SYS-CON MEDIA Authors: Pat Romanski, Sean Houghton, Glenn Rossman, Ignacio M. Llorente, Xenia von Wedel

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AbbVie Reports Fourth-Quarter and Full-Year 2013 Financial Results

- Reports Fourth-Quarter Adjusted EPS of $0.82 (GAAP EPS of $0.70); Reports Full-Year Adjusted EPS of $3.14 (GAAP EPS of $2.56)

NORTH CHICAGO, Ill., Jan. 31, 2014 /PRNewswire/ -- AbbVie (NYSE:ABBV) today announced financial results for the fourth quarter and full year ended Dec. 31, 2013.

"We are pleased with AbbVie's performance in our first full year as an independent biopharmaceutical company," said Richard A. Gonzalez, chairman and chief executive officer, AbbVie. "We achieved all of the objectives we set forth for 2013, exceeded our original earnings guidance, and established a solid foundation for the future. We intend to build on this momentum in 2014 as we invest in our key products, advance our pipeline, and prepare for significant product launches that will drive growth in 2015 and beyond."

Fourth-Quarter Results

  • Worldwide sales were $5.111 billion in the fourth quarter, down 1.8 percent. On an operational basis, sales decreased 1.1 percent, excluding a 0.7 percent unfavorable impact from foreign exchange rate fluctuations. Excluding sales from our lipid franchise due to the loss of exclusivity, sales increased 7.9 percent on an operational basis in the quarter.
  • Fourth-quarter sales were led by the continued strength of HUMIRA. Global HUMIRA sales increased 13.4 percent. U.S. HUMIRA sales grew 18.1 percent.
  • Fourth-quarter adjusted gross margin ratio was 77.1 percent, excluding intangible asset amortization and other specified items. The gross margin ratio under U.S. generally accepted accounting principles (GAAP) was 74.9 percent.
  • Adjusted selling, general and administrative (SG&A) expense was 26.5 percent of sales in the fourth quarter, reflecting continued investment in our growth brands. On a GAAP basis, SG&A was 28.3 percent of sales.
  • Research and development (R&D) was 15.6 percent of sales in the quarter, reflecting funding actions in support of our emerging mid- and late-stage pipeline assets and the continued pursuit of additional HUMIRA indications.
  • Net interest expense was $68 million, and the adjusted tax rate was 22.2 percent in the quarter. On a GAAP basis, the fourth-quarter tax rate was 21.6 percent.
  • Fourth-quarter diluted earnings per share were $0.70 on a GAAP basis. Adjusted diluted earnings per share, excluding intangible asset amortization expense and other specified items, were $0.82.

Key Events from the Fourth Quarter

  • This morning, AbbVie announced completion of its Phase 3 hepatitis C virus (HCV) studies; including top-line results from four remaining registrational HCV trials: TURQUOISE-II, PEARL-II, PEARL-III, and PEARL-IV trials.

Results from the TURQUOISE-II study, which examined treatment of HCV in 380 patients with cirrhosis, a difficult-to-treat population, showed that patients treated for 12 weeks with the AbbVie combination achieved 92 percent sustained virologic response at 12 weeks post treatment (SVR12). 96 percent of patients treated with the AbbVie regimen for 24 weeks achieved SVR12

The PEARL-II and PEARL-III studies evaluated the potential for ribavirin-free therapy in genotype 1b (GT1b) experienced and naive patients, respectively. PEARL-IV evaluated the potential for ribavirin-free therapy in genotype 1a (GT1a) naive patients. Results from the PEARL-II study (n=179) showed that 100 percent of the GT1b experienced patients treated with the AbbVie combination without ribavirin achieved SVR12. Patients treated with the ribavirin-containing regimen, achieved 97 percent SVR12. Results from the PEARL-III study (n=419) showed that GT1b naive patients treated with our combination, with and without ribavirin, achieved 99 percent SVR12. The PEARL-IV study (n=305) showed that even in the more difficult to treat GT1a patients, our regimen with ribavirin achieved an SVR12 rate of 97 percent and the ribavirin-free regimen produced an SVR12 rate of 90 percent.

