--Total Net Revenue Increased 18%--
HAYWARD, Calif.--(BUSINESS WIRE)--May. 5, 2009--
Impax Laboratories, Inc. (NASDAQ: IPXL) today reported net
income increased 382% to $2.2 million during the first quarter of 2009,
compared with net income of $460,000 in the prior year period, driven by
an 18% increase in total revenue to $58.9 million and a 23% increase in
gross profit to $32.7 million in the first quarter of 2009. Earnings per
diluted share for the first quarter of 2009 increased to $0.04, compared
with earnings per diluted share of $0.01 in the prior year period.
Larry Hsu, Ph.D., president and chief executive officer of Impax
Laboratories, said: “Our positive first quarter financial results in
combination with a number of recent encouraging events are confirmation
that we continue to execute the right long-term strategy. We recently
experienced positive achievements with both of our leading brand
candidates, IPX056 and IPX066. We also continue to receive optimistic
news concerning several 2008 ANDA filings as we now believe we are sole
first-to-file on generic versions of Doryx® 150 mg and Renvela® 800 mg.”
Dr. Hsu continued, “The investments we are making in research and
development are expected to drive future growth of the business by
achieving additional first-to-file generic product opportunities.
Throughout 2009 and beyond, we plan to continue to invest in R&D across
both our Global Pharmaceuticals and Impax Pharmaceuticals divisions to
drive long-term growth. We are off to a strong start for 2009 and will
remain focused on achieving our current year financial outlook, ANDA
filing goals and continued progress on brand initiatives.”
Total revenues for the first quarter of 2009 increased 18% to $58.9
million, compared to the prior year period, due primarily to an increase
in Global label product revenues, partially offset by a decline in Rx
Partner and OTC Partner revenues. Global label revenues increased 70% to
$39.1 million primarily due to higher demand for fenofibrate products,
the generic versions of Lofibra® capsules, and an increase in sales of
generic Wellbutrin® 150XL. Private label product revenue increased 171%
to $1.3 million primarily due to sales of D24
loratadine/pseudoephedrine, the generic version of Claritin® D 24-hour,
as a result of a new supply agreement. Research Partner revenue
contributed $2.6 million to the increase in total revenues, resulting
from a Joint Development Agreement entered into during the fourth
quarter of 2008.
Rx Partner revenues for the first quarter of 2009 declined $8.1 million
to $10.7 million primarily due to the Company’s cessation of sales of
generic OxyContin® (through our DAVA alliance agreement) after the first
quarter of 2008, and a reduction in sales of generic Wellbutrin® XL
300mg (through our Teva alliance agreement) due to price and market
share erosion from increased marketplace competition. Sales of generic
OxyContin® were made pursuant to a license from the patent holder which
by its terms expired in January 2008. OTC Partner revenue decreased $2.6
million to $1.9 million primarily attributable to the expiration of the
Company’s obligation to supply Schering-Plough with product effective
December 31, 2008.
Gross profit for the first quarter of 2009 increased 23% to $32.7
million and gross margin improved more than 200 basis points to 55%
compared to the prior year period. The increase in gross profit and
gross margin was primarily due to stronger margins in the Global label
product business, partially offset by the cessation of higher margin
sales of generic OxyContin® during the first quarter of 2008 as
discussed above.
Total research and development expenses for the first quarter of 2009
increased $2.7 million to $16.1 million, compared to the prior year
period, in line with our expanded R&D development initiative noted
above. Generic project activity increased $1.4 million to $10.5 million
primarily due to increased spending on bio-equivalency studies,
acquisition of active pharmaceutical ingredients and additional R&D
personnel. The brand product R&D activity increased $1.3 million to $5.5
million due to higher spending on clinical trials, additional R&D
personnel and research supplies.
Patent litigation expenses for the first quarter of 2009 declined
$700,000 or 40%, compared to the prior year period due to settlements of
litigation that was active in the first quarter of 2008.
Selling, general and administrative expenses for the first quarter of
2009 increased $1.1 million, or 11%, compared to the prior year period.
The increase was primarily attributable to higher salary and benefit
expenses driven by the addition of several executive level personnel and
an increase in professional fees primarily related to the examination
and review of the Company’s financial statements for the year ended
December 31, 2008 and other public-company reporting requirements.
