TEL AVIV (Reuters) – Teva Pharmaceutical Industries (TEVA.TA) (TEVA.N) said on Wednesday that a two-year restructuring has enabled the world’s largest generic drugmaker to turn a corner, as it reported slightly better than expected fourth-quarter results.
Its shares surged 9.1% in New York trade as the company also said it expected strong growth in two key drugs – new migraine drug Ajovy and Huntington’s treatment Austedo, in 2020 and expressed optimism over finalising a settlement in an opioid lawsuit in the United States.
CEO Kare Schultz said Teva had lost the market’s confidence by missing estimates during what he said was one of the biggest restructurings in the drug sector.
“The fact we have been very predictable in our performance ….that wasn’t case in the past,” he told Reuters. “We are slowly regaining the market’s trust.”
Teva said it earned 62 cents per diluted share excluding one-time items in the October-December quarter, up from 53 cents a year earlier.
Revenue rose 1% to $4.5 billion, mainly due to an increase in sales of Austedo and Ajovy, as well certain respiratory products. That was partially offset by lower revenue from multiple sclerosis drug Copaxone in North America.
Analysts had forecast Teva would earn 61 cents per share excluding one-offs on revenue of $4.35 billion, according to I/B/E/S data from Refinitiv.
“In 2019, we made great strides towards positioning Teva for renewed growth by completing our two-year restructuring plan, reducing our cost base by more than $3 billion, and reducing our net debt by more than $9 billion,” Schultz said.
SVB Leerink analyst Ami Fadia said revenue at the end of 2019 was strong, adding: “We view the top line 2020 guidance as achievable with potential for further cost savings impacting the bottom line.”
Teva has shut 13 manufacturing sites, with another 10 sites in the process of being closed or divested, and has cut its workforce by 13,000 to around 40,000.
Teva is looking to Ajovy and Austedo to boost revenue and help it pay down its debt, which at the end of 2019 stood at $26.9 billion. Its debt soared after it paid more than $40 billion in 2016 to buy Allergan’s generic drugs business.
Ajovy generated revenue in North America of $25 million in the quarter, while sales of Austedo doubled to $136 million.
Austedo has performed better than expected, Schultz said, but Ajovy sales had been lower than hoped for due to lower than anticipated pricing. He believes the launch of an autoinjector will boost the drug’s market share in the U.S. migraine market to 25% from 15%.
Teva said a framework for a U.S. settlement on opioids was still being examined. Attorney generals of four U.S. states agreed last year on a proposed settlement under which Teva would provide $23 billion worth of generic Suboxone and pay $250 million in cash over 10 years.
“We are still cautiously optimistic it can happen before the New York state trial, which is meant to start in March,” Schultz said.
For 2020 Teva forecast adjusted EPS of $2.30-$2.55 and revenue of $16.6-$17.0 billion. Analysts are forecasting EPS of $2.47 on revenue of $17.2 billion.
The outlook assumes U.S. sales of Austedo of $650 million and global sales of Ajovy of $250 million.
Teva is studying the use of Austedo to treat Tourette syndrome and Schultz said the results of late stage trials are expected in the first quarter of 2020.
Reporting by Tova Cohen and Steven Scheer; Editing by Mark Potter/ Susan Fenton/Jane Merriman