Strong Quarter Driven by Improved Margins and Higher Sales of Select Generic Products
WOODCLIFF LAKE, N.J., May 6 /PRNewswire-FirstCall/ -- Par Pharmaceutical Companies, Inc. (NYSE: PRX) today reported results for the first quarter ended March 28, 2009.
Par reported total revenues of $204.0 million and net income of $16.1 million, or $0.48 per diluted share, which included a change in estimate relating to the final Pentech settlement agreement, restructuring-related costs, a milestone payment to MonoSol Rx, and a required change in accounting principle that results in non-cash interest expense (FSP APB 14-1). Adjusting for these items, earnings per diluted share were $0.49 for the three month period ended March 28, 2009. This is compared to reported revenues of $154.9 million and net income of $1.4 million, or $0.04 per diluted share for the same period in 2008 as adjusted for the adoption of FSP APB 14-1, which became effective January 1, 2009. Adjusting for one-time items, earnings per diluted share were $0.17 in the first quarter of 2008.
First Quarter Highlights
Key Product Sales (Net sales comparisons at the product level are to fourth quarter 2008)
Total net revenues for the three months ended March 28, 2009, were $204.0 million, up $49.1 million, or nearly 32%, from the year ago period, principally driven by gains in metoprolol succinate, sumatriptan injection, dronabinol, and meclizine, tempered by declines in fluticasone and Megace(R) ES.
Gross margin for the first quarter 2009 was $64.1 million, or 31.4% of total revenue, an increase of $14.5 million from the comparable period in 2008. Total generic gross margin in the first quarter 2009 was $52.0 million, or 27.7% of total generic revenue, compared to $30.1 million, or 23.2% of total generic revenue. This increase is due primarily to the launches of sumatriptan and dronabinal and higher sales of metoprolol and meclizine. These four products contributed $29.3 million of gross margin, or 20.2% of such generic revenue. Gross margin of all other generic products was approximately $22.7 million, or 52.9% of other generic revenue. The improvement in total generic gross margin percentage was due primarily to higher sales of sumatriptan, meclizine and dronabinal, and the discontinuation of lower margin generic products as part of the generic division's restructuring announced in the fourth quarter of 2008. Strativa's gross margin of $12.0 million, or 75.4% of total Strativa revenue, decreased compared to the first quarter of 2008 due to lower sales of Megace ES and increased rebates.
Research and Development (R&D) expenses decreased 58.2% to $7.2 million in the first quarter of 2009 compared to the first quarter 2008 due to the resizing of the generic division, which included a headcount reduction and lower development and biostudy costs, as well as decreased expenses related to Strativa milestone payments.
Selling, general and administrative (SG&A) expenses for the first quarter 2009 increased 5.1% to $33.0 million compared to the first quarter 2008. The increase is due to an increase in employment costs and higher legal fees. Branded sales and marketing expenses were essentially flat as increased pre-launch costs behind products currently being developed were tempered by lower Megace(R) ES related spend. SG&A expenses were $39.2 million in the fourth quarter of 2008.
Cash and cash equivalents and marketable securities is currently approximately $175 million and reflect first quarter cash outflows related to the Pentech final settlement (approximately $66 million), the re-purchase of $2.5 million face value of Par's convertible debentures at a discount, and the second quarter purchase of Nascobal B12 Nasal Spray (approximately $55 million).
Product and Pipeline Update
On March 31, 2009, Strativa Pharmaceuticals acquired the worldwide rights to Nascobal(R) B12 Nasal Spray and anticipates re-launching the product with its expanded salesforce in late June. Nascobal is the first and only once-weekly FDA approved prescription vitamin B12 supplement indicated to treat vitamin B12 deficiency. In conjunction with the acquisition of Nascobal, Par acquired certain manufacturing assets from MDRNA and assumed operating leases at the facility where the product is manufactured.
