HAYWARD, Calif.--(BUSINESS WIRE)--Feb. 26, 2009--
Impax Laboratories, Inc. (OTCBB: IPXL.OB) today reported net
income for the fourth quarter of 2008 increased 39% to $9.1 million,
compared with net income of $6.5 million in the prior year. Reported
earnings per diluted share increased 36% to $0.15, compared with
earnings per diluted share of $0.11 in the prior year. Cash and
short-term investments, net of interest-bearing debt, increased to $99.3
million as of December 31, 2008, compared with $60.2 million as of
September 30, 2008, and $53.8 million at December 31, 2007.
The results for the fourth quarter of 2008 include in other income the
receipt of $25.0 million from a settlement of an antitrust claim,
partially offset by a $3.4 million charge (net of insurance
reimbursements) relating to an agreement to settle 2004 securities class
actions against the Company. The increase in cash and short-term
investments as of December 31, 2008, is primarily due to the receipt of
a $40.0 million payment for an R&D Joint Development agreement and the
$25.0 million antitrust claim settlement.
Larry Hsu, Ph.D., president and chief executive officer of Impax
Laboratories, said: “We ended 2008 in the strongest financial position
in our history. We reduced our debt by $69 million and increased our
cash position, net of debt, by almost $46 million resulting in a healthy
balance sheet. This strong financial position allowed us to continue our
plans to invest in R&D across our Global Pharmaceuticals (generic) and
Impax Pharmaceuticals (brand) divisions to drive future growth. In 2008,
Global launched six new products and filed nine ANDAs, in the range of
our guidance of eight to ten ANDAs. We are also proud that two of our
nine ANDAs were shared first-to-file opportunities, and at least one
additional one has the potential to be a sole first-to-file. Impax
Pharmaceuticals was also very active continuing its development work on
two CNS proprietary products and four exploratory CNS products.”
Dr. Hsu continued, “With our strong financial position, we will be able
to internally fund our business in 2009 and beyond. We are currently
forecasting that 2009 will be our third consecutive year of positive
cash flows from operations. For 2009, our Global division is targeting
eight to ten new ANDAs with a continuing focus on controlled-release
products. We will continue to work diligently to meet our objectives of
at least three of these new applications having the potential to be
first-to-file or first-to-market product opportunities.”
For the year ended December 31, 2008, net income decreased to $18.7
million, compared with net income of $125.9 million in the prior year.
Reported earnings per diluted share decreased to $0.31, compared with
earnings per diluted share of $2.06 in the prior year. The results for
the full year 2008 were impacted by the elimination of $77.8 million of
revenue from sales of the Company’s generic OxyContin® product which the
Company stopped selling in early 2008 due to a patent litigation
settlement agreement entered into in 2007. There was a further decline
as a result of a planned $19.8 million increase in generic and brand
research and development expenses, a $2.2 million increase for
professional fees related to the examination and review of the Company’s
financial statements and preparation of the Company’s registration
statement on Form 10 filed with the SEC and $1.4 million severance
payment associated with a former executive position. The results for the
full year 2007 include a reversal of a deferred tax asset valuation
allowance of $1.33 per diluted share ($81.5 million).
Fourth Quarter 2008 Results
Total revenues for the fourth quarter of 2008 decreased 34% to $44.7
million, compared to the prior year due to a decline in RX Partner
revenues partially offset by an increase in Global product revenues.
Global product net revenues increased 19% to $27.8 million primarily due
to higher demand for fenofibrate and to a lesser extent, the November
28, 2008, launch of our generic version of Bupropion 150XL. Rx Partner
revenues decreased 74% to $9.7 million primarily attributable to the
elimination of $23.4 million of revenue from the Company’s generic
OxyContin® product recognized in the fourth quarter of 2007, and price
and market share erosion of the Company’s generic Bupropion 300XL due to
additional generic competition upon expiration of the Company’s market
exclusivity in June 2007.
Gross profit margin for the fourth quarter of 2008 decreased to
approximately 43% of total revenues compared with 51% of total revenues
in the prior year. The decline in gross profit margin was due
principally to higher margin sales of the Company’s generic OxyContin®
in the prior year.
Total research and development expenses for the fourth quarter of 2008
increased $2.6 million to $16.2 million, compared to the prior year.
