Teva lifts full-year guidance as first-quarter sales, profit top estimates

Teva on Thursday alongside reporting its first-quarter financial results said that it now expects sales this year to be between $18.5 billion and $18.8 billion, up from prior guidance of $18.3 billion to $18.8 billion. The company added that full-year earnings per share will be in the range of $2.40 to $2.65, lifted from a previous estimate of $2.25 to $2.50. Teva's shares rose more than 8 percent on the news.

CEO Kare Schultz said "2018 is off to a solid start. Our restructuring programme is proceeding well, and we are on track to meet our cost reduction targets of $1.5 billion in 2018 and $3 billion by the end of 2019." The executive added "our strong first-quarter performance, along with our confidence in executing the restructuring programme, gives us a solid foundation to raise our guidance for the year."  

Last December, Teva unveiled plans to reduce its workforce by more than 25 percent as part of efforts to reduce spending by $3 billion. The proposal followed the appointment of Schultz as CEO and an overhaul of the drugmaker's organisational structure. The company noted that as of March 31, it had reduced its debt load from $32.5 billion to $30.8 billion.  

In the quarter, sales fell 10 percent to $5.1 billion, which Teva explained was "due to adverse market dynamics in the US generics market, generic competition to Copaxone and loss of revenues following [the] divestment of certain products." However, the figure beat analyst estimates of $4.8 billion, while net income in the three-month period reached $1.1 billion, up from $580 million in the prior-year quarter.  

The company's sales in North America slipped 22 percent to $2.5 billion, with revenue in the US dropping 23 percent to $2.4 billion. Teva said that quarterly sales of Copaxone in North America plunged 40 percent to $476 million, while combined revenue from Bendeka and Treanda rose 16 percent to $181 million, with the drugmaker attributing growth to higher volumes as a result of supply stabilisation. Further, sales of Austedo, which was cleared last year for the treatment of chorea associated with Huntington's disease, totalled $30 million. Teva acquired the therapy as part of its $3.2-billion takeover of Auspex Pharmaceuticals.

According to Teva, sales of generic products in North America declined 23 percent to $1.1 billion. Schultz indicated that the company is seeing some stabilisation of prices in the US generics market after they dropped in 2017, with the drugmaker launching 10 generic medicines in the quarter.

Meanwhile, in Europe, quarterly sales rose 8 percent to $1.4 billion, with revenue from Copaxone in the region up 1 percent at $153 million. In Europe, sales of generics climbed 17 percent year-over-year to $997 million, while overall revenue in growth markets increased 4 percent to $750 million.  

Commenting on the results, Leerink analyst Ami Fadia said "the beat was mainly driven by strong branded performance."

Teva also acknowledged Thursday that although it does not anticipate receiving FDA approval of the migraine therapy fremanezumab by mid-June, it hopes to receive clearance and launch the anti-CGRP drug by the end of the year. The company had previously anticipated a mid-year launch of the drug after the regulator granted its submission priority review, but earlier this year said that approval would be delayed after manufacturing partner Celltrion received an FDA warning letter. Teva indicated that it expects a pre-approval inspection of Celltrion's site in South Korea to occur in the coming months.

There are a number of other companies developing anti-CGRP therapies, with the FDA set to make a decision on whether to approve Amgen's Aimovig (erenumab) later this month, making it the first such drug to reach the market. "Whether it will be us or [Eli] Lilly who is second or third I think is probably going to be a close race. It's hard to say right now," Schultz remarked. However, the executive noted that this will have no major impact on pricing and fremanezumab will likely have a list price of around $10 000 a year, similar to competitors. "We do have one key benefit and that is the fact that our product will most likely be approved for one quarterly injection," Schultz added.

"The question is how long Teva could be delayed before it accrues long-term commercial damage," commented  Bernstein analyst Ronny Gal. "Teva would not give their view here. Our take is they have to be approved by this time next year or both Amgen and [Eli] Lilly will be in a good position to close them out of contracts for 2020," Gal added. For related analysis, see ViewPoints: Celltrion's miss means more pain for Teva.

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