In early April, Strativa filed its NDA for ondansetron orally dissolving film strip with the FDA. If approved, ondansetron ODFS could launch by mid-2010.
BioAlliance Pharma, Strativa's development partner for Loramyc(R), recently held a meeting with the FDA and based on this meeting, will resubmit the NDA in the second quarter. If approved, Strativa could launch Loramyc in the second half of 2010.
Par successfully launched alprazolam ODT, a generic version of Niravam(R), during the first quarter, and was the exclusive supplier of the product during the period. Niravam had $9.2 million in annual sales in 2008 according to IMS Health.
Par recently announced that it settled its patent litigation with Reliant Pharmaceuticals over Rythmol(R) SR. Under terms of the settlement, Par will have the right to introduce a generic version of Rythmol SR no later than January 1, 2011.
Par also settled its patent litigation with Novartis Pharmaceuticals over certain strengths of Lotrel(R). Under terms of the settlement, Par will have the right to introduce a generic version of Lotrel on January 1, 2011.
Par currently has approximately 37 ANDAs pending with the FDA, 14 of which Par believes to be first-to-file and/or first-to-market opportunities with a brand value of approximately $5.8 billion.
Par has scheduled a conference call for Wednesday, May 6 at 9:00 am EDT to discuss results for the first quarter of 2009. Par invites investors and the general public to listen to a webcast of the conference call. Access to the live webcast can be made via the Company's website at http://www.parpharm.com and will be available for two weeks. The dial-in number is 866-356-4123 for domestic callers and 617-597-5393 for international callers. The access number is 84965329. A replay of the conference call will be available commencing approximately one hour after the call. The replay dial-in number is 888-286-8010 for domestic callers and 617-801-6888 for international callers. The access number is 59953213.
Par believes it prepared its condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) and pursuant to accounting requirements of the Securities and Exchange Commission applicable to quarterly reports on Form 10-Q. In an effort to provide investors with additional information regarding Par's results and to provide a meaningful period-over-period comparison of Par's financial performance, the Company sometimes uses non-GAAP financial measures as defined by the Securities and Exchange Commission. The differences between the U.S. GAAP and non-GAAP financial measures are reconciled in an attached schedule. In presenting comparable results, the Company discloses non-GAAP financial measures when it believes such measures will be useful to investors in evaluating Par's underlying business performance. Management uses the non-GAAP financial measures to evaluate Par's financial performance against internal budgets and targets. In addition, management internally reviews Par's results excluding the impact of certain items, as it believes that these non-GAAP financial measures are useful for evaluating Par's core operating results and facilitating comparison across reporting periods. Importantly, Par believes non-GAAP financial measures should be considered in addition to, and not in lieu of, U.S. GAAP financial measures. Par's non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.
Par Pharmaceutical Companies, Inc. develops, manufactures and markets generic drugs and innovative branded pharmaceuticals for specialty markets. For press release and other company information, visit www.parpharm.com.
Safe Harbor Statement
Certain statements in this news release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. To the extent any statements made in this news release contain information that is not historical, these statements are essentially forward-looking and, as such, are subject to known and unknown risks, uncertainties and contingencies, many of which are beyond the control of the Company, which could cause actual results and outcomes to differ materially from those expressed herein. Risk factors that might affect such forward-looking statements include those set forth in Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2008, in other of the Company's filings with the SEC from time to time, including Current Reports on Form 8-K, and on general industry and economic conditions. Any forward-looking statements included in this news release are made as of the date hereof only, based on information available to the Company as of the date hereof, and, subject to any applicable law to the contrary, the Company assumes no obligation to update any forward-looking statements.
