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Mylan Profits Best Forecasts As Company Shrugs Off FDA Advisory on Patch

Posted on: Wednesday, 20 July 2005, 18:01 CDT

Jul. 20--Mylan Laboratories yesterday reported fiscal first quarter earnings of $42.9 million, or 16 cents per share, sharply lower than year-ago results but at the high end of the Canonsburg generic drug maker's forecast. Revenue fell 5 percent to $323.4 million.

Pricing pressure from drugs used to treat heartburn, Parkinson's disease and acne offset revenue from new products, predominantly the fentanyl pain killing skin patch that Mylan introduced in January and which has come under fire in the past week.

In a conference call with analysts, Chief Executive Officer Robert J. Coury -- while delivering a parting shot at Carl Icahn, the company's largest shareholder for the time being -- played down concerns about a U.S. Food and Drug Administration advisory on the fentanyl patch.

The patch accounted for substantially all of the $55 million in revenue new products generated for Mylan in the quarter. "There have been no developments brought to our attention as to the safety of these products," Coury told analysts.

The FDA issued an advisory Friday outlining safety precautions in using the patch, which relies on a powerful narcotic to provide relief to people with chronic pain. The advisory was prompted by about 120 deaths by patients who used the product.

Johnson & Johnson's Duragesic is the brand name version of the patch. Mylan is the only generic company marketing it, although several competitors are seeking FDA approval.

Coury told analysts that although there have been a number of what he called "adverse events" involving patients who used Mylan's patch, "we are confident that these adverse events are not associated with the quality of our product."

Spokesman Patrick Fitzgerald later clarified the statement, saying a small number of patients who used fentanyl have died. The deaths were the result of misusing or abusing the patch, not because it didn't work properly, he said.

Safety concerns may result in delayed FDA approval for other generic versions of the patch, Coury said.

Mylan's results included a $10.2 million charge for closing the Mylan Bertek subsidiary based in Research Triangle Park, N.C. Excluding that and other special items, Mylan's adjusted earnings per share of 26 cents were at the top end of guidance the company provided July 11.

Mylan reported earnings of $82 million, or 30 cents per share, on revenue of $339 million in the year-ago quarter.

The drug maker's shares finished yesterday at $18.33, down 5 cents.

Coury reiterated that Icahn, who announced Monday he is selling 94 percent of his 26.3 million shares back to the company, never unduly influenced the company's decisions.

Calling off the controversial $4 billion acquisition of King Pharmaceuticals -- a move Icahn had demanded -- as well as the $1.25 billion share repurchase that allowed Icahn to exit at a profit, and other decisions including the recent removal of two insiders on the company's board were made for the benefit of all shareholders, he said.

"We believe the investment community can see through Mr. Icahn's self-interested motives," said Coury, who often had found himself the target of Icahn's verbal missives.

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MYL, JNJ,

Source: Pittsburgh Post-Gazette

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