergan First Quarter 2012 Earnings Call. [Operator Instructions] At the request of the company, today's conference is being recorded. If anyone has any objections, you may disconnect at this time. I would like to introduce today's conference host, Mr. Jim Hindman, Senior Vice President, Treasury, Risk and Investor Relations. Sir, you may begin.

James M. Hindman

Thank you, Terry. Good morning. With me for today's conference call is David Pyott, Chairman of the Board, President and Chief Executive Officer; Jeff Edwards, Executive Vice President, Finance and Business Development, Chief Financial Officer; Dr. Scott Whitcup, Executive Vice President, Research and Development, Chief Scientific Officer; and Jim Barlow, Senior Vice President and Corporate Controller.

Before we move ahead, I would like to remind you that certain statements that we will make in this presentation are forward-looking statements. These forward-looking statements reflect Allergan's judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting Allergan's businesses.

Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with the forward-looking statements to be made in this conference call and webcast, we refer you to the disclaimer regarding forward-looking statements that is included in our first quarter 2012 earnings release, which was furnished to the SEC today on Form 8-K, as well as our filings with the SEC referenced in that disclaimer.

We will follow up the question-and-answer session of this call with a short listen-only segment, where we will provide additional miscellaneous information that relates to our business. Under Regulation FD, in order to be able to discuss this information freely during the quarter, we must be sure that it is in the public domain. This conference call and accompanying webcast are being simultaneously broadcast over the Internet, with replays available for one week. You can access this information on our website at

At this point, I'd like to turn the call over to David Pyott.

David E.I. Pyott

Great. Thanks, Jim. Good morning, ladies and gentlemen. In the first quarter of this year, Allergan sales grew versus the first quarter of 2011 by 9.0%, due to the strength of U.S. dollar relative to many world currencies, especially the euro, by a higher 10.4% in local currencies.

We enjoyed strong double-digit growth in many operating regions, namely the U.S. and Canadian pharmaceuticals businesses, across the total business in Europe, Africa, Middle East, and also in Latin America and Asia Pacific.

The U.S. medical device business have declining sales due to the filler business, which is explained by the timing of consumer promotions in 2012 and 2011 and due to market conditions for LAP-BAND. Regarding operating performance, we generated non-GAAP earnings per share of $0.86, marking an increase of 11.7% and at the top end of the range of expectations provided at our last earnings call.

For reconciliation to GAAP numbers, kindly consult our press release. You will note that we have not changed our outlook for sales or earnings for the full year 2012. A few major swing items for the full year are, however, worthy of comment.

On March 9, a U.S. District Court judge in California issued a permanent injunction enjoining Merz from selling or providing Xeomin or soliciting purchases of Xeomin in official -- facial aesthetics market until January 9, 2013. The judge also imposed the same restrictions on Xeomin in the therapeutic market, unless customers are not identified on court mandate to the exclusion lists, or customers voluntarily and without solicitation request to purchase the product for therapeutic use, and sworn declarations are submitted so stating.

Finally, the judge enjoined Merz from providing or selling dermal filler products or soliciting purchases of dermal filler products until Jan. 9, 2013, except to customers who voluntarily and without solicitation request to purchase the product and sworn declarations are submitted so stating, or unless customers had already purchased product between July 1, 2009, and June 30, 2010. Further exact details of this injunction are to be found in the court order.

Given Xeomin inventory in channel , which still have to be used, this did not positively affect BOTOX sales in the quarter, but is expected to provide a benefit during the remainder of the year, and additionally, a small benefit to JUVÉDERM sales.

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