FAIRFIELD, N.J., Nov. 8 Bradley Pharmaceuticals,Inc. (NYSE: BDY) announced today that it has filed with the Securities andExchange Commission its Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2007.
Bradley reported that net sales for the quarter ended September 30, 2007were approximately $33.6 million, a decrease of $1.6 million, or 5%, from netsales of $35.2 million for the quarter ended September 30, 2006. The Companyhad a net loss of $(1.2) million for the 2007 quarter, or $(0.07) per share ona fully diluted basis, based upon approximately 17.0 million sharesoutstanding, compared to net income of $3.8 million, or $0.23 per share on afully diluted basis, based upon approximately 16.5 million shares outstandingfor the same period last year.
In April 2007, the Company implemented a returns and inventoryoptimization plan designed to reduce future returns by decreasing customerinventory in the channel and to ship products with increased shelf-life towholesalers by improving product production planning. The Company believesthe increase in gross prescription sales in the Third Quarter of 2007 comparedto the Second Quarter of 2007 indicates a greater portion of the currentdemand is being satisfied through current quarter sales rather than inventoryin the channel and that the implementation of the plan contributed to lowergross prescription sales in the Second Quarter of 2007 compared to those inprevious quarters. As outlined in the table below, gross prescription demandhas outpaced sales in the most recent quarters, indicating a portion of thedemand, particularly in the Second Quarter of 2007, was satisfied by inventoryin the channel rather than through new sales. Pursuant to the returns andinventory optimization plan, the Company estimates it had reduced inventory ofall products in the distribution channel from $36.4 million at December 31,2006, to $33.2 million at March 31, 2007 and to $27.4 million at June 30,2007. Although weeks of inventory on hand for the primary wholesale customerscontinued to decrease at September 30, 2007, the dollar value of inventory ofall products in the distribution channel increased from the Second Quarter of2007 to $29.3 million primarily due to sales of DECONAMINE(R) in the ThirdQuarter of 2007, which the Company previously had on backorder due to aninability to secure active ingredient. DECONAMINE(R) inventory in the channelwas $2.3 million at September 30, 2007 compared to $.1 million at June 30,2007. The following table is a comparison of the gross prescription demand,gross prescription sales, the returns provision and net sales for the lastseven quarters ($ in millions):
With a balance sheet return reserve of $22.5 million, 77% of the inventoryin the distribution channel is reserved for as of September 30, 2007.
Doak Dermatologics, led by its core branded products of ADOXA(R),KERALAC(R)/ KEROL(TM), SOLARAZE(R), ZODERM(R), LIDAMANTLE(R), and ROSULA(R),accounted for 77% of our net sales for the quarter ended September 30, 2007,while Kenwood Therapeutics, and its core branded products of PAMINE(R),ANAMANTLE HC(R), PERANEX(TM) HC, ELESTRIN(TM) and FLORA-Q(R), accounted for19% of our net sales for the quarter ended September 30, 2007 and A. Aarons,our generic subsidiary, accounted for 4% of our net sales.
Our net sales for the quarter ended September 30, 2007 were adverselyaffected by generic competition, leading to declines in the acne/rosaceaproducts, particularly in the ADOXA(R) product line, the gastrointestinalproducts, particularly in the ANAMANTLE HC(R) and PAMINE(R) product lines, andlower profit sharing revenues as reported to us by Par PharmaceuticalCompanies, Inc. Partially offsetting the revenue declines were higher salesof the actinic keratosis product SOLARAZE(R), revenue from A. Aarons, highersales of the respiratory product DECONAMINE(R) and sales of recentlyin