Generic project activity increased $1.2 million to $11.4 million
primarily due to increased spending on bio-equivalency studies, higher
patent prosecution and opinion expenses, and investment in additional
human resources. Brand product activity relating to the Company’s
pipeline increased $1.5 million to $4.8 million due to higher spending
on additional research personnel and on clinical trials.
Selling, general and administrative expenses for the fourth quarter of
2008 were $11.2 million, down slightly ($0.4 million) compared to the
prior year.
Other income for the fourth quarter of 2008 increased $20.0 million to
$21.4 million due to the receipt of $25.0 million from an antitrust
claim, partially offset by a $3.5 million charge (net of insurance
reimbursements) relating to an agreement to settle 2004 securities class
actions against the Company.
Full Year 2008 Results
Total revenues for the twelve months ended December 31, 2008, decreased
23% to $210.1 million, compared to the prior year due to a decline in RX
Partner revenues partially offset by an increase in Global and OTC
Partner product revenues. Global product net revenues increased 12% to
$98.6 million primarily due to higher sales of our fenofibrate products,
a cholesterol-lowering drug, in a market experiencing increasing demand
for drugs of this type. Rx Partner revenues decreased 49% to $81.8
million primarily attributable to reduced sales of generic OxyContin®
($40.8 million in revenue was recognized from sales of this product
during the full year of 2008 versus $118.6 million during the full year
of 2007. Sales of the product were suspended earlier in 2008 in
connection with the settlement of patent litigation). OTC Partner
revenues increased 34% to $15.9 million primarily attributable to higher
demand for seasonal allergy products.
Gross profit margin for the full year of 2008 decreased to approximately
56% of total revenues compared with 61% of total revenues in the prior
year. The decline in gross profit margin was due principally to higher
margin sales of the Company’s generic OxyContin® in the prior year.
Total research and development expenses for the full year of 2008
increased $19.8 million to $59.8 million, compared to the prior year.
Generic project activity increased $12.3 million to $43.5 million
primarily due to increased spending on bio-equivalency studies, higher
patent prosecution and opinion expenses, and investment in additional
human resources. Brand product activity relating to the Company’s
pipeline increased $7.5 million to $16.3 million due to higher spending
on additional research personnel and on clinical trials.
Selling, general and administrative expenses for the full year of 2008
increased $8.3 million to $47.9 million, compared to the prior year. The
increase is primarily due to a $2.9 million increase for salary and
benefits expenses related primarily to the addition of several executive
level positions, $2.2 million increase for professional fees related to
the examination and review of the Company’s financial statements and
preparation of the Company’s registration statement on Form 10, $1.4
million in a severance payment associated with a former executive
position and $1.1 million in higher consulting expenses associated with
strategic and operational management analysis.
Other income for the full year of 2008 increased $21.5 million to $21.6
million, compared to the prior year due to the reasons previously
mentioned above.
2009 Financial Outlook
The Company previously disclosed its 2009 financial outlook for the year
ending December 31, 2009, on January 14, 2009. For 2009, the Company is
currently forecasting:
-
Its third consecutive year of positive cash flows from operations
-
Gross margins as a percent of total revenues to approximate 50%
-
Total research and development expenses across the generic and brand
divisions to approximate $64 million with generic R&D to approximate
$40 million and brand R&D to approximate $24 million
-
Patent litigation expenses of approximate $10 million
-
Selling, general and administrative expenses of approximately $39
million
Conference Call Information
The Company will host a conference call today at 11:00 a.m. EDT to
discuss its results. The number to call from within the United States is
(877) 356-3814 and (706) 758-0033 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 1:00 p.m. EST on
February 26, 2009 through 11:59 p.m. EST March 5, 2009 and can be
accessed by dialing (800) 642-1687 in the United States or (706)
645-9291 internationally and using the access code 87487691.
