IMPAX Files Amended Form 10/A Registration Statement

December 3, 2008


Reports Results for the Three and Nine Months Ended September 30, 2008
Company to Hold Conference Call on December 4

HAYWARD, Calif. (December 3, 2008) – IMPAX Laboratories, Inc. today announced that yesterday evening it filed an amended Form 10/A registration statement with the Securities and Exchange Commission pursuant to section 12(g) of the Securities Exchange Act and announced its results for the three and nine months ended September 30, 2008. On October 10, 2008, the Company filed a Form 10 registration statement and Section 12(g) provides the registration statements thereunder shall become effective within 60 days after filing. The Company will issue further announcements when the statement filed on October 10 becomes effective and when trading in the Company's stock resumes.

For the three months ended September 30, 2008, total revenues decreased to $36.8 million, compared with total revenues of $113.4 million in the prior year period, primarily attributable to the elimination of $68.0 million of sales of the Company's generic OxyContin® product due to a patent litigation settlement agreement in 2007, and the timing of new product launches. These declines in revenue along with a planned $6.4 million increase in generic and brand research and development expenses, $1.4 million for professional fees related to the examination and review of the Company's financial statements and preparation of the Company's registration statement on SEC Form 10, and $1.4 million in a severance payment associated with a former executive position resulted in a loss from operations in the third quarter of 2008 of $18.1 million, compared with income from operations of $66.3 million for the same period last year. Net loss per share on a diluted basis for the three months ended September 30, 2008 was $0.15, compared with net income per share on a diluted basis of $0.71 in the prior year period. Cash and short-term investments, net of long-term debt, was $60.2 million as of September 30, 2008, compared with $71.1 million at June 30, 2008, and $53.8 million at December 31, 2007. Purchases of property, plant and equipment during the quarter were $8.1 million.

For the nine months ended September 30, 2008, total revenues decreased to $165.4 million, compared with total revenues of $206.3 million in the prior year period due primarily to the factors described above. These declines in revenue along with a planned $17.2 million increase in generic and brand research and development expenses, $2.8 million for professional fees related to the examination and review of the Company's financial statements and preparation of the Company's registration statement on SEC Form 10, and $1.4 million in a severance payment associated with a former executive position resulted in a decline in income from operations to $13.8 million, compared with income from operations of $69.3 million for the same period last year. Net income per share on a diluted basis for the nine months ended September 30, 2008 was $0.16, compared with tax-benefit aided net income per share on a diluted basis of $1.95 in the prior year period. The results for the first nine months of 2007 include a reversal of a deferred tax asset valuation allowance of $1.33 per diluted share ($81.5 million).

Larry Hsu, Ph.D., president and chief executive officer of IMPAX Laboratories said, "Our third quarter 2008 results were primarily impacted by the elimination of sales of our generic OxyContin® product, the timing of new product launches and our increasing investments in generic and brand research and development. However, the more than $127 million we earned in 2007 and in the first half of 2008 due in part to sales of our generic OxyContin® product was beneficial in helping to reduce our long-term debt in the third quarter of 2008 from $90 million to $21 million. Adding the $25 million we will receive from a recent settlement and the $40 million up front payment we will receive under a recent R&D collaboration agreement, our cash position will increase to levels in excess of $100 million."

Dr. Hsu continued, "We have a healthy balance sheet with significant cash and a modest debt level allowing us to invest in our business to achieve long-term growth. We continue to see the benefits from our investments in research and development. In the past month we filed two additional ANDAs, bringing our year-to-date 2008 filing total to seven. We also believe that our recently filed ANDA for generic Cymbalta® will be entitled to 180 days of shared exclusivity with other filers of ANDAs submitted on the same date. These positive results move us closer to achieving our ANDA filing goal in 2008 of eight to 10 new applications with at least 25% having the potential to be first-to-file product opportunities. We believe we will be able to achieve our goals by the end of the year."

Three Months Ended September 30, 2008 Results

Revenues

Total revenues for the three months ended September 30, 2008 decreased 68% to $36.8 million, compared with $113.4 million in the prior year period primarily due to a decline in RX Partner revenues.

Global product net revenues decreased 16% to $20.7 million, compared with $24.6 million in the prior year period. The decline was primarily due to lower sales of our Demeclocyclin, Colestipol and Bupropion ER 200mg products, generic versions of Declomycin®, Colestid® and Wellbutrin SR®. Partially offsetting this decline was an increase in sales of our fenofibrate products, the generic versions of Lofibra® capsules, a cholesterol-lowering drug, of which ours was the only generic version in a market experiencing increasing demand for drugs of this type.

