ANAHEIM, Calif., Feb. 26, 2013 /PRNewswire/ -- Questcor Pharmaceuticals, Inc. (NASDAQ: QCOR) today reported financial results for the fourth quarter and full year ended December 31, 2012. Three Months Ended 12/31/12
Three Months Ended 12/31/11
Percentage ChangeNet Sales
113%GAAP Diluted EPS
115%Non-GAAP Diluted EPS
132% Year Ended 12/31/12
Year Ended 12/31/11
Percentage ChangeNet Sales
133%GAAP Diluted EPS
160%Non-GAAP Diluted EPS
162%Net sales for the fourth quarter of 2012 were $160.5 million, compared to $75.5 million for the same period in 2011. Net sales increased primarily due to expanded prescribing of H.P. Acthar® Gel (repository corticotropin injection) by nephrologists in the treatment of nephrotic syndrome, as well as continued prescribing by neurologists in the treatment of MS relapses and infantile spasms. Net sales also benefitted from the initiation of commercial activities focused on the use of Acthar by rheumatologists in the treatment of on-label rheumatology-related conditions.
GAAP earnings for the fourth quarter of 2012 were $1.03 per diluted common share, compared to $0.48 per diluted common share for last year's comparable quarter. Non-GAAP earnings for the quarter ended December 31, 2012 were $1.09 per diluted common share and exclude non-cash share-based compensation expense and depreciation and amortization expense. Non-GAAP earnings for the year ago quarter were $0.47 per diluted common share. Basic common share count decreased over 5 million shares from the fourth quarter of 2011 to the fourth quarteinuria in the nephrotic syndrome without uremia of the idiopathic type or that due to lupus erythematosus. Questcor is also exploring the possibility of developing markets for other on-label indications and the possibility of pursuing FDA approval of additional indications not currently on the Acthar label where there is high unmet medical need. For more information about Questcor, please visit www.questcor.com.
Note: Except for the historical information contained herein, this press release contains forward-looking statements that have been made pursuant to the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "believes," "continue," "could," "estimates," "expects," "growth," "may," "plans," "potential," "remain," "should," "substantial" or "will" or the negative of such terms and other comparable terminology. These statements are only predictions. Actual events or results may differ materially. Factors that could cause or contribute to such differences include, but are not limited to, the following:
The risk factors and other information contained in these documents should be considered in evaluating Questcor's prospects and future financial performance.
Questcor undertakes no obligation to publicly release the result of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date of this release.
For more information, please visit www.questcor.com or www.acthar.com.Questcor Pharmaceuticals, Inc.Consolidated Statements of Income(In thousands, except per share amounts)Three Months Ended December 31,Twelve Months Ended December 31,2012201120122011Net sales
$ 218,169Cost of sales (exclusive of amortization of purchased technology)
205,710Operating expenses:Selling and marketing
56,728General and administrative
17,743Research and development
16,778Depreciation and amortization
1,044Impairment of goodwill and intangibles
299Total operating expenses
92,592Income from operations
113,118Other income:Interest and other income, net
627Total other income
627Income before income taxes
113,745Income tax expense
79,591Net income per share applicable to common shareholders:Basic
.21Shares used in computing net income per share applicable to common shareholders:Basic
66,010Dividends declared per common shareholder
8212;Reconciliation of Non-GAAP Adjusted FinancialAdjusted net income
83,956Share-based compensation expense (1)
(5,128)Depreciation and amortization expense (2)
(731)Impairment of goodwill and intangibles (3)
(209)Tax adjustments (4)
1,703Net income - GAAP
79,591Adjusted net income per share - basic
.34Share-based compensation expense (1)
(0.08)Depreciation and amortization expense (2)
(0.01)Impairment of goodwill and intangibles (3)
0.00Tax adjustments (4)
0.03Net income per share - basic
.27Adjusted net income per share - diluted
.27Share-based compensation expense (1)
(0.08)Depreciation and amortization expense (2)
(0.01)Impairment of goodwill and intangibles (3)
0.00Tax adjustments (4)
0.03Net income per share - diluted
.21Net income per share – basic and diluted may not foot due to rounding.Use of Non-GAAP Financial Measures Our "non-GAAP adjusted net income" excludes the following items from GAAP net income: 1. Share-based compensation expense.2. Depreciation and amortization expense3. Impairment of purchased technology in 2012 related to the acquisition of Doral and impairment of goodwill related to the write-off of goodwill associated with an acquisition completed in 1999, written off in 2011.4. Tax adjustments include: (1) the valuation allowance we established in the fourth quarter of 2010 relating to our single sales factor apportionment election which was made in 2011 for California; and (2) the recording of a one-time tax credit in 2011 for the orphan drug designation. Questcor Pharmaceuticals, Inc.Consolidated Balance Sheets(In thousands, except per share amounts)December 31, 2012December 31,2011ASSETSCurrent assets: Cash and cash equivalents
$ 88,469 Short-term investments
121,680Total cash, cash equivalents and short-term investments
210,149 Accounts receivable, net of allowance for doubtful accounts of $0 at both December 31, 2012 and 2011, respectively
27,801 Inventories, net
5,226 Prepaid income taxes
6,940 Prepaid expenses and other current assets
3,391 Deferred tax assets
12,093Total current assets
