ANAHEIM, Calif., July 30, 2013 /PRNewswire/ -- Questcor
Pharmaceuticals, Inc. (NASDAQ: QCOR) today reported financial
results for the second quarter and six months ended June 30, 2013.
|
Three
Months Ended 06/30/13
|
Three
Months Ended 06/30/12
|
Percentage
Change
|
GAAP Net
Sales
|
$184.6
Million
|
$112.5
Million
|
64%
|
Non-GAAP Net
Sales
|
$196.1
Million
|
$112.5
Million
|
74%
|
GAAP Diluted
EPS
|
$1.12
|
$0.65
|
72%
|
Non-GAAP Diluted
EPS
|
$1.35
|
$0.69
|
96%
|
|
Six Months Ended
06/30/13
|
Six Months Ended
06/30/12
|
Percentage
Change
|
GAAP Net
Sales
|
$319.7
Million
|
$208.4
Million
|
53%
|
Non-GAAP Net
Sales
|
$331.2
Million
|
$208.4
Million
|
59%
|
GAAP Diluted
EPS
|
$1.79
|
$1.23
|
46%
|
Non-GAAP Diluted
EPS
|
$2.13
|
$1.29
|
65%
|
Net sales for the second quarter ended June 30, 2013 were $184.6
million, up 64% from $112.5
million in the second quarter of 2012. The increase was
driven primarily by the expanded usage of H.P. Acthar®
Gel (repository corticotropin injection) by rheumatologists in the
treatment of patients suffering from dermatomyositis, polymyositis,
systemic lupus erythematosus, and rheumatoid arthritis. The
increase in net sales was also driven by increased prescribing by
nephrologists in the treatment of nephrotic syndrome (NS) and by
neurologists in the treatment of multiple sclerosis (MS) relapses
and infantile spasms (IS). GAAP earnings for the second
quarter of 2013 were $1.12 per
diluted common share, compared to $0.65 per diluted common share for last year's
comparable quarter. BioVectra, the company's specialty
manufacturing subsidiary which was acquired in January 2013, had net sales of $7.5 million in the second quarter of 2013.
Net sales for the second quarter include the effect of the
Company's decision to accrue, based on information received in the
quarter, an incremental Medicaid rebate liability of $11.5 million related to Questcor's 2001 entry
into the Medicaid system subsequent to Questcor's acquisition of
Acthar in 2001. The incremental liability covers periods from 2002
to 2009. Due to health care legislation passed in early 2010,
there is no incremental liability for periods subsequent to 2009.
On a non-GAAP basis, excluding this charge, net sales for the
second quarter were $196.1 million,
up 74% over the second quarter of 2012. Non-GAAP earnings for the
second quarter of 2013 were $1.35 per
diluted common share and exclude the incremental rebate liability,
non-cash share-based compensation expense, and depreciation and
amortization expense. Non-GAAP earnings for the year ago quarter
were $0.69 per diluted common share.
The reconciliation between GAAP and non-GAAP financial measures is
provided with the financial tables included with this release.
Questcor shipped 7,050 vials of Acthar during the second quarter
of 2013, up 50 percent compared to 4,710 vials in the year ago
quarter. As the Company has previously disclosed, quarterly vial
shipments are subject to significant variation due to the size and
timing of individual orders received from Questcor's
distributor. The timing of when these orders are received and
filled can significantly affect net sales and net income in any
particular quarter. The Company believes that investors should
consider the Company's results over several quarters when analyzing
the Company's performance.
"Our commercial expansion effort continues, most recently driven
by increasing usage of Acthar among rheumatologists," said
Don M. Bailey, President and CEO of
Questcor. "The foundation for potential additional growth over the
near-, medium- and long-term continues to strengthen. The first
full quarter of our commercial rheumatology effort generated over
300 prescriptions, marking the best Acthar launch into a new
therapeutic area that we have yet experienced. This rapid success
has encouraged us to accelerate our entry into pulmonology, where
we recently announced a pilot commercialization effort for
respiratory manifestations of symptomatic sarcoidosis, a labeled
indication for Acthar. We also continue to assess additional
indications on the Acthar label for other commercial opportunities,
as well as explore the use of Acthar for possible new indications,
as demonstrated by the initiation of our Phase 2 study in
amyotrophic lateral sclerosis (ALS). This is our second phase
2 trial, as we continue to proceed with our trial in diabetic
nephropathy. Additionally, in the second quarter we acquired the
rights to Synacthen®, which will further expand our
melanocortin peptide R&D program. This action provides us a
platform for potential further U.S. growth and the initiation of
international commercial activity for Synacthen and potentially for
Acthar."
"Total new paid prescriptions for Acthar were approximately
2,250 to 2,275 in the second quarter, an increase of about 35%
year-over-year," commented Steve
Cartt, Chief Operating Officer of Questcor. "There were 400
to 405 new paid prescriptions for NS in the quarter, up about 19%
year-over-year. NS prescriptions currently account for around
40% of our Acthar business. During the second quarter there
were 1,285 to 1,295 new paid prescriptions for MS, up about 12%
year-over-year and up 27% sequentially. MS prescriptions currently
represent over a quarter of our Acthar business. New paid
prescriptions for IS were 210 to 215, up 27% year-over-year.
Quite encouragingly, there were also 315 to 320 new paid
Acthar prescriptions for approved rheumatology indications during
the second quarter, which was the first full commercial quarter of
Questcor promoting Acthar in this therapeutic area."