PAR PHARMACEUTICAL COMPANIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share Data) (Unaudited) March 28, December 31, 2009 2008 ASSETS ------ Current assets: Cash and cash equivalents $133,773 $170,629 Available for sale debt and marketable equity securities 70,813 93,097 Accounts receivable, net 131,658 83,408 Inventories 48,720 42,504 Prepaid expenses and other current assets 19,064 20,040 Deferred income tax assets 35,941 53,060 Income taxes receivable 39,856 35,397 Total current assets 479,825 498,135 Property, plant and equipment, at cost less accumulated depreciation and amortization 79,319 79,439 Available for sale debt and marketable equity securities 375 1,949 Intangible assets, net 28,956 35,208 Goodwill 63,729 63,729 Deferred financing costs and other assets 991 1,159 Non-current deferred income tax assets, net 68,030 68,618 Total assets $721,225 $748,237 LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Current portion of long-term debt $129,234 $130,141 Accounts payable 29,037 22,879 Payables due to distribution agreement partners 43,297 91,451 Accrued salaries and employee benefits 14,173 11,850 Accrued expenses and other current liabilities 36,250 38,352 Total current liabilities 251,991 294,673 Long-term debt, less current portion - - Other long-term liabilities 40,786 41,581 Commitments and contingencies - - Stockholders' equity Common Stock, par value $0.01 per share, authorized 90,000,000 shares; issued 37,572,275 and 37,392,469 shares 375 374 Additional paid-in capital 322,047 319,976 Retained earnings 175,549 159,470 Accumulated other comprehensive gain 92 122 Treasury stock, at cost 2,815,369 and 2,716,010 shares (69,615) (67,959) Total stockholders' equity 428,448 411,983 Total liabilities and stockholders' equity $721,225 $748,237 PAR PHARMACEUTICAL COMPANIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Data) (Unaudited) Three Months Ended March 28, March 29, 2009 2008 Revenues: Net product sales $200,223 $151,237 Other product related revenues 3,812 3,691 Total revenues 204,035 154,928 Cost of goods sold 139,966 105,407 Gross margin 64,069 49,521 Operating expenses: Research and development 7,172 17,158 Selling, general and administrative 32,960 31,346 Settlements and loss contingencies, net (3,376) - Restructuring costs 1,401 - Total operating expenses 38,157 48,504 Gain on sale of product rights and other (1,100) (1,625) Operating income 27,012 2,642 Gain on extinguishment of senior subordinated convertible notes 245 - Equity in loss of joint venture - (20) Loss on marketable securities and other investments, net (55) - Interest income 1,157 3,014 Interest expense (2,567) (3,510) Income from continuing operations before provision for income taxes 25,792 2,126 Provision for income taxes 9,537 743 Income from continuing operations 16,255 1,383 Discontinued operations: Gain from discontinued operations - 505 Provision for income taxes 176 445 (Loss) gain from discontinued operations (176) 60 Net income $16,079 $1,443 Basic earnings per share of common stock: Income from continuing operations $0.48 $0.04 (Loss) gain from discontinued operations 0.00 0.00 Net income $0.48 $0.04 Diluted earnings per share of common stock: Income from continuing operations $0.48 $0.04 (Loss) gain from discontinued operations 0.00 0.00 Net income $0.48 $0.04 Weighted average number of common shares outstanding: Basic 33,603 33,220 Diluted 33,772 33,587 Reconciliation Between Reported (GAAP) and Adjusted Net Income (Loss) (In thousands, except per share data) (Unaudited) Three Months Ended March 28, March 29, 2009 2008 Reported Net Income $16,079 $1,443 Change in Estimate Related to Final Pentech Settlement (3,412) - Restructuring Costs 1,401 - Milestone Payments 1,000 5,000 Non-cash Interest Expense (FSP APB 14-1) 1,593 1,843 Estimated Tax on Adjustments (221) (2,600) Adjusted Net Income (non-GAAP measure) $16,440 $5,686 Diluted Earnings Per Share: Reported $0.48 $0.04 Adjusted (non-GAAP measure) $0.49 $0.17
|SOURCE Par Pharmaceutical Companies, Inc.|
Copyright©2009 PR Newswire.
All rights reserved