Teva hit as sales forecast disappoints market

Teva Pharmaceutical Industries on Thursday raised its profit outlook for 2018 after reporting a smaller than expected drop in second-quarter net profit, but its shares tumbled eight percent on disappointment over its unchanged revenue outlook.

The world’s largest generic drugmaker also reaffirmed that the U.S. Food and Drug Administration is due to make a decision in the middle of September for its migraine treatment fremanezumab, which it had originally hoped to launch in June.

“We will be ready to launch immediately after,” CEO Kare Schultz told a conference call.

Teva’s drug will be priced similar to Amgen’s migraine treatment that was launched in May – which after discounts is close to $6,000 per patient a year, he told Reuters.

“We are confident we can get significant market share,” he said, noting Teva’s drug is taken every three months, rather than monthly for Amgen’s drug.

Heavily-indebted Teva has been counting on its migraine treatment to revive its fortunes, though its release has been delayed due to U.S. regulatory concerns about the manufacturing process.

In a bid to cut debts, Teva late last year said it would combine its generic and speciality medicine businesses, cut more than a quarter of its workforce and close or sell 10 of its factories.

Teva earned 78 cents per share, excluding one-time items in the April-June period, down from $1.02 a year earlier.

Revenue fell 18 percent to $4.7 billion (£3.6 billion) due to continued price erosion in the company’s U.S. generics business, generic competition to its multiple sclerosis drug Copaxone and loss of revenue following the divestment of certain products and discontinuation of some activities.

Copaxone revenue in North America in the second quarter decreased by 46 percent to $464 million. In Europe, Copaxone sales edged up 1 percent to $140 million.

SHARES SLIDE

Analysts had forecast Teva would earn 64 cents a share ex-items on revenue of $4.74 billion, according to Thomson Reuters I/B/E/S.

For the full year, Teva raised its forecast for adjusted EPS to $2.55-$2.80 from $2.40-$2.65 estimated last quarter. It maintained its outlook for revenue of $18.5-$19 billion.

Analysts were forecasting EPS of $2.69 on revenue of $18.99 billion.

“Relative to expectations that is going to disappoint,” RBC Capital Markets analyst Randall Stanicky said.

“Perhaps what is more concerning is the light revenue with virtually all U.S. segments down year-over-year, which to us will raise questions around what impact the aggressive cost cuts are having on the business which is our primary concern for the medium to long term outlook.”

Teva’s shares were down 8 percent on the Nasdaq by 1440 GMT.

It said it had cut 8,300 jobs so far as part of plans to cut 14,000 announced last year.

“The restructuring program is on schedule, we have already achieved a significant cost base reduction towards our target for the year and we continue to reduce our net debt,” Schultz said.

Teva said its net debt has fallen to $28.4 billion, down from a peak of $35 billion, which resulted from its purchase of Allergan’s generic drug business Actavis for $40.5 billion in 2016. Schultz said Teva’s filing for a generic version of Mylan’s EpiPen was being reviewed by the FDA.

“We are hoping sometime in the coming months to have a clarification, hopefully a positive clarification, so that we will be able to launch a generic EpiPen in the U.S.,” he said.

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