Par Pharmaceutical Companies Reports Cash EPS and GAAP EPS of $0.75 for First Quarter 2010
For the first quarter ended March 31, 2010, Par reported total revenues of $291.9 million and net income of $26.3 million, or $0.75 per diluted share, which includes a one-time milestone payment of $5 million from Optimer Pharmaceuticals. On an adjusted cash basis, which excludes amortization expenses, net income was $26.2 million, or $0.75 per diluted share for the first quarter 2010. This is compared to reported revenues of $204.0 million and net income of $16.1 million, or $0.48 per diluted share for the same period in 2009, which included several one-time items. On an adjusted cash basis, net income for the first quarter 2009 was $20.3 million, or $0.60 per diluted share.
First Quarter Highlights
Key Product Sales
Total net revenues for the first quarter 2010, were $291.9 million, up $87.9 million, or 43.1%, from the first quarter 2009, principally driven by limited competition in metoprolol, sumatriptan and meclizine, as well as the launches of nateglinide and clonidine in the third quarter 2009, and tramadol ER in the fourth quarter 2009.
Gross margin for the first quarter 2010 increased due primarily to higher sales of metoprolol coupled with the new product launches in 2009, including clonidine and tramadol ER, and improving sumatriptan margin. These gains were slightly tempered by the initial negative impact on price resulting from the recently enacted U.S. healthcare reform, worth approximately $0.9 million.
Research and development (R&D) expenses decreased to $4.7 million in the first quarter 2010 compared to $7.2 million in the first quarter 2009 due to lower outside development costs and the non-recurrence of milestone payments to MonoSol Rx.
Selling, general and administrative (SG&A) expenses for the first quarter 2010 increased to $41.2 million compared to $33.0 million in the first quarter 2009. This increase primarily reflects on-going expenditures supporting Strativa sales and marketing, driven chiefly by an increase in the field force and other activities related to the re-launch of Nascobal B12 Nasal Spray, as well as pre-commercialization costs for Zuplenz(TM) and Oravig(TM) in 2009.
Cash and cash equivalents and marketable securities aggregate balance as of March 31, 2010, was $196.8 million.
Product and Pipeline Update
In February 2010, Strativa Pharmaceuticals announced that due to a FDA foreign travel restriction to India, the FDA had been unable to perform an inspection of the clinical and analytical sites for the bioequivalence study related to Zuplenz(TM). No issues related to the study data or film product were identified. The FDA restriction on foreign travel in India has been subsequently lifted and the inspection of the clinical and analytical sites for the bioequivalence study related to Zuplenz has been completed. Strativa expects to respond to the FDA's Complete Response Letter shortly.
In April 2010, Par Pharmaceutical and its development partner MN Pharmaceuticals of Turkey announced that they entered into a settlement agreement with sanofi-aventis that resolves patent litigation related to their generic version EloxatinŽ (oxaliplatin injection) product. Under the terms of the settlement, Par would begin selling the generic version of Eloxatin in August 2012, or earlier under certain circumstances. Eloxatin had combined U.S. sales of approximately $993 million for the twelve months ended December 31, 2009, according to IMS Health.
In April 2010, Par Pharmaceutical announced that the U.S. District Court for the District of Delaware has ruled in favor of Par in its challenge of the University of Missouri's patents relating to omeprazole/sodium bicarbonate capsules (20 mg/1.1 g and 40 mg/1.1 g) and powders for oral suspension (20 mg/1.68 g and 40 mg/1.68 g), which are listed in the Orange Book for Santarus's ZegeridŽ product. Par has been awarded 180 days of marketing exclusivity, commencing at launch, for being the first to file an ANDA containing a paragraph IV certification for the product. Par currently has tentative approval on both strengths of the generic Zegerid capsule product. Par anticipates that plaintiffs will appeal the court's decision, and therefore Par intends to review its options with respect to its omeprazole/sodium bicarbonate ANDA.
In April 2010, Strativa Pharmaceuticals announced that it received FDA approval for Oravig(TM) (miconazole) buccal tablets for the treatment of oropharyngeal candidiasis (OPC). Strativa intends to launch Oravig in the third quarter of 2010.