Interest income in the first quarter of 2009 declined $1.4 million to
$149,000, compared to the prior year period. The decline was due to
lower average cash and short-term investment balances during the first
quarter of 2009 resulting from the use of funds to repurchase at a
discount a significant portion of the Company’s 3.5% Debentures in
August and September 2008 and the repayment in full of bank term loans
in May 2008.
Interest expense in the first quarter of 2009 declined $1.5 million to
$294,000, compared to the prior year period due to reduced amounts of
average debt outstanding as a result of the repurchase of Debentures and
repayment of the bank term loans noted above.
Cash and short-term investments, net of interest-bearing debt, decreased
to $78.3 million as of March 31, 2009, compared with $99.6 million as of
December 31, 2008. The decrease in cash from year-end 2008 was primarily
due to customary changes in assets and liabilities, including the timing
of collection of accounts receivables from first quarter 2009 sales.
Cash flow from operations before such changes in working capital items
was a positive $2.2 million.
Segment Information
The Company has two reportable segments, the Global Pharmaceuticals
Division (generic products) and the Impax Pharmaceuticals Division
(brand products).
Global Pharmaceuticals Division revenues in the first quarter of 2009
increased 19% over the prior year period primarily driven by the 70%
increase in Global label product sales as noted above. Gross profit
increased 23% resulting in a gross margin of 58%, compared to a gross
margin of 56% in the prior year period. These positive improvements
resulted in a 31%, or $4.4 million increase in income before taxes in
the first quarter of 2009.
Impax Pharmaceuticals Division revenues in the first quarter of 2009,
derived from the co-promotion of Carbatrol®, a product of Shire Plc,
increased slightly over the prior year period, while gross profit
declined slightly due to modestly higher costs. The Company is currently
investing in R&D to develop brand products which provide longer product
life cycles and the potential for significantly higher profit margins
than generic products. In the first quarter of 2009, the Company’s
planned increased investment in R&D resulted in a loss of $6.3 million
in income before taxes.
The following table highlights the quarterly financial performance for
each of these divisions.
|
(amounts in thousands) - unaudited
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2009
|
|
Global
Division (a)
|
|
Impax
Division (b)
|
|
Corporate
and Other
|
|
Total
Company
|
|
Revenue, net
|
|
$
|
55,629
|
|
$
|
3,284
|
|
|
$
|
-
|
|
|
$
|
58,913
|
|
Cost of revenue
|
|
|
23,233
|
|
|
3,017
|
|
|
|
-
|
|
|
|
26,250
|
|
Research and development
|
|
|
10,542
|
|
|
5,514
|
|
|
|
-
|
|
|
|
16,056
|
|
Patent litigation
|
|
|
1,017
|
|
|
-
|
|
|
|
-
|
|
|
|
1,017
|
|
Income (loss) before provision for income taxes
|
|
$
|
18,609
|
|
|
(6,287
|
)
|
|
$
|
(8,267
|
)
|
|
$
|
4,055
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2008
|
|
Global
Division (a)
|
|
Impax
Division (b)
|
|
Corporate
and Other
|
|
Total
Company
|
|
Revenue, net
|
|
$
|
46,678
|
|
$
|
3,252
|
|
|
$
|
-
|
|
|
$
|
49,930
|
|
Cost of revenue
|
|
|
20,410
|
|
|
2,968
|
|
|
|
-
|
|
|
|
23,378
|
|
Research and development
|
|
|
9,128
|
|
|
4,211
|
|
|
|
-
|
|
|
|
13,339
|
|
Patent litigation
|
|
|
1,701
|
|
|
-
|
|
|
|
-
|
|
|
|
1,701
|
|
Income (loss) before provision for income taxes
|
|
$
|
14,176
|
|
|
(4,403
|
)
|
|
$
|
(8,745
|
)
|
|
$
|
1,028
|
(a) Global Pharmaceuticals Division includes Global, Private
Label, Rx Partner, OTC Partner, Research Partner and Other product sales
(b) Impax Pharmaceuticals Division includes Promotional
Partner product sales
2009 Financial Outlook
The Company previously disclosed its 2009 financial outlook for the year
ending December 31, 2009, on February 26, 2009. For the full year 2009,
the Company continues to forecast:
-
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 $40 million and $24 million
allocated to generic and brand R&D, respectively.