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; ability to timely file periodic reports required by
the Exchange Act; ability to maintain an effective system of internal
control over financial reporting; ability to sustain profitability and
positive cash flows; ability to maintain sufficient capital to fund
operations; any delays or unanticipated expenses in connection with the
construction of our Taiwan facility; ability to successfully develop and
commercialize pharmaceutical products; the uncertainty of patent
litigation; consumer acceptance and demand for new pharmaceutical
products; the impact of competitive products and pricing; the difficulty
of predicting Food and Drug Administration (“FDA”) filings and
approvals; inexperience in conducting clinical trials and submitting new
drug applications; reliance on key alliance agreements; the availability
of raw materials; the regulatory environment; exposure to product
liability claims; fluctuations in operating results and other risks
detailed from time to time in our 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.
|
Impax Laboratories, Inc.
|
|
Consolidated Statements of Operations
|
|
(amounts in thousands, except share and per share data)
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
2008
|
|
2007
|
|
|
(unaudited)
|
|
(unaudited)
|
|
Revenues:
|
|
|
|
|
|
Global product sales, net
|
|
$ 27,811
|
|
$ 23,311
|
|
RX Partner
|
|
9,679
|
|
37,906
|
|
OTC Partner
|
|
3,207
|
|
3,072
|
|
Research Partner (1)
|
|
833
|
|
-
|
|
Promotional Partner
|
|
3,163
|
|
3,175
|
|
Other
|
|
2
|
|
3
|
|
Total Revenues
|
|
44,695
|
|
67,467
|
|
|
|
|
|
|
Cost of revenues
|
|
25,591
|
|
33,377
|
|
Gross profit
|
|
19,104
|
|
34,090
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
Research and development
|
|
16,157
|
|
13,537
|
|
Patent litigation
|
|
1,646
|
|
1,681
|
|
Selling, general and administrative
|
|
11,227
|
|
11,675
|
|
Total operating expenses
|
|
29,030
|
|
26,893
|
|
|
|
|
|
|
(Loss) Income from operations
|
|
(9,926)
|
|
7,197
|
|
|
|
|
|
|
Change in fair value of common stock purchase warrants
|
|
1,175
|
|
404
|
|
Other income (2)
|
|
21,425
|
|
1,383
|
|
Interest income
|
|
937
|
|
1,965
|
|
Interest expense
|
|
(196)
|
|
(1,011)
|
|
Income before income taxes
|
|
13,415
|
|
9,938
|
|
Provision for income taxes
|
|
4,357
|
|
3,437
|
|
Net Income
|
|
$ 9,058
|
|
$ 6,501
|
|
|
|
|
|
|
Net Income per share:
|
|
|
|
|
|
Basic
|
|
$ 0.15
|
|
$ 0.11
|
|
Diluted
|
|
$ 0.15
|
|
$ 0.11
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
Basic
|
|
59,308,389
|
|
58,821,964
|
|
Diluted
|
|
60,624,452
|
|
61,301,862
|
|
|
|
|
|
|
See notes to financial information on page 9.
|
|
|
|
|
|
Impax Laboratories, Inc.
|
|
Consolidated Statements of Operations
|
|
(amounts in thousands, except share and per share data)
|
|
|
|
|
|
Twelve Months Ended December 31,
|
|
|
2008
|
|
2007
|
|
|
(unaudited)
|
|
|
|
Revenues:
|
|
|
|
|
|
Global product sales, net
|
|
$ 98,602
|
|
$ 87,978
|
|
RX Partner
|
|
81,778
|
|
161,114
|
|
OTC Partner
|
|
15,946
|
|
11,866
|
|
Research Partner (1)
|
|
833
|
|
-
|
|
Promotional Partner
|
|
12,891
|
|
12,759
|
|
Other
|
|
21
|
|
36
|
|
Total Revenues
|
|
210,071
|
|
273,753
|
|
|
|
|
|
|
Cost of revenues
|
|
91,969
|
|
107,656
|
|
Gross profit
|
|
118,102
|
|
166,097
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
Research and development
|
|
59,809
|
|
39,992
|
|
Patent litigation
|
|
6,472
|
|
10,025
|
|
Selling, general and administrative
|
|
47,898
|
|
39,573
|
|
Total operating expenses
|
|
114,179
|
|
89,590
|
|
|
|
|
|
|
Income from operations
|
|
3,923
|
|
76,507
|
|
|
|
|
|
|
Change in fair value of common stock purchase warrants
|
|
1,234
|
|
(110)
|
|
Gain on repurchase of 3.5% debentures
|
|
1,319
|
|
-
|
|
Other income (2)
|
|
21,576
|
|
73
|
|
Interest income
|
|
4,218
|
|
4,751
|
|
Interest expense
|
|
(2,599)
|
|
(4,113)
|
|
Income before income taxes
|
|
29,671
|
|
77,108
|
|
Provision (Benefit) for income taxes
|
|
10,971
|
|
(48,817)
|
|
Net Income
|
|
$ 18,700
|
|
$ 125,925
|
|
|
|
|
|
|
Net Income per share:
|
|
|
|
|
|
Basic
|
|
$ 0.32
|
|
$ 2.14
|
|
Diluted
|
|
$ 0.31
|
|
$ 2.06
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
Basic
|
|
59,072,752
|
|
58,810,452
|
|
Diluted
|
|
60,782,721
|
|
61,217,470
|
|
|
|
|
|
|
See notes to financial information on page 9.