  • During the quarter, AbbVie announced top-line Phase 3 HCV results from the SAPPHIRE-I and SAPPHIRE-II studies, which examined AbbVie's HCV regimen in naive and treatment-experienced patients. Results from the SAPPHIRE trials showed that in both naive and treatment-experienced patients, treatment with AbbVie's 3-DAA therapy plus ribavirin produced high SVR rates of 96 percent. Additionally, the regimen was well-tolerated, with discontinuations due to adverse events reported in only one percent of patients receiving the combination.
  • AbbVie recently announced the initiation of a Phase 3 clinical trial evaluating the safety and efficacy of its investigational compound, veliparib (ABT-888), when added to carboplatin, a chemotherapy, in women with early-stage, triple-negative breast cancer. The three-arm trial will compare the addition of veliparib plus carboplatin or placebo plus carboplatin to standard neoadjuvant chemotherapy. We expect Phase 3 starts for veliparib in additional cancer types in 2014.
  • AbbVie and its partner recently initiated a Phase 3 comparative clinical trial designed to evaluate the efficacy and safety of ABT-199/GDC-0199, an investigational BCL-2 (B-cell lymphoma 2) selective inhibitor, in patients with relapsed refractory chronic lymphocytic leukemia (CLL). The study will compare the combination of ABT-199/GDC-0199 and rituximab to the combination of bendamustine and rituximab. Rituximab and bendamustine are commonly used to treat patients with CLL.

Issuing Full-Year 2014 Outlook

AbbVie expects 2014 revenue of approximately $19 billion, excluding any potential revenue from the expected 2014 U.S. launch of our HCV therapy. AbbVie is issuing diluted earnings-per-share guidance for the full-year 2014 of $3.00 to $3.10 on an adjusted basis, or $2.63 to $2.73 on a GAAP basis. The company's 2014 adjusted diluted earnings-per-share guidance excludes $0.37 per share of intangible asset amortization expense and other specified items primarily associated with certain separation-related costs and ongoing restructuring activities.

About AbbVie

AbbVie is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories.  The company's mission is to use its expertise, dedicated people and unique approach to innovation to develop and market advanced therapies that address some of the world's most complex and serious diseases.  AbbVie employs approximately 25,000 people worldwide and markets medicines in more than 170 countries.  For further information on the company and its people, portfolio and commitments, please visit www.abbvie.com.  Follow @abbvie on Twitter or view careers on our Facebook or LinkedIn page.

Conference Call

AbbVie will host an investor conference call today at 8:00 a.m. Central time to discuss our fourth-quarter performance.  Participating on the call will be Rick Gonzalez, chairman and chief executive officer;  Bill Chase, executive vice president and chief financial officer;  Laura Schumacher, executive vice president, business development, external affairs and general counsel;  Scott Brun, vice president of clinical development;  and Larry Peepo, vice president of investor relations.  The call will be webcast through AbbVie's Investor Relations Web site at www.abbvieinvestor.com.  An archived edition of the call will be available after 10:00 a.m. Central time.

Non-GAAP Financial Results

Financial results for 2013 are presented on both a reported and a non-GAAP basis.  Reported results were prepared in accordance with GAAP and include all revenue and expenses recognized during the period.  Non-GAAP results adjust for certain non-cash items and for factors that are unusual or unpredictable, and exclude those costs, expenses, and other specified items presented in the reconciliation tables later in this release.  AbbVie's management believes non-GAAP financial measures provide useful information to investors regarding AbbVie's results of operations and assist management, analysts, and investors in evaluating the performance of the business.  Non-GAAP financial measures should be considered in addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP.  The company's 2014 financial guidance is also being provided on both a reported and a non-GAAP basis. 

Forward-Looking Statements

Some statements in this news release may be forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995.  The words "believe," "expect," "anticipate," "project" and similar expressions, among others, generally identify forward-looking statements.  AbbVie cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements.  Such risks and uncertainties include, but are not limited to, challenges to intellectual property, competition from other products, difficulties inherent in the research and development process, adverse litigation or government action, and changes to laws and regulations applicable to our industry.  Additional information about the economic, competitive, governmental, technological and other factors that may affect AbbVie's operations is set forth in Item 1A, "Risk Factors," in AbbVie's 2012 Annual Report on Form 10-K/A, which has been filed with the Securities and Exchange Commission.  AbbVie undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law.

 

AbbVie Inc.

Key Product Sales

Quarter Ended December 31, 2013

(Unaudited)




% Change vs. 4Q12


Sales (in millions)


International

Total


U.S.