-
Patent litigation expenses of approximately $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 2:00 p.m. EST on May
5, 2009 through 11:59 p.m. EST May 12, 2009 and can be accessed by
dialing (800) 642-1687 in the United States or (706) 645-9291
internationally and using the access code 97387383.
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
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 the Company’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 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 described in
our Annual Report on Form 10-K for the year ended December 31, 2008.
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
|
|
|
|
|
(amounts in thousands, except share and per share data)
|
|
Three Months Ended March 31,
|
|
|
2009
|
|
2008
|
|
|
(unaudited)
|
|
(unaudited)
|
|
Revenues:
|
|
|
|
(as adjusted)(c)
|
|
Global product sales, net
|
|
$
|
39,121
|
|
|
$
|
22,979
|
|
|
Private Label (a)
|
|
|
1,297
|
|
|
|
478
|
|
|
Rx Partner
|
|
|
10,736
|
|
|
|
18,805
|
|
|
OTC Partner
|
|
|
1,858
|
|
|
|
4,409
|
|
|
Research Partner (b)
|
|
|
2,611
|
|
|
|
-
|
|
|
Promotional Partner
|
|
|
3,284
|
|
|
|
3,252
|
|
|
Other
|
|
|
6
|
|
|
|
7
|
|
|
Total Revenues
|
|
|
58,913
|
|
|
|
49,930
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
26,250
|
|
|
|
23,378
|
|
|
Gross profit
|
|
|
32,663
|
|
|
|
26,552
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
Research and development
|
|
|
16,056
|
|
|
|
13,339
|
|
|
Patent litigation
|
|
|
1,017
|
|
|
|
1,701
|
|
|
Selling, general and administrative
|
|
|
11,455
|
|
|
|
10,362
|
|
|
Total operating expenses
|
|
|
28,528
|
|
|
|
25,402
|
|
|
Income from operations
|
|
|
4,135
|
|
|
|
1,150
|
|
|
Change in fair value of common stock purchase warrants
|
|
|
-
|
|
|
|
44
|
|
|
Other income
|
|
|
65
|
|
|
|
61
|
|
|
Interest income
|
|
|
149
|
|
|
|
1,537
|
|
|
Interest expense
|
|
|
(294
|
)
|
|
|
(1,764
|
)
|
|
Income before income taxes
|
|
|
4,055
|
|
|
|
1,028
|
|
|
Provision for income taxes
|
|
|
1,836
|
|
|
|
568
|
|
|
Net Income
|
|
$
|
2,219
|
|
|
$
|
460
|
|
|
|
|
|
|
|
Net Income per share:
|
|
|
|
|
|
Basic
|
|
$
|
0.04
|
|
|
$
|
0.01
|
|
|
Diluted
|
|
$
|
0.04
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
Basic
|
|
|
59,711,133
|
|
|
|
58,833,979
|
|
|
Diluted
|
|
|
60,222,215
|
|
|
|
61,126,768
|
|
|
|
|
Impax Laboratories, Inc.