265,600Property and equipment, net
1,970Purchased technology, net
—Deposits and other assets
56Deferred tax assets
$275,808LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities: Accounts payable
5,503 Accrued compensation
11,590 Sales-related reserves
34,119 Income taxes payable
— Other accrued liabilities
4,509Total current liabilities
55,721Lease termination, deferred rent and other non-current liabilities
55,982Shareholders' equity: Preferred stock, no par value, 5,334,285 shares authorized; none outstanding
— Common stock, no par value, 105,000,000 shares authorized; 58,544,206 and 63,645,781 shares issued and outstanding at December 31, 2012 and 2011, respectively
94,976 Retained earnings
124,886 Accumulated other comprehensive income (loss)
(36)Total shareholders' equity
219,826Total liabilities and shareholders' equity
$275,808 Questcor Pharmaceuticals, Inc.Consolidated Statements of Cash Flows(In thousands)Years Ended December 31,201220112010(In thousands)Cash Flows From Operating ActivitiesNet income
$ 35,071Adjustments to reconcile net income to net cash provided by operating activities:Share-based compensation expense
3,739Deferred income taxes
(1,029)Amortization of investments
678Depreciation and amortization
546Impairment of goodwill and intangibles
—Loss on disposal of property and equipment
—Changes in operating assets and liabilities:Accounts receivable
(348)Prepaid income taxes
(3,532)Income taxes payable
—Prepaid expenses and other current assets
6,589Other accrued liabilities
(255)Other non-current liabilities
(871)Net cash provided by operating activities
36,557Cash Flows From Investing ActivitiesPurchase of short-term investments
(106,647)Proceeds from the sale and maturities of short-term investments
62,560Purchase of property, equipment and leasehold improvements
(713)Changes in deposits and other assets
645Net cash provided by /(used in) investing activities
(44,155)Cash Flows From Financing ActivitiesIncome tax benefit realized from share-based compensation plans
1,335Issuance of common stock, net
—Repurchase of common stock
—Net cash (used in) / provided by financing activities
3,277(Decrease) / increase in cash and cash equivalents
(4,321)Cash and cash equivalents at beginning of year
45,829Cash and cash equivalents at end of year
$ 41,508Supplemental Disclosures of Cash Flow Information:Cash paid for interest
7Cash paid for income taxes
$ 23,185Supplemental disclosure of non-cash investing and financing activities:Capital lease obligation
Questcor shipped 6,330 vials of Acthar during the fourth quarter 2012, up 88 percent compared to 3,360 vials in the year ago quarter. For the full year of 2012, Questcor shipped 20,741vials of Acthar, up 94 percent compared to 10,710 vials in 2011. Quarterly vial shipments are subject to significant variation due to the size and timing of individual orders received from Questcor's distributor. The timing of when these orders are received and filled can significantly affect net sales and net income in any particular quarter.
The fourth quarter and full year results do not reflect Questcor's acquisition of BioVectra or the change, to be applied on a prospective basis, in the Medicaid rebate percentage for Acthar, both of which occurred in the first quarter of 2013.
"Net sales, net income and cash flow from operations grew sharply in the fourth quarter compared to the prior-year period," said Don M. Bailey, President and CEO of Questcor. "Additionally, we more than doubled our investment in R&D in 2012 compared to 2011 as we continue to build the body of evidence regarding the unique properties of Acthar and how it may benefit an increasing number of patients who do not respond to other therapies."
"Acthar is most commonly prescribed by physicians as an appropriate treatment alternative for patients with certain auto-immune conditions in whom first-line therapies have not provided the intended treatment outcome and an additional FDA-approved treatment alternative is needed," commented Steve Cartt, Chief Operating Officer of Questcor. "For such patients, insurance coverage for Acthar continues to remain favorable. Continued expanded use in nephrotic syndrome, MS and strong growth in our newly commercialized rheumatology indications, mainly dermatomyositis and polymyositis, contributed to the year-over-year net sales increase in the fourth quarter. While Acthar net sales in MS posted greater than 40% year-over-year growth, MS prescriptions softened by approximately 8% from the third quarter, after almost five years of sequential quarterly growth, and nephrotic syndrome became the largest contributor to net sales. At the same time, based on early, encouraging results from our pilot rheumatology commercial effort, we have just completed our rheumatology sales force expansion from 12 to 55 representatives."
"We continue to invest in the future of both Acthar and our overall business capabilities," continued Mr. Bailey. "In addition to the rapid expansion of our R&D investment, we have also substantially expanded our sales force, our reimbursement and compliance teams, and our manufacturing capabilities. The recent acquisition of BioVectra, which gives us much greater control of our supply chain, deepens our manufacturing capabilities and scientific expertise, while also expanding and diversifying our business. The appointment of Michael Aldridge to lead our strategic development function was another important step as we look to broaden our capabilities and further diversify our business, while maintaining our focus on the potential of Acthar to help many more patients than it does today. We continue to balance our investments in the business with a disciplined program of returning capital to shareholders, as demonstrated by additional share repurchases and the institution of a regular quarterly dividend."