Rx Partner revenues decreased 88% to $9.4 million, compared with $81.6 million in the prior year period, primarily attributable to reduced sales of generic OxyContin® ($68.0 million in revenue recognized under the DAVA Agreement during the three months ended September 30, 2007, which terminated earlier in 2008 due to the settlement of patent litigation).

OTC Partner revenues decreased 17% to $3.4 million, compared with $4.1 million in the prior year period, primarily attributable to market share decline for allergy products.

Promotional Partner revenues were $3.2 million up slightly over the same period in 2007.

Margins

Gross profit for the three months ended September 30, 2008 decreased 83% to $14.5 million, compared with $87.4 million in the prior year period. Gross profit margin for the three months ended September 30, 2008 decreased to approximately 39% of total revenues, as compared to 77% of total revenues in the prior year period. The decline in gross profit dollars and margin was due principally to higher margin sales of the Company's generic OxyContin® in the prior year period.

Expenses

Total research and development expenses for the three months ended September 30, 2008 were $16.4 million, compared with $10.0 million in the prior year period. Generic project activity increased $4.3 million to $12.5 million primarily due to increased spending on bioequivalency studies and higher patent prosecution and opinion expenses, and investment in additional human resources. Brand product activity relating to the Company's pipeline increased $2.1 million to $3.9 million due to higher spending on additional research personnel and on clinical trials.

Patent litigation expenses for the three months ended September 30, 2008 were $1.9 million, down slightly over the prior year period.

Selling, general and administrative expenses for the three months ended September 30, 2008 were $14.3 million, up $5.1 million over the prior year period primarily attributable to an increase in professional fees related to the examination and review of our financial statements for the years 2004 through the current period of 2008, as well as the preparation of our registration statement on SEC Form 10, the addition of several executive level personnel, severance payment associated with a former executive position; and higher consulting expenses associated with strategic and operational management analyses.

Other income and expense

During August and September 2008, at the request of the holders, the Company made aggregate cash payments of $59.9 million to repurchase, at a discount, an aggregate of $62.3 million principal face-value of the Company's 3.5% convertible senior subordinated debentures. The Company recorded a gain of $1.3 million, net of previously unamortized deferred financing costs.

Interest income for the three months ended September 30, 2008 declined by $0.8 million primarily due to lower average cash balances. Interest expense declined $0.5 million due to reduced average debt outstanding, including the repurchase of our 3.5% convertible senior subordinated debentures.

Tax Rate

The tax benefit for the three months ended September 30, 2008 was $7.5 million compared to a tax expense of $23.7 million in the same period last year due to the Company recording a loss from operations in the current year quarter.

Balance Sheet Information

The Company had cash, cash equivalents and short-term marketable securities of $81.2 million and total debt of $21.0 million as of September 30, 2008.

Presentation of Non-GAAP Financial Data

A substantial portion of the Company's revenue is derived from alliance agreements with marketing partners. This revenue and the associated product manufacturing cost is, in accordance with generally accepted accounting principles (GAAP), deferred and recognized over the estimated remaining life of the related agreement. The Company believes it is useful to present supplemental information showing what its financial results of operations would have been had it not deferred such revenue and product manufacturing cost. This information is taken directly from data set forth in the consolidated statement of operations and the notes thereto and is presented in a different format in order to show what the Company's financial results would have been if revenue and related costs were recognized at the time its alliance agreement partners reported the revenue to the Company, as compared to the Company's reported results under GAAP. Management utilizes this information to track and analyze the dollar value of product being shipped in the current period, which is useful in planning as it enables management to determine the amount of expected cash receipts. The Company believes it may be useful to investors, drug wholesalers and others in evaluating customer acceptance of the Company's products in comparison with its competitors, few, if any, of which defer significant portions of their revenue and product manufacturing cost. However, these non-GAAP financial data should not be considered by investors as an alternative to operating income or net income as an indicator of the Company's performance. The non-GAAP financial data presentation is also not necessarily comparable to non-GAAP financial data presentations by other companies.