|
|
Condensed Consolidated Balance Sheets
|
|
|
|
|
|
(amounts in thousands)
|
March 31,
|
|
December 31,
|
|
2009
|
|
2008
|
|
(unaudited)
|
|
(as adjusted) (c)
|
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
$
|
38,044
|
|
$
|
69,275
|
|
Short-term investments
|
|
60,311
|
|
|
50,710
|
|
Accounts receivable, net
|
|
61,813
|
|
|
43,306
|
|
Inventory, net
|
|
29,759
|
|
|
32,305
|
|
Current portion of deferred product manufacturing costs-alliance
agreements
|
|
14,136
|
|
|
13,578
|
|
Current portion of deferred income taxes
|
|
21,607
|
|
|
17,900
|
|
Prepaid expenses and other current assets
|
|
4,371
|
|
|
9,298
|
|
Total current assets
|
|
230,041
|
|
|
236,372
|
|
Property, plant and equipment, net
|
|
95,914
|
|
|
95,629
|
|
Deferred product manufacturing costs-alliance agreements
|
|
94,839
|
|
|
93,144
|
|
Deferred income taxes, net
|
|
51,871
|
|
|
52,551
|
|
Other assets
|
|
11,892
|
|
|
9,017
|
|
Goodwill
|
|
27,574
|
|
|
27,574
|
|
Total assets
|
$
|
512,131
|
|
$
|
514,287
|
|
|
|
|
|
Liabilities and Stockholders Equity
|
|
|
|
|
Current liabilities
|
|
|
|
|
Current portion of long-term debt, net
|
$
|
14,536
|
|
$
|
14,416
|
|
Accounts payable
|
|
11,795
|
|
|
12,797
|
|
Accrued expenses
|
|
34,811
|
|
|
41,360
|
|
Current portion of deferred revenue-alliance agreements
|
|
37,173
|
|
|
35,015
|
|
Current portion of accrued exclusivity period fee payments due
|
|
3,000
|
|
|
6,000
|
|
Total current liabilities
|
|
101,315
|
|
|
109,588
|
|
Long-term debt
|
|
5,531
|
|
|
5,990
|
|
Deferred revenue-alliance agreements
|
|
228,164
|
|
|
225,804
|
|
Other liabilities
|
|
14,217
|
|
|
13,255
|
|
Total liabilities
|
|
349,227
|
|
|
354,637
|
|
Stockholders equity
|
|
162,904
|
|
|
159,650
|
|
Total liabilities and stockholders equity
|
$
|
512,131
|
|
$
|
514,287
|
|
|
|
Impax Laboratories, Inc.
|
|
Consolidated Statement of Cash Flows
|
|
|
|
|
(amounts in thousands)
|
|
Three Months Ended March 31,
|
|
|
2009
|
|
2008
|
|
|
(unaudited)
|
|
(unaudited)
|
|
Cash flows from operating activities:
|
|
|
|
(as adjusted) (c)
|
|
Net income
|
|
$
|
2,219
|
|
|
$
|
460
|
|
|
Adjustments to reconcile net income to net cash used in operating
activities:
|
|
|
|
|
|
Depreciation
|
|
|
2,544
|
|
|
|
2,174
|
|
|
Amortization of discount and deferred financing costs on-3.5%
Debentures
|
|
|
150
|
|
|
|
851
|
|
|
Amortization of deferred financing costs on Wachovia Credit Agreement
|
|
|
-
|
|
|
|
37
|
|
|
Bad debt expense
|
|
|
23
|
|
|
|
39
|
|
|
Deferred income taxes
|
|
|
(3,027
|
)
|
|
|
163
|
|
|
Provision for uncertain tax positions
|
|
|
218
|
|
|
|
-
|
|
|
Deferred revenue - Rx Partners
|
|
|
13,837
|
|
|
|
57,149
|
|
|
Deferred product manufacturing costs - Rx Partners
|
|
|
(9,008
|
)
|
|
|
(10,887
|
)
|
|
Deferred revenue recognized - Rx Partners
|
|
|
(10,736
|
)
|
|
|
(18,805
|
)
|
|
Amortization deferred product manufacturing costs - Rx Partners
|
|
|
5,982
|
|
|
|
7,454
|
|
|
Deferred revenue - OTC Partners
|
|
|
886
|
|
|
|
5,166
|
|
|
Deferred product manufacturing costs - OTC Partners
|
|
|
(911
|
)
|
|
|
(5,150
|
)
|
|
Deferred revenue recognized - OTC Partners
|
|
|
(1,858
|
)
|
|
|
(4,409
|
)
|
|
Amortization deferred product manufacturing costs - OTC Partners
|
|
|
1,684
|
|
|
|
4,213
|
|
|
Deferred revenue - Research Partners
|
|
|
5,000
|
|
|
|
-
|
|
|
Deferred revenue recognized - Research Partners
|
|
|
(2,611
|
)
|
|
|
-
|
|
|
Payments on exclusivity period fee
|
|
|
(3,000
|
)
|
|
|
(3,000
|
)
|
|
Payments on accrued litigation settlements
|
|
|
(549
|
)
|
|
|
(549
|
)
|
|
Share-based compensation expense
|
|
|
1,437
|
|
|
|
1,625
|
|
|
Accretion of interest income on short-term investments
|
|
|
(36
|
)
|
|
|
(1,146
|
)
|
|
Change in fair value of stock purchase warrants
|
|
|