Int'l.

Total

U.S.

Operational

Reported

Operational

Reported

TOTAL SALES

$2,818

$2,293

$5,111

(8.2%)

9.2%

7.5%

(1.1%)

(1.8%)

Humira

1,667

1,372

3,039

18.1

8.0

8.2

13.3

13.4

Synagis

--

314

314

n/m

8.4

(1.4)

2.9

(6.4)

AndroGel

289

--

289

(20.9)

n/a

n/a

(20.9)

(20.9)

Kaletra

63

165

228

(24.0)

0.2

(0.9)

(7.8)

(8.6)

Lupron

156

53

209

0.5

(1.7)

(5.0)

(0.1)

(1.0)

Synthroid

189

--

189

12.8

n/a

n/a

12.8

12.8

Sevoflurane

23

133

156

(20.9)

6.3

3.6

1.3

(0.9)

Creon

115

--

115

9.3

n/a

n/a

9.3

9.3

Zemplar

57

44

101

(16.8)

14.9

16.2

(5.4)

(4.9)

Duodopa

--

49

49

n/a

15.7

20.1

15.7

20.1

Niaspan

31

--

31

(88.9)

n/a

n/a

(88.9)

(88.9)

TriCor/Trilipix

29

--

29

(85.4)

n/a

n/a

(85.4)

(85.4)


Note: "Operational" growth reflects the percentage change over the prior year excluding the impact of exchange rate fluctuations.

n/a = not applicable

n/m = not meaningful

 

AbbVie Inc.

Key Product Sales

Twelve Months Ended December 31, 2013

(Unaudited)





% Change vs. 12M12


Sales (in millions)


International

Total


U.S.

Int'l.

Total

U.S.

Operational

Reported

Operational

Reported

TOTAL SALES

$10,181

$8,609

$18,790

(2.4%)

10.1%

8.4%

2.9%

2.2%

Humira

5,236

5,423

10,659

19.6

11.7

10.9

15.4

15.0

AndroGel

1,035

--

1,035

(10.1)

n/a

n/a

(10.1)

(10.1)

Kaletra

244

718

962

(12.8)

(1.0)

(2.1)

(4.2)

(5.0)

Synagis

--

827

827

n/m

9.2

0.2

7.0

(1.8)

Lupron

566

219

785

(0.6)

(3.2)

(5.0)

(1.4)

(1.9)

Niaspan

650

--

650

(28.7)

n/a

n/a

(28.7)

(28.7)

Synthroid

622

--

622

12.9

n/a

n/a

12.9

12.9

Sevoflurane

77

491

568

(5.4)

(3.6)

(5.7)

(3.8)

(5.6)

Creon

412

--

412

16.5

n/a

n/a

16.5

16.5

Zemplar

218

171

389

(5.1)

10.7

11.7

1.2

1.6

TriCor/Trilipix

303

--

303

(72.4)

n/a

n/a

(72.4)

(72.4)

Duodopa

--

178

178

n/a

16.4

19.5

16.4

19.5


Note: "Operational" growth reflects the percentage change over the prior year excluding the impact of exchange rate fluctuations.

n/a = not applicable

n/m = not meaningful

 

AbbVie Inc.

Consolidated Statements of Earnings

Quarter and Twelve Months Ended December 31, 2013 and 2012

(Unaudited) (In millions, except per share data)



Fourth Quarter Ended
December 31


Twelve Months Ended 
December 31


2013


2012


2013


2012

Net sales

$5,111


$5,206


$18,790


$18,380









Cost of products sold

1,282


1,265


4,581


4,508

Selling, general and administrative

1,448


1,411


5,352


4,989

Research and development

798


681


2,855


2,778

Acquired in-process research and development

48


28


338


288

Total operating cost and expenses

3,576


3,385


13,126


12,563









Operating earnings

1,535


1,821


5,664


5,817









Interest (income) expense, net

68


88


278


84

Net foreign exchange (gain) loss

15


(10)


55


17

Other (income) expense, net

13


30


(1)


(9)

Earnings before income tax

1,439


1,713


5,332


5,725

Income tax expense

311


173


1,204


450

Net earnings

$1,128


$1,540


$4,128


$5,275









Diluted earnings per share

$0.70


$0.98


$2.56


$3.35









Average diluted shares outstanding     

1,608


1,577


1,604


1,577


Note:  The computation of diluted earnings per share for the quarter and twelve months ended Dec. 31, 2013 was calculated pursuant to the two-class method which requires the allocation of net earnings between common stockholders and participating security holders.  On Jan. 1, 2013, Abbott Laboratories distributed 1,577 million shares of AbbVie common stock to Abbott's shareholders in connection with the separation of AbbVie from Abbott.  The computation of diluted earnings per share for the quarter and twelve months ended Dec. 31, 2012 was calculated using the shares distributed on Jan. 1, 2013.

