Q1 Results - Part 1
11 February 2003 - 11:00PM
UK Regulatory
RNS Number:3249H
Galen Holdings PLC
11 February 2003
Craigavon, Northern Ireland/Rockaway, NJ 11 February 2003
Galen Holdings PLC
Results for the first quarter ended 31 December 2002
PART 1
Craigavon, Northern Ireland/Rockaway, New Jersey, USA - 11 February 2003: Galen
Holdings PLC ("Galen") (LSE: GAL.L, Nasdaq: GALN), the international specialty
pharmaceutical products company, announces its results for the quarter ended 31
December 2002.
Financial Highlights
Quarter ended Quarter ended
31 December 2002 31 December 2001 Change
($ m) ($ m) (%)
Revenues
- Products 68.6 54.9 25%
- Services (Discontinued) -- 22.5 --
_____ _____ _____
Total 68.6 77.4 -11%
Operating profits*
- Products 24.9 18.3 36%
- Services (Discontinued) -- 5.0 --
_____ _____ _____
Total 24.9 23.3 7%
Earnings per share*
Adjusted EPS (cents) 12.7 9.4 35%
Adjusted EPS (pence) 8.1 6.6 23%
*before amortisation of intangibles and goodwill
* Earnings per ordinary share, before amortisation of goodwill and
intangible assets, increased to 12.7 cents, up 35% over the same quarter in the
prior year.
* Total pharmaceutical product revenues increased by 25% from $54.9
million to $68.6 million reflecting strong underlying growth in our core
promoted brands, Ovcon(R), Estrace(R) cream and Doryx(R) and the addition of
Duricef(R) and Moisturel(R), acquired in March 2002.
* Operating profit, before amortisation of goodwill and intangibles,
increased to $24.9 million compared to $23.3 million in the same quarter last
year, an increase of 7%, despite divestment of Services business.
* The results of the comparative quarter include the Pharmaceutical
Services business, which was disposed of in the year ended 30 September 2002.
* During the quarter, the business generated cash of $22.7 million.
Cash at 31 December 2002 was $331 million, prior to the acquisition of Sarafem
(R) in January 2003 for $295 million.
Business Highlights
* Increased product revenues and operating profit quarter over
quarter.
* Received an approvable letter for Femring(R) (October 2002).
* Agreed to purchase the sales and marketing rights to Sarafem(R), for
the treatment of pre-menstrual dysphoric disorder (PMDD), from Eli Lilly for
$295 million (finalised in January 2003).
* Adopted the US dollar as the functional currency for the Group.
Commenting on the results, Roger Boissonneault, Chief Executive, said:
"These are another excellent set of results and the first that reflect Galen as
a pure pharmaceutical products company. With growth of 25%, increased
profitability and strong cash generation, the business today is as strong as
ever and poised for the next phase of growth.
"Having completed the Sarafem(R) purchase and received an approvable letter for
Femring(R) during the quarter, we are off to a strong start to the year."
For further information, please contact:
Galen Holdings PLC
David G. Kelly Today: + 44 (0) 207 831 3113
Thereafter: + 44 (0) 28 3833 4974
Financial Dynamics
Sophie Pender-Cudlip / Francetta Carr Tel: + 44 (0) 20 7831 3113
For further information on Galen visit: www.galenplc.com
A conference call will take place today at 2:00pm (UK) / 9:00 am (US). Please
call Mo Noonan on 020 7269 7116 or Jane Cash at 001 973-442-3290 for further
details.
Adoption of US Dollar
We have adopted the US dollar as the functional currency for the Group for the
year ending 30 September 2003. As a result, we are presenting this quarter's
results in US dollars and under UK generally accepted accounting principles (UK
GAAP).
For the convenience of our shareholders and others using these statements, we
have included a full set of our results in UK #'s and under UK GAAP as has been
our prior practice. In addition, we have included our results in US $'s under
US GAAP also, as we have done in prior years.
We have moved to using the US dollar as the functional currency to better
reflect the reality of our business, which now derives over 70% of its revenues
from the US. With the acquisition of Sarafem(R) this percentage will increase
further. Thus by using the US dollar the company believes that shareholders can
better understand the true performance of the business without material impact
as a result of exchange rate fluctuations, which are beyond the company's
control. The company will continue to show earnings per share data in pence and
cents, to reflect the fact that our shares and ADRs trade on exchanges in both
the UK and US.