The following table shows the Company's results as reported in accordance with GAAP and in accordance with this non-GAAP presentation. The Company derives the non-GAAP data by (i) adding the deferred revenues to revenues determined in accordance with GAAP and deducting the recognized portion of previously deferred revenues, (ii) adding the deferred product manufacturing costs to cost of revenue determined in accordance with GAAP and (iii) subtracting the amortized portion of previously deferred product manufacturing cost.


Three Months Ended September 30, 2008

Three Months Ended September 30, 2007

(unaudited)

GAAP

Deferral

Amortization

Non-GAAP

GAAP

Deferral

Amortization

Non-GAAP

Total Revenues

$ 36,774

$ 16,236

$ (12,884)

$ 40,126

$ 113,420

$ 39,182

$ (85,715)

$ 66,887

Gross Profit.......

$ 14,478

$ 5,539

$ (4,749)

$ 15,268

$ 87,428

$ 24,669

$ (72,651)

$ 39,446

%Total Revenues..........

39%



38%

77%



59%

Operating Expenses...........

$ 32,607

$ (175)


$ 32,432

$ 21,133

$ (175)


$ 20,959

Income/(loss) from Operations.............................

$ (18,129)

$ 5,714

$ (4,749)

$(17,164)

$ 66,295

$ 24,844

$ (72,651)

$ 18,487

%Total Revenues..........

--



--

58%



28%

Conference Call Information
The Company will host a conference call at 4:30 p.m. EDT on Thursday, December 4, 2008 to discuss its results. The number to call from within the United States is (888) 803-7396 and (706) 634-1052 Internationally. The call can also be accessed via a live Webcast through the Investor Relations section of the Company's Web site, www.impaxlabs.com . A replay of the conference call will be available 5:30 p.m EST on December 4, 2008 through 11:59 p.m. EST December 8, 2008 and can be accessed by dialing (800) 642-1687 in the United States or (706) 645-9291 Internationally and using the access code 76451121.

About IMPAX Laboratories, Inc.

IMPAX Laboratories, Inc. is a technology based specialty pharmaceutical company applying its formulation expertise and drug delivery technology to the development of controlled-release and specialty generics in addition to the development of branded products. IMPAX markets its generic products through its Global Pharmaceuticals division and markets its branded products through the IMPAX Pharmaceuticals division. Additionally, where strategically appropriate, IMPAX has developed marketing partnerships to fully leverage its technology platform. IMPAX Laboratories is headquartered in Hayward, California, and has a full range of capabilities in its Hayward and Philadelphia facilities. For more information, please visit the Company's Web site at: www.impaxlabs.com.

"Safe Harbor" statement under 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 forward-looking in nature and express the beliefs and expectations of management. Such statements are based on current expectations and involve a number of known and unknown risks and uncertainties that could cause IMPAX's future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, possible adverse effects resulting from the delisting of and suspension of trading in IMPAX's stock, the actual time that will be required to obtain effectiveness of IMPAX's registration statement on Form 10 and resumption of trading in its stock, IMPAX's ability to obtain sufficient capital to fund its operations, the difficulty of predicting FDA filings and approvals, consumer acceptance and demand for new pharmaceutical products, the impact of competitive products and pricing, IMPAX's ability to successfully develop and commercialize pharmaceutical products, IMPAX's reliance on key strategic alliances, the uncertainty of patent litigation, the availability of raw materials, the regulatory environment, dependence on patent and other protection for innovative products, exposure to product liability claims, fluctuations in operating results and other risks detailed from time to time in IMPAX's filings with the Securities and Exchange Commission. Forward-looking statements speak only as to the date on which they are made, and IMPAX undertakes no obligation to update publicly or revise any forward-looking statement, regardless of whether new information becomes available, future developments occur or otherwise.

(tables to follow)


Impax Laboratories, Inc
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except share and per share data)

Three Months Ended September 30,
2008 2007
(unaudited) (unaudited)
Revenues:
Global product sales, net $ 20,709 $ 24,594
Rx Partner 9,424 81,634
OTC Partner 3,398 4,081
Promotional Partner 3,238 3,104
Other 5 7
Total revenues 36,774 113,420

Cost of revenues 22,296 25,992
Gross profit 14,478 87,428

Operating expenses:
Research and development 16,440 9,958
Patent litigation 1,876 2,016
Selling, general and administrative 14,291 9,159
Total operating expenses 32,607 21,133
(Loss) Income from operations (18,129) 66,295
Change in fair value of common stock purchase warrants -- 286
Gain on repurchase of 3.5% debentures 1,319 --
Other income 110 40
Interest income 723 1,550
Interest expense (485) (1,020)
(Loss)Income before income taxes (16,462) 67,151
Benefit (Provision) for income taxes 7,548 (23,749)
Net (Loss) income $ (8,914) $ 43,402

