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Eli Lilly realizes $790 million in income from Amylin Pharmaceuticals
INDIANAPOLIS—Eli Lilly and Co. has revised certain elements of its 2012 reported financial guidance to reflect additional income the company will recognize as a result of the early payment of financial obligations from Amylin Pharmaceuticals.
Following the completion of its acquisition by Bristol-Myers Squibb, Amylin has paid to Lilly roughly $1.26 billion in satisfaction of its revenue sharing obligation with respect to its drug exenatide, a medication approved in April 2005 for the treatment of type 2 diabetes and going under the brand names Byetta and Bydureon.
As a result, Lilly will recognize pre-tax income in the third quarter of 2012 of approximately $790 million, or approximately $0.43 per share after tax. In addition to income previously deferred pursuant to this arrangement, Lilly also expects to recognize pre-tax income in 2013 related to this payment of approximately $425 million, or approximately $0.25 per share after-tax, contingent upon transfer of exenatide commercial rights outside the United States to Amylin.
Currently, Lilly anticipates these rights will be transferred to Amylin over the course of 2013. In addition, Amylin has also repaid in full to Lilly a $165 million loan and accrued interest.
"The early payment of the revenue sharing obligation by Amylin allows Lilly to recognize the obligation's value in the near-term, receive significant income in both 2012 and 2013, and further strengthen our balance sheet," said Derica Rice, Lilly's executive vice president of global services and chief financial officer. "With this additional cash, we will continue to advance our pipeline of more than 60 potential new medicines in development, as well as fund capital expenditures, business development activity, our dividend and share repurchases.
"At the same time, we still expect to meet or exceed our mid-term minimum financial goals, despite not receiving 15 percent of net exenatide sales on an ongoing basis. From now through 2014, on an annual basis we still expect revenue to be at least $20 billion, net income to be at least $3 billion, and operating cash flow to be at least $4 billion."
In accordance with generally accepted accounting principles (GAAP), the recognition of the income from the early payment of the revenue sharing obligation has caused Lilly to revise certain elements of its 2012 reported financial guidance. The income has been excluded, however, from the company's 2012 non-GAAP financial guidance.
On a non-GAAP basis—financial guidance is intended to provide additional insights into the underlying trends in the company's business—Lilly still expects full-year 2012 earnings per share to be in the range of $3.30 to $3.40, but now expects full-year 2012 earnings per share to be in the range of $3.72 to $3.82 on a reported basis.