2nd UPDATE:Mylan Stands By FDA Probe Comment;Reports Strong 2Q
July 30 2009 - 5:43PM
Dow Jones News
Mylan Inc. (MYL) reported strong second-quarter results and
raised its 2009 earnings outlook Thursday.
It also continued to assert that the U.S. Food and Drug
Administration's recent allegations of misconduct at Mylan's West
Virginia plant are unfounded, despite the agency's ongoing
investigation.
The potential quality-control issues came to light in a recent
Pittsburgh Post-Gazette report. Confusing statements from the
company and regulators have created volatility in the generic drug
maker's stock price.
In a statement at the beginning of the Pittsburgh company's
second-quarter conference call Thursday, Chief Executive Robert
Coury implied that unspecified parties were exacerbating the
situation.
"There are some outside the company who attempt to speak on
behalf of Mylan to the point that statements being made were
purposely being mischaracterized in an attempt to further incite
the overreaction that we witnessed earlier in the week and even to
go so far as to attempt to pit us against the regulatory agency,"
Coury said.
Mylan declined to answer questions on the issue, and analysts on
the call didn't raise the issue with the company.
"The FDA is in the process of reviewing the investigation
findings, and we have not concluded the investigation," an agency
spokeswoman said Thursday. She declined to provide a timeline for
the inquiry's conclusion.
Mylan's stock fell 13% to $12.10 on Monday but then rose as much
as 10.5% on Tuesday after the company said the FDA "determined that
all accusations were unfounded." The FDA later disclosed that the
investigation is ongoing and "statements to the contrary are
untrue."
Mylan shares closed up 22 cents, or 1.7%, at $13.13
Thursday.
About 24% of Mylan's float is sold short, meaning those
shareholders expect the stock price to decline, which can add to
price volatility.
On Sunday, the Pittsburgh Post-Gazette reported that Mylan had
launched an internal probe into workers routinely overriding
computer-generated warnings about the drugs being produced at the
plant.
Coury said reporting in that article was "highly irresponsible"
and "sensational" and contained allegations that were "false,
misleading and unfounded."
He emphasized the company's reputation for manufacturing
quality, a factor that many on Wall Street have stressed in recent
days. Analyst Corey Davis with Natixis Bleichroeder said Mylan has
had only one product recall since 2005, compared with 19 from Teva
Pharmaceutical Industries Ltd. (TEVA).
Several analysts hypothesized that the mix-up came from a
communication breakdown between the local inspector, who may have
made comments to company officials, and the official FDA assessment
of the investigation as a whole.
Coury added weight to that scenario, saying that the FDA's
inspection Monday ended with a "closeout meeting" and that the
agency didn't issue a Form 483, which covers any findings in an
inspection.
The FDA spokeswoman wouldn't confirm that information and said
that any comments about the ongoing investigation would be
premature.
Mylan President Heather Bresch said the FDA inspection cleared
the Post-Gazette accusations, but declined to estimate the timing
of the FDA's final report. Bresch said she is unaware of any
additional related investigations by the agency.
Davis, of Natixis, also said Mylan has a "history of botched
communications" that have led to a "management discount" in the
stock price.
"The timing of this latest debacle is disappointing to us since
Mylan was finally starting to overcome the discount after several
straight quarters of highly respectable earnings reports," the
analyst wrote.
For the three months ended June 30, Mylan earned $58.1 million,
or 19 cents a share, compared with a year-ago loss of $16.3
million, or 5 cents a share, which included merger costs.
Excluding items, the company earned 32 cents a share, beating
the average analyst estimate of 29 cents a share, according to
Thomson Reuters.
Revenue rose 5.3% to $1.26 billion, surpassing expectations of
$1.22 billion.
Mylan forecast a "much stronger second half" and raised its 2009
adjusted-earnings guidance range to $1.13 to $1.20 a share. It
raised that view in April to 90 cents to $1.10 a share, while
analysts currently project $1.08 a share.
-By Thomas Gryta, Dow Jones Newswires; 212-416-2169;
thomas.gryta@dowjones.com