Sales & Marketing
Following requests from investors, this quarter we have broken out the
individual sales of our main products. Similar information will be provided for
Sarafem(R) next quarter. Sales of the products below, shown net of discounts,
tend to fluctuate from quarter to quarter, dictated by the buying patterns of a
small number of large distributors in the US. Thus, percentage growth in any
one quarter is not necessarily indicative of any longer term trend.
Product/Group Net Sales % Growth
for Qtr over prior
$'m year Qtr
_____ _____
Ovcon 12.4 30%
Estrace cream 10.7 12%
Doryx 13.8 27%
Estrace Tablets 4.6 22%
Duricef & Moisturel 5.6 N/A
Other U.S 2.4 -50%
U.K & Ireland 19.1 18%
_____ _____
Total 68.6 25%
Ovcon(R) (oral contraceptive) continues to build market share, while Estrace(R)
(estrogen replacement therapy) cream prescription growth has benefited from a
general trend towards non-oral estrogen therapy products, which provide local
relief for the symptoms of menopause. Doryx(R) (acne treatment) continues to be
a success. The introduction of the 75mg line extension in January last year has
been an excellent example of Galen's approach to product lifecycle management.
Doryx(R) is now the leading branded tetracycline antibiotic for the treatment of
acne in the US.
Margins
The gross margin for the quarter was 78% compared to 66% for the same period
last year. This improvement is largely attributable to the disposal of our
lower margin services businesses during our last fiscal year. However, the
gross margin in our products business, 78%, increased by 3 percentage points
from 75% last year. As our US business expands, gross margins should continue
to improve.
Operating margin, before amortisation of goodwill and intangibles, was $24.9
million or 36% compared to $23.3 million or 30% in the same quarter last year.
Again, if the services contribution for last year is excluded, the operating
margin from products showed an improvement from 33% to 36%, and increased in
absolute dollar terms from $18.3 million to $24.9 million, i.e. 36% growth.
Research & Development
Total research and development costs were $5.4 million, compared to $4.4 million
in the same quarter last year, an increase of 23%. This increase in cost
reflects our ongoing investment in our development pipeline.
During the quarter, we continued clinical work on our oral estradiol-3-acetate
product, for the treatment of the symptoms of menopause, and continue on track
for our NDA filing. We have also commenced the Phase III clinical phase of our
development of a vaginal ring containing metronidazole, for the treatment of
bacterial vaginosis.
In October 2002, we announced receipt of an approvable letter from the FDA for
Femring(R), our first vaginal ring product to be launched in the United States.
This product continues to progress towards approval. We have submitted our
proposed labeling to the FDA following their clarification of class label
changes in January 2003 and are currently awaiting their response.
Liquidity
Cash balances at 31 December 2002 were $331 million, compared to $348 million a
year earlier. Net cash, after long-term debt, was $280.6 million compared to
$82.4 million at 31 December 2001. Cash generated from operations and disposals
of non-core businesses has been used to pay down debt and invest in acquisitions
of products.
Cash generated from operations during the quarter remains strong at $22.7
million. The acquisition of Sarafem(R), which closed in January 2003, absorbed
much of our existing cash balances. However, this strong operating cashflow,
complemented by cash generated from Sarafem(R) sales, puts Galen in a strong
position to borrow funds to finance further acquisitions in our therapeutic
areas.
Note:
Forward looking statements in this report, including, without limitation,
statements relating to Galen's plans, strategies, objectives, expectations,
intentions and adequacy of resources, are made pursuant to the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of 1995. These
forward looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
Galen to be materially different from any future results, performance or
achievements expressed or implied by such forward looking statements. These
factors include, among others, the following: Galen's ability to manage its
growth, government regulation affecting the development, manufacture, marketing
and sale of pharmaceutical products, customer acceptance of new products,
competitive factors in the industries in which Galen operates, the loss of key
senior management or scientific staff, exchange rate fluctuations, general
economic and business conditions, and other factors described in filings of
Galen with the SEC. Galen undertakes no obligation to publicly update or revise
any forward looking statement, whether as a result of new information, future
events or otherwise.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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