-
|
|
|
|
(44
|
)
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
Accounts receivable
|
|
|
(18,530
|
)
|
|
|
(36,245
|
)
|
|
Inventory
|
|
|
2,546
|
|
|
|
861
|
|
|
Prepaid expenses and other assets
|
|
|
2,042
|
|
|
|
1,210
|
|
|
Accounts payable and accrued expenses
|
|
|
(7,119
|
)
|
|
|
(5,615
|
)
|
|
Other liabilities
|
|
|
734
|
|
|
|
530
|
|
|
Net cash used in operating activities
|
|
$
|
(18,083
|
)
|
|
$
|
(3,918
|
)
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Purchase of short-term investments
|
|
$
|
(27,810
|
)
|
|
$
|
(91,710
|
)
|
|
Maturities of short-term investments
|
|
|
18,245
|
|
|
|
82,306
|
|
|
Purchases of property, plant and equipment
|
|
|
(3,881
|
)
|
|
|
(4,241
|
)
|
|
Net cash used in investing activities
|
|
$
|
(13,446
|
)
|
|
$
|
(13,645
|
)
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Repayment of long-term debt
|
|
$
|
(36
|
)
|
|
$
|
(66
|
)
|
|
Proceeds from exercise of stock options and purchases under the ESPP
|
|
|
334
|
|
|
|
154
|
|
|
Net cash provided by financing activities
|
|
$
|
298
|
|
|
$
|
88
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
$
|
(31,231
|
)
|
|
$
|
(17,475
|
)
|
|
Cash and cash equivalents, beginning of period
|
|
$
|
69,275
|
|
|
$
|
37,462
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
38,044
|
|
|
$
|
19,987
|
|
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 Teva, DAVA, OTC and Medicis alliance
agreements. This information is used to explain the changes in the
respective balance sheet accounts of deferred revenue-alliance
agreements and deferred product manufacturing costs-alliance agreements.
The table sets 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 Teva, DAVA, and OTC alliance agreements and straight
line revenue recognition for the Medicis alliance agreement. The
summarized information for the three months ended March 31, 2009 is
derived from the corresponding tables for each of these separate
alliance agreements set forth in the Alliance Agreement footnote to the
Company’s unaudited interim consolidated financial statements for the
quarter ended March 31, 2009.
|
|
|
|
(amounts in thousands)
|
|
Three Months Ended March 31,
|
|
|
2009
|
|
2008
|
|
|
(unaudited)
|
|
(unaudited)
|
|
Deferred revenue:
|
|
|
|
|
|
Beginning balance
|
|
$
|
260,819
|
|
|
$
|
208,101
|
|
|
Deferrals
|
|
|
19,723
|
|
|
|
62,315
|
|
|
Less amounts recognized
|
|
|
(15,205
|
)
|
|
|
(23,214
|
)
|
|
Total deferred revenue-alliance agreements(current and non-current)
|
|
$
|
265,337
|
|
|
$
|
247,202
|
|
|
|
|
|
|
|
Deferred product manufacturing costs:
|
|
|
|
|
|
Beginning balance
|
|
$
|
106,722
|
|
|
$
|
94,397
|
|
|
Deferrals
|
|
|
9,919
|
|
|
|
16,037
|
|
|
Less amounts amortized
|
|
|
(7,666
|
)
|
|
|
(11,667
|
)
|
|
Total deferred product manufacturing costs (current and non-current)
|
|
$
|
108,975
|
|
|
$
|
98,767
|
|
Impax Laboratories, Inc.
Notes to the Financial
Information
March 31, 2009
|
(a)
|
|
Private Label represents revenue recognized related to shipments of
generic pharmaceutical products to customers who sell the product to
third parties under their own label; this product is not sold under
the Company’s Global label.
|
|
|
|
|
(b)
|
|
Research Partner represents revenue recognized under a Joint
Development Agreement with Medicis Pharmaceutical Corporation.
|
|
|
|
|
(c)
|
|
As required, Financial Accounting Standards Board Staff Position APB
14-1, “Accounting for Convertible Debt Instruments That May Be
Settled in Cash upon Conversion (Including Partial Cash Settlement)”
was applied on a retrospective basis, beginning with the year ended
December 31, 2007.
|
Source: Impax Laboratories, Inc.
Impax Laboratories, Inc.
Mark
Donohue, Sr. Director, Investor Relations
(215) 933-3526
www.impaxlabs.com