|
|
|
|
|
|
Impax Laboratories, Inc.
|
|
Condensed Consolidated Balance Sheets
|
|
(amounts in thousands)
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
2008
|
|
2007
|
|
|
(unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ 69,275
|
|
$ 37,462
|
|
Short-term investments
|
|
50,710
|
|
106,034
|
|
Accounts receivable, net
|
|
43,306
|
|
51,503
|
|
Inventory, net
|
|
32,305
|
|
27,568
|
|
Current portion of deferred product manufacturing costs-alliance
agreements
|
|
13,578
|
|
11,923
|
|
Other current assets
|
|
27,294
|
|
35,968
|
|
Total current assets
|
|
236,468
|
|
270,458
|
|
Property, plant and equipment, net
|
|
95,629
|
|
81,223
|
|
Deferred product manufacturing costs-alliance agreements
|
|
93,144
|
|
82,474
|
|
Other long-term assets
|
|
61,767
|
|
54,730
|
|
Goodwill
|
|
27,574
|
|
27,574
|
|
Total assets
|
|
$ 514,582
|
|
$ 516,459
|
|
|
|
|
|
|
Liabilities and Stockholders Equity
|
|
|
|
|
|
Current portion of deferred revenue-alliance agreements
|
|
$ 35,015
|
|
$ 26,381
|
|
Other current liabilities
|
|
74,814
|
|
133,970
|
|
Total current liabilities
|
|
109,829
|
|
160,351
|
|
Long-term debt
|
|
5,990
|
|
20,510
|
|
Deferred revenue-alliance agreements
|
|
225,804
|
|
181,720
|
|
Other long-term liabilities
|
|
13,561
|
|
19,711
|
|
Total liabilities
|
|
355,184
|
|
382,292
|
|
Stockholders equity
|
|
159,398
|
|
134,167
|
|
Total liabilities and stockholders equity
|
|
$ 514,582
|
|
$ 516,459
|
|
|
|
|
|
|
See notes to financial information on page 9.
|
|
|
|
|
Impax Laboratories, Inc.
Presentation of Deferred Revenue and Deferred Product Manufacturing
Cost Data
The following table summarizes the additions to and deductions from the
deferred revenue-alliance agreements and deferred product manufacturing
costs under the Company’s alliance agreements with Teva, DAVA, OTC and
Medicis. This information is used to explain the changes in the
respective balance sheet accounts for the reporting periods presented.
Also the tables set forth the amount of revenue deferred in each period
as well as the amount recognized in the period under the Company’s
modified proportional performance method of revenue recognition for
revenue earned under the alliance agreements with Teva, Dava, and OTC
and straight line revenue recognition for the alliance agreement with
Medicis. The summarized information is derived from the corresponding
tables for each of these separate alliance agreements set forth in the
Alliance Agreement note to the Company’s consolidated financial
statements that will be included in the Company’s Annual Report on Form
10-K for the year ended December 31, 2008.