Yesterday, Par Pharmaceutical announced that it has entered into an exclusive licensing agreement with Glenmark Generics to market the generic version of Merck's ZetiaŽ, a cholesterol modifying agent with annual U.S. sales of approximately $1.4 billion, according to IMS Health data. Under the terms of the licensing and supply agreement, Par has made a payment to Glenmark for exclusive rights to market, sell and distribute ezetimibe in the U.S. The companies will share in profits from the sales of the product. Glenmark believes it is the first to file an ANDA containing a paragraph IV certification for the product, which would potentially provide 180 days of marketing exclusivity. On April 24, 2009, Glenmark was granted tentative approval for its product by the U.S. FDA.
Par currently has approximately 26 ANDAs pending with the FDA, 13 of which Par believes to be first-to-file opportunities with a brand value of approximately $7.7 billion.
Par has scheduled a conference call for Tuesday, May 4 at 9:00am EDT to discuss results for the first quarter 2010. Par invites investors and the general public to listen to a webcast of the conference call. Access to the live webcast can be made via the Company's website at http://www.parpharm.com and will be available for two weeks. The dial-in number is 866-578-5784 for domestic callers and 617-213-8056 for international callers. The access number is 11777532. A replay of the conference call will be available commencing approximately one hour after the call. The replay dial-in number is 888-286-8010 for domestic callers and 617-801-6888 for international callers. The access number is 29044500.
Par believes it prepared its condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) and pursuant to accounting requirements of the Securities and Exchange Commission. In an effort to provide investors with additional information regarding Par's results and to provide a meaningful period-over-period comparison of Par's financial performance, the Company sometimes uses non-GAAP financial measures as defined by the Securities and Exchange Commission. The differences between the U.S. GAAP and non-GAAP financial measures are reconciled in an attached schedule. In presenting comparable results, the Company discloses non-GAAP financial measures when it believes such measures will be useful to investors in evaluating Par's underlying business performance. Management uses the non-GAAP financial measure "Adjusted Net Income" to evaluate Par's financial performance against internal budgets and targets. In addition, management internally reviews Par's results excluding the impact of certain items, as it believes that these non-GAAP financial measures are useful for evaluating Par's core operating results and facilitating comparison across reporting periods. In addition, the accompanying press release presents "Cash EPS", which is a non-GAAP financial measure. Cash EPS represents net income adjusted for amortization expense related to intangible assets. Par believes that this measure is utilized by industry analysts in comparing Par's results to that of similar companies within our industry. Importantly, Par believes non-GAAP financial measures should be considered in addition to, and not in lieu of, U.S. GAAP financial measures. Par's non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.
Par Pharmaceutical Companies, Inc. is a US-based specialty pharmaceutical company. Through its wholly-owned subsidiary's two operating divisions, Par Pharmaceutical and Strativa Pharmaceuticals, it develops, manufactures and markets higher-barrier-to entry generic drugs and niche, innovative proprietary pharmaceuticals. For press release and other company information, visit www.parpharm.com.
Safe Harbor Statement
Certain statements in this news release constitute "forward-looking statements" within the meaning of 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 essentially forward-looking and, as such, are subject to known and unknown risks, uncertainties and contingencies, many of which are beyond the control of the Company, which could cause actual results and outcomes to differ materially from those expressed herein. Risk factors that might affect such forward-looking statements include those set forth in Item 1A of the Company's most recent Annual Report on Form 10-K in other of the Company's filings with the SEC from time to time, including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and on general industry and economic conditions. Any forward-looking statements included in this news release are made as of the date hereof only, based on information available to the Company as of the date hereof, and, subject to any applicable law to the contrary, the Company assumes no obligation to update any forward-looking statements.
-- Metoprolol: For the first quarter 2010, net sales of metoprolol succinate were $183.3 million, an increase of 12% from the fourth quarter 2009. Par remained the exclusive supplier of the 100mg and 200mg strengths of metoprolol succinate throughout the first quarter 2010. Par is the authorized generic for all strengths of AstraZeneca's ToprolŽ XL.
SOURCE Par Pharmaceutical Companies
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