Full Year Financial ResultsNet sales for the full year of 2012 were $509.3 million, compared to $218.2 million in the full year of 2011. Cash flow from operations for the full year of 2012 was $219.0 million, compared to $85.6 million for the full year of 2011. GAAP earnings per share for the full year of 2012 were $3.14 per diluted common share, compared with $1.21 per diluted common share for the comparable period of 2011. Non-GAAP earnings per share for the full year ended December 31, 2012 were $3.33 per diluted common share, excluding non-cash share-based compensation expense, depreciation and amortization expense, and impairment of intangibles. Non-GAAP earnings for the comparable period of 2011 were $1.27 per diluted common share.
Research and Development Programs Questcor's continued strong financial performance has enabled the company to increase investment in research programs to further clarify the potential immune-modulating properties of Acthar and identify Acthar mechanisms of action applicable to other inflammatory and auto-immune diseases with high unmet need. Questcor currently has approximately 35 company-sponsored clinical and pre-clinical research projects underway. Key company-sponsored clinical programs are in process in the following disease states:
In addition, Questcor provides grant funding to a wide range of independent research projects, which include the evaluation of Acthar in nephrotic syndrome due to focal segmental glomerulosclerosis (FSGS), nephrotic syndrome due to lupus nephritis, lupus flares, intractable chronic migraine, multiple sclerosis, prevention of infantile spasms in at-risk patients, and others. The company is currently funding more than 30 such independent research programs, including both preclinical and clinical studies.
Questcor continues to receive case reports and inquiries from physicians indicating that Acthar may be able to benefit patients whose serious illnesses are not effectively treated with other medications, but for which Questcor does not currently have an active sales force providing information to specialists who treat these illnesses. As it has over the last several years, Questcor continues to follow up on these reports and inquiries in order to ascertain whether the Company should fund research regarding the potential utility of Acthar in treating these serious illnesses. Past reports and inquiries have led to the company's current work in MS and rheumatology. More recent reports and inquiries may lead Questcor to expand its internal research and development, including clinical trials, and other activities within current on-label or potential new indications.
Share Repurchase Program and Cash DividendDuring the fourth quarter of 2012, Questcor used $18.6 million in cash to repurchase 747,207 shares of its common stock in open market transactions, at an average price of $24.93 per common share. Since the beginning of 2008, the company has repurchased a total of 22.2 million shares of its common stock for $340.3 million through December 31, 2012, at an average price of $15.36 per share. As of December 31, 2012, there are approximately 6.3 million shares authorized remaining under the stock repurchase plan. Shares outstanding were 58.5 million at December 31, 2012 and 63.6 million at December 31, 2011.
The company today announced that its Board of Directors has declared a quarterly cash dividend of $0.25 per share to all shareholders of record at the close of business on April 22, 2013. The quarterly cash dividend was increased from $0.20 per share, or 25% over the previous quarterly dividend. The dividend is scheduled to be paid on or about April 30, 2013. Questcor currently intends to pay regular quarterly cash dividends for the foreseeable future.
2012 Corporate Highlights
Following the end of the fourth quarter of 2012:
Acthar Label InformationThe product label for Acthar includes 19 FDA-approved indications. Substantially all of the Company's net sales currently result from Acthar prescriptions for the following on-label indications of:
Non-GAAP Financial Measures The company believes it is important to share non-GAAP financial metrics with shareholders as these metrics may better represent the ongoing economics of the business and reflect how we manage the business. Accordingly, management believes investors' understanding of the company's financial performance is enhanced as a result of the disclosure of these non-GAAP financial metrics. Non-GAAP net income should not be viewed in isolation, or as a substitute for, or as superior to, reported GAAP net income. The reconciliation between GAAP and Non-GAAP net income is provided with the financial tables included with this release.
Conference Call and Webcast and Investor Communications The company will host a conference call and slide presentation via webcast today, February 26, 2013, at 4:30 p.m. ET/ 1:30 p.m. PT. The call can be accessed three ways:
About QuestcorQuestcor Pharmaceuticals, Inc. is a biopharmaceutical company focused on the treatment of patients with serious, difficult-to-treat autoimmune and inflammatory disorders. Questcor's primary product is H.P. Acthar® Gel (repository corticotropin injection), an injectable drug that is approved by the FDA for the treatment of 19 indications. Of these 19 indications, Questcor currently generates substantially all of its net sales from the following on-label indications: the treatment of proteinuria in the nephrotic syndrome of the idiopathic type, or NS, the treatment of acute exacerbations of multiple sclerosis, or MS, in adults, the treatment of infantile spasms, or IS, in infants and children under two years of age, and the treatment of certain rheumatology related conditions, including the treatment of the rare and closely related neuromuscular disorders dermatomyositis and polymyositis. With respect to nephrotic syndrome, the FDA has approved Acthar to "induce a diuresis or a remission of prote
|SOURCE Questcor Pharmaceuticals, Inc.|
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