|
|
Three Months Ended December 31,
|
|
|
2008
|
|
2007
|
|
|
(unaudited)
|
|
(unaudited)
|
|
Deferred revenue:
|
|
|
|
|
|
Beginning balance
|
|
$ 219,938
|
|
$ 210,227
|
|
Deferrals
|
|
54,600
|
|
38,852
|
|
Less amounts recognized
|
|
(13,719)
|
|
(40,978)
|
|
Total deferred revenue-alliance agreements(current and non-current)
|
|
$ 260,819
|
|
$ 208,101
|
|
|
|
|
|
|
Deferred product manufacturing costs:
|
|
|
|
|
|
Beginning balance
|
|
$ 104,350
|
|
$ 91,319
|
|
Deferrals
|
|
10,850
|
|
22,174
|
|
Less amounts amortized
|
|
(8,478)
|
|
(19,096)
|
|
Total deferred product manufacturing costs (current and non-current)
|
|
$ 106,722
|
|
$ 94,397
|
|
|
Twelve Months Ended December 31,
|
|
|
2008
|
|
2007
|
|
|
(unaudited)
|
|
|
|
Deferred revenue:
|
|
|
|
|
|
Beginning balance
|
|
$ 208,101
|
|
$ 178,039
|
|
Deferrals
|
|
151,275
|
|
203,042
|
|
Less amounts recognized
|
|
(98,557)
|
|
(172,980)
|
|
Total deferred revenue-alliance agreements(current and non-current)
|
|
$ 260,819
|
|
$ 208,101
|
|
|
|
|
|
|
Deferred product manufacturing costs:
|
|
|
|
|
|
Beginning balance
|
|
$ 94,397
|
|
$ 72,965
|
|
Deferrals
|
|
50,015
|
|
77,695
|
|
Less amounts amortized
|
|
(37,690)
|
|
(56,263)
|
|
Total deferred product manufacturing costs (current and non-current)
|
|
$ 106,722
|
|
$ 94,397
|
Impax Laboratories, Inc.
Notes to the Financial Information
December 31, 2008
(1) Agreements with Medicis
Pharmaceutical Corporation
Joint Development Agreement
In November 2008, the Company and Medicis Pharmaceutical Corporation
(Medicis) entered into a Joint Development Agreement providing for the
Company and Medicis to collaborate in the development of four generic
dermatology products and an advanced form of SOLODYN® branded
product. Under the Joint Development Agreement, Medicis paid the Company
an upfront fee of $ 40.0 million December 2008. Medicis may also pay the
Company up to $23.0 million upon completion of specified clinical and
regulatory milestones. Revenue received from the provision of research
and development services, including the $40 million upfront payment and
the contingent $23 million milestone payments, will be deferred and
recognized on a straight line basis over the expected period of
performance of the research and development service period. The Company
estimates its expected period of performance to provide research and
development services is 48 months starting in December 2008. To the
extent the Medicis next-generation (new) advanced form SOLODYN® branded
product is commercialized, Medicis will pay the Company royalties based
on its sales of the such product, and the Company will pay Medicis a
profit share of 50% on sales, if any, of the four generic dermatology
products.
License and Settlement Agreement
In November 2008 the Company and Medicis Pharmaceutical Corporation
(Medicis) entered into a License and Settlement Agreement to settle
patent infringement litigation between the Company and Medicis involving
the Company’s generic versions of SOLODYN® 45mg, 90mg and 135mg
products. Under the License and Settlement Agreement, Medicis granted
the Company a license to sell its generic versions of SOLODYN®
45mg, 90mg and 135mg products under its patent. In this regard, the
Medicis License becomes effective on the earlier of (a) November 2011 or
(b) date of the entry of another generic, and to the extent the Company
has sales of its product, the Company is required to pay Medicis a 15%
profit share on sales, if any, of its generic SOLODYN®.
(2) Settlement of Anti-Trust Litigation
In November 2008, the Company entered into an agreement to settle its
antitrust claim against Abbott Laboratories and Fournier Industrie et
Sante related to the Company ANDAs for Fenofibrate Tablets, 160mg and
54mg, generic to TriCor®. Under the terms of the settlement, the Company
received $25.0 million in December 2008.
Settlement – Securities Litigation
In January 2009, the Company entered into an agreement settling the
securities class actions pending in the U.S. District Court for the
Northern District of California. Under the terms of the settlement, the
Company agreed to dismissal of the actions with prejudice, without
admitting the validity of the allegations of any liability, agreed to
pay $9.0 million, of which the Company paid approximately $3.4 million
with the balance funded by the Company’s directors and officers
liability insurance carriers.
Source: Impax Laboratories, Inc.
Impax Laboratories, Inc.
Mark Donohue, 215-933-3526
Sr.
Director, Investor Relations
www.impaxlabs.com