Teva lifts bottom end of annual revenue, profit guidance, despite fall in Q3 sales

Headline results for the third quarter:

Revenue

$4.3 billion (forecasts of $4.2 billion)

-6%

Loss

$314 million

Versus $273 million

Note: All changes are versus the prior-year period unless otherwise stated

What the company said:

"Our North American generics business continued its steady trend…supported by 39 new product launches in the first nine months of 2019, including generic EpiPen Jr," remarked CEO Kåre Schultz. The executive added "among our branded products, Austedo continues to demonstrate consistent growth, and Ajovy maintained its US market share and is being introduced in the EU." 

He also said Teva remains "on track" to achieve its two-year restructuring target to cut spending by $3 billion. Meanwhile, the drugmaker, which is trying to settle pending opioid lawsuits in the US as part of a global deal worth up to $48 billion, disclosed it has set aside $468 million mainly for related legal expenses, taking its provisions to almost $1.2 billion so far this year.

Separately on Thursday, Teva announced that Eli Kalif will assume the role of chief financial officer on December 22, replacing Michael McClellan, who will depart the company on November 8. 

Other results:

  • North America: $2.1 billion, down 9%
    • Generic drug sales: $914 million, down 1%, as new product launches were offset by market dynamics, including price erosion
    • Copaxone: $271 million, down 41%, hit by generic competition in the US, but topping analyst estimates of $225 million
    • Bendeka/Treanda: $124 million, down 23%, mainly due to the 2018 debut of Eagle Pharmaceuticals' ready-to-dilute bendamustine formulation Belrapzo
    • Austedo: $105 million, up 71%
    • QVAR: $60 million, up 68% from the third quarter of 2018, which Teva said was a transition period due to the launch of the QVAR RediHaler
    • Ajovy: $25 million, missing analyst estimates by $6 million
  • Europe: $1.2 billion, down 4%, with new drug launches and higher sales of over-the-counter products offset by lower Copaxone revenues
    • Generic drug sales: $836 million, down 1%
    • Copaxone: $106 million, down 14%, due to price reductions and generic competition
    • Respiratory products: $87 million, down 7%, mainly due to lower sales in the UK
  • International markets: $736 million, up 1%, with higher distribution activities in Israel, partially outweighed by lower sales in Japan and Russia
    • Generic drug sales: $474 million, down 5%
    • Copaxone: $20 million, up 39%

Looking ahead:

Teva now expects revenue this year of between $17.2 billion and $17.4 billion, with the lower end of the guidance lifted from a previous estimate of $17 billion. Meanwhile, earnings per share are predicted to be in the range of $2.30 to $2.50, with the bottom of the forecast boosted from a prior forecast of $2.20 per share. Analysts expect earnings of $2.38 per share on annual revenue of around $17.2 billion.  

"We are optimistic that we will maintain a significant business in Copaxone, both in North America and in Europe," Schultz said, adding "the decline of Copaxone combined with the restructuring would...automatically result in more or less this year being the trough year. And, as you know, a trough is flat at the bottom, and that's what we’re seeing right now."

What analysts said:

The quarter "seems generally in-line," noted Evercore ISI analyst Umer Raffat, adding "Teva appears to have nearly achieved the entire $3 [billion] cost cut."

Teva also announced Thursday the US launch of Truxima, its biosimilar version of Biogen and Roche's Rituxan (rituximab), which Evercore ISI analyst Umer Raffat said could boost the Israeli drugmaker's fourth-quarter sales.

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