 

AbbVie Inc.

Reconciliation of GAAP Reported to Non-GAAP Adjusted Information

Quarter Ended December 31, 2013

(Unaudited) (In millions, except per share data)


1. Specified items impacted results as follows:



4Q13


Earnings

Diluted


Pre-tax

After-tax

EPS

As reported (GAAP)

$1,439

$1,128

$0.70

Adjusted for specified items:




Intangible asset amortization

101

76

0.05

Separation costs

103

66

0.04

Acquired IPR&D

48

48

0.03

Restructuring/Other      

11

7

0.00

As adjusted (non-GAAP)

$1,702

$1,325

$0.82


Intangible asset amortization reflects costs recognized as a result of licensing and acquisition activities.  Separation costs are expenses related to the separation of AbbVie from Abbott.  Acquired IPR&D reflects upfront payments related to previously announced collaborations.  Restructuring/Other is primarily associated with previously announced restructuring activities.

 

2. The impact of the specified items by line item was as follows:




 

4Q13


Cost of products sold

SG&A

R&D

Acquired IPR&D

Other (income) expense

 As reported (GAAP)

$1,282

$1,448

$798

$48

$13

 Adjusted for specified items:






 Intangible asset amortization

(101)

--

--

--

--

 Separation costs

(5)

(95)

(3)

--

--

 Acquired IPR&D

--

--

--

(48)

--

 Restructuring/Other

(8)

--

--

--

(3)

 As adjusted (non-GAAP)

$1,168

$1,353

$795

--

$10

 

3. The adjusted tax rate for the fourth quarter was 22.2 percent, as detailed below:



4Q13


Pre-tax

Income



income

taxes

Tax rate

As reported (GAAP)

$1,439

$311

21.6%

Specified items

263

66

25.1%

As adjusted (non-GAAP)

$1,702

$377

22.2%

 

AbbVie Inc.

Reconciliation of GAAP Reported to Non-GAAP Adjusted Information

Twelve Months Ended December 31, 2013

(Unaudited) (In millions, except per share data)


1. Specified items impacted results as follows:



12M13


Earnings

Diluted


Pre-tax

After-tax

EPS

As reported (GAAP)

$5,332

$4,128

$2.56

Adjusted for specified items:




Intangible asset amortization

509

370

0.23

Separation costs

255

163

0.10

Acquired IPR&D

338

338

0.21

Restructuring/Other      

81

67

0.04

As adjusted (non-GAAP)

$6,515

$5,066

$3.14


Intangible asset amortization reflects costs recognized as a result of licensing and acquisition activities.  Separation costs are expenses related to the separation of AbbVie from Abbott.  Acquired IPR&D reflects upfront payments related to previously announced collaborations.  Restructuring/Other is primarily associated with previously announced restructuring activities.

 

2. The impact of the specified items by line item was as follows:



12M13


Cost of products sold

SG&A

R&D

Acquired IPR&D

Net foreign exchange (gain) loss

Other (income) expense

 As reported (GAAP)

$4,581

$5,352

$2,855

$338

$55

($1)

 Adjusted for specified items:







 Intangible asset amortization

(509)

--

--

--

--

--

 Separation costs

(16)

(230)

(9)

--

--

--

 Acquired IPR&D

--

--

--

(338)

--

--

 Restructuring/Other

(5)

(38)

(15)

--

(11)

(12)

 As adjusted (non-GAAP)

$4,051

$5,084

$2,831

--

44

($13)

 

3. The adjusted tax rate for the fourth quarter was 22.2 percent, as detailed below:



12M13


Pre-tax

Income



income

taxes

Tax rate

As reported (GAAP)

$5,332

$1,204

22.6%

Specified items

1,183

245

20.7%

As adjusted (non-GAAP)

$6,515

$1,449

22.2%

SOURCE AbbVie

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