Net (Loss)/Income per share:
Basic $ (0.15) $ 0.74
Diluted $ (0.15) $ 0.71
Weighted average common shares outstanding:
Basic 59,166,319 58,818,971
Diluted 59,166,319 61,293,615

Impax Laboratories, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except share and per share data)

Nine Months Ended September 30,
2008 2007
(unaudited) (unaudited)
Revenues:
Global product sales, net $ 70,791 $ 64,667
Rx Partner 72,099 123,208
OTC Partner 12,739 8,794
Promotional Partner 9,728 9,584
Other 19 33
Total revenues 165,376 206,286

Cost of revenues 66,378 74,279
Gross profit 98,998 132,007

Operating expenses:
Research and development 43,653 26,454
Patent litigation 4,827 8,344
Selling, general and administrative 36,669 27,896
Total operating expenses 85,149 62,694
Income from operations 13,849 69,313
Change in fair value of common stock purchase warrants 59 (514)
Gain on repurchase of 3.5% debentures 1,319 ---
Other income (expense), net 150 (1,316)
Interest income 3,282 2,786
Interest expense (2,403) (3,098)
Income before income taxes 16,256 67,171
(Provision) benefit for income taxes (6,614) 52,253
Net income $ 9,642 $ 119,424

Net Income per share:
Basic $ 0.16 $ 2.03
Diluted $ 0.16 $ 1.95
Weighted average common shares outstanding:
Basic 58,993,633 58,806,974
Diluted 60,813,707 61,265,898


Impax Laboratories, Inc.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share and per share data)
September 30, December 31,
2008 2007
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 25,883 $ 37,462
Short-term investments 55,269 106,034
Accounts receivable, net 37,846 51,503
Inventory, net 30,628 27,568
Current portion of deferred product manufacturing costs-alliance agreements 12,844 11,923
Current portion of deferred income taxes 22,350 27,376
Prepaid expenses and other assets 11,505 8,592
Total current assets 196,325 270,458

Property, plant and equipment, net 93,677 81,223
Deferred product manufacturing costs-alliance agreements 91,506 82,474
Deferred income taxes, net 47,137 47,937
Other assets 9,369 6,793
Goodwill 27,574 27,574
Total assets $ 465,588 $ 516,459

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 14,528 $ 69,234
Accounts payable 15,120 16,898
Accrued expenses 35,450 35,838
Current portion of deferred revenue-alliance agreements 24,316 26,381
Current portion of accrued exclusivity period fee payments due 9,000 12,000
Total current liabilities 98,414 160,351

3.5% Convertible senior subordinated debentures --- 12,750
Long-term debt 6,442 7,760
Fair value of common stock purchase warrants --- 2,285
Deferred revenue-alliance agreements 196,560 181,720
Accrued exclusivity period fee payments due --- 6,000
Other liabilities 13,539 11,426
Total liabilities $ 314,955 $ 382,292

Commitments and contingencies

Stockholders' equity:
Preferred Stock, $ 0.01 par value, 2,000,000 shares authorized,
none outstanding at September 30, 2008 and December 31, 2007 $ --- $ ---
Common stock, $ 0.01 par value, 90,000,000 shares authorized,
59,218,937 and 58,822,548 shares issued and outstanding
at September 30, 2008 and December 31, 2007, respectively 595 591
Additional paid-in capital 203,528 196,049
Treasury stock-acquired at cost resulting from achievement of milestone under
the Teva Agreement, 243,729 shares at September 30, 2008
and December 31, 2007 (2,157) (2,157)
Accumulated other comprehensive loss (685) (26)
Accumulated deficit (50,648) (60,290)
Total stockholders' equity $ 150,633 $ 134,167
Total liabilities and stockholders' equity $ 465,588 $ 516,459

516,459

Company Contacts:

IMPAX Laboratories, Inc.

Larry Hsu, Ph.D. President & CEO
(510) 476-2000, Ext. 1111
Arthur Koch, CFO
(215) 933-0351
Mark Donohue, Sr. Director, Investor Relations
(215) 933-3526

www.impaxlabs.com