Allergan Plc on Wednesday tried to reassure shareholders after losing a major patent ruling last month on its second-most important drug, dry-eye treatment Restasis, downplaying the importance of the loss of revenue from the drug.
The drugmaker, which also announced third-quarter earnings, said it will combat generic competition for the drug by expanding its base business, reducing costs and deploying its balance sheet. The company added, however, that it has yet to decide on a specific strategy.
“We are in the planning stages, and we will be implementing something as soon as we complete our planning,” Chief Executive Brent Saunders said on a conference call with investors. “But rest assured, we will do it rapidly.”
The drugmaker’s shares were up 0.7 percent at $178.47 in late morning trading after earlier hitting nearly four-year lows.
Allergan worked hard in recent years to protect Restasis, which generated about $1.5 billion in sales last year, from generic rivals. It struck a controversial deal with a Native American tribe in September to shield review of the patents by U.S. regulators, drawing the ire of lawmakers and rival drug companies.
Last month, a Texas federal judge invalidated Restasis patents on grounds that they cover ideas that are obvious, making it possible for rival generics to hit the market as early as next year. Allergan has appealed the ruling.
Allergan said it evaluated its dry eye-related assets as a result of the court order, and took an impairment charge of $3.2 billion related to Restasis in the quarter.
It said it expects next year’s adjusted earnings to be down as much as 9 percent from this year if a generic competitor to Restasis launches early in 2018. If a rival launches during the second half, the impact on earnings will be more modest, the company said.
The company said that regardless of when or whether a generic launches next year, it expects to return to earnings growth by 2019.
Including the impairment charge for Restasis and other items, Allergan reported a net loss of $4.03 billion, or $12.07 per share, for the quarter, compared with a profit of $15.15 billion or, $38.58 per share, a year earlier.
Excluding those items, Allergan earned $4.15 per share and topped analysts’ average estimate of $4.05, according to Thomson Reuters I/B/E/S.
Revenue rose 11.4 percent to $4.03 billion, matching analysts’ expectations as the drugmaker benefited from products it acquired over the last year and it sold more of its top-selling Botox treatment.
The regenerative medicine business it picked up in its February acquisition of LifeCell and the CoolSculpting business acquired in its April deal for Zeltiq accounted for nearly half of the revenue increase. The company’s CoolSculpting products are meant to help people slim down by freezing away fat.
Reporting by Michael Erman in New York and Tamara Mathias in Bengaluru; Editing by Sai Sachin Ravikumar and Steve Orlofsky