Mr. Cartt continued, "The vial shipment activity and
prescription levels seen in late March and in April extended
through the second quarter. In particular, we are experiencing
solid uptake of Acthar in the approved rheumatology-related
indications dermatomyositis and polymyositis, and we are also
beginning to see a growing number of prescriptions for rheumatoid
arthritis and lupus, both of which are on-label."
The Company believes that insurance coverage for Acthar
continues to remain favorable, when Acthar is prescribed for
on-label indications for patients in need of an additional
FDA-approved treatment alternative.
To allow comparable analysis, the Company has defined "new paid"
prescriptions in the above paragraphs to include prescriptions
covered by commercial carriers, Medicare, Medicaid and Tricare in
all periods regardless of the rebate percentage applicable in those
periods. The numbers are based on internal company estimates and do
not include prescriptions filled through the Acthar free drug
program.
Year-to-Date Financial Results
Net sales for the first six months of 2013 were $319.7 million, with BioVectra contributing
$15.9 million. On a non-GAAP basis,
net sales for the first six months were $331.2 million. Net sales in the first six months
of 2012 were $208.4 million. GAAP
earnings for the first six months of 2013 were $1.79 per diluted common share, compared to
$1.23 per diluted common share for
the comparable period of 2012. Non-GAAP earnings for the six months
ended June 30, 2013 were $2.13 per diluted common share excluding non-cash
share-based compensation expense, depreciation and amortization
expense, and the incremental rebate adjustment. Non-GAAP earnings
for the comparable period of 2012 were $1.29 per diluted common share. The
reconciliation between GAAP and non-GAAP financial measures is
provided with the financial tables included with this release.
Research and Development Progress
"Questcor's continued strong financial performance has enabled
the Company to increase investment in research programs to further
clarify the potential immune-modulating properties of Acthar and
identify Acthar mechanisms of action applicable to other
inflammatory and auto-immune diseases with high unmet medical
need," noted Dr. David Young, Chief
Scientific Officer. "The Company is also identifying new patient
populations in which to evaluate Acthar through clinical studies.
Questcor has funded or has approved funding for approximately 70
research projects, including company-sponsored clinical and
pre-clinical studies and independent physician sponsored
studies."
Research and development (R&D) investment increased 44% to
$12.2 million in the three months
ended June 30, 2013, as compared to
$8.5 million for the year ago period.
R&D investments were $23.0
million for the first six months of 2013, as compared to
$14.2 million for the year ago
period.
Label Enhancement Programs:
- Amyotrophic Lateral Sclerosis (ALS): Questcor commenced
screening patients for enrollment into a dose-ranging Phase 2
clinical trial to evaluate the safety and tolerability of Acthar in
patients with ALS, often referred to as Lou
Gehrig's disease. ALS is a life-threatening, progressive
neurodegenerative disease that affects nerve cells in the brain and
the spinal cord.
- Diabetic Nephropathy: Enrollment continues in a
company-sponsored Phase 2 trial to evaluate the efficacy and safety
of Acthar in patients with diabetic nephropathy, one of the most
common causes of end-stage renal disease in the United States.
Research Regarding Approved Indications:
- Idiopathic Membranous Nephropathy: Enrollment continues
in a company-sponsored Phase 4 trial in idiopathic membranous
nephropathy. Patients enrolled in this study are refractory, or
non-responsive, to current standard therapies or have relapsed
after partial remission on current standard therapies.
- Lupus: Enrollment continues in a company-sponsored
multi-site Phase 4 company-sponsored clinical trial to evaluate the
efficacy and safety of daily Acthar administration over a 6-month
period in patients with persistently active lupus.
- Lupus Exacerbations: Questcor is providing grant support
for a prospective independent investigator initiated study
evaluating Acthar in the treatment of lupus exacerbations. The
Company has been informed by the investigator that this study has
recently been completed.
Planning activities related to the initial evaluation of a
select grouping of potential Synacthen indications are in
process. Questcor will provide further updates on this newly
initiated development program as key activities get underway.
Cash, Share Repurchase Program and Dividends
As of July 26, 2013, Questcor had
cash, cash equivalents and short-term investments of $115.6 million, and restricted cash of
$75.0 million set aside to secure
certain post-closing payment obligations related to Questcor's
acquisition of Synacthen. There were no share repurchases during
the second quarter of 2013 and Questcor had 6.3 million remaining
authorized shares under the Company's existing common stock
repurchase plan. Diluted shares outstanding at June 30, 2013 were 61.5 million shares.
The Company issued its second quarter cash dividend
of $0.25 per share to all shareholders of record at the
close of business on July 22, 2013. The dividend is scheduled
to be paid today, July 30, 2013. Questcor currently intends to
pay regular quarterly cash dividends for the foreseeable
future.
Acthar Label Information
The product label for Acthar includes 19 FDA-approved
indications. Substantially all of the Company's net sales currently
result from Acthar prescriptions for the following on-label
indications of:
- Nephrotic Syndrome (NS): "to induce a diuresis or a
remission of proteinuria in the nephrotic syndrome without uremia
of the idiopathic type or that due to lupus erythematosus." NS can
result from several underlying conditions, and prescribing
physicians indicate that Acthar is most commonly being prescribed
for patients who suffer from NS due to idiopathic membranous
nephropathy, focal segmental glomerulosclerosis (FSGS), IgA
nephropathy, minimal change disease and lupus nephritis.
- Multiple Sclerosis (MS): "for the treatment of acute
exacerbations of multiple sclerosis in adults. Clinical controlled
trials have shown H.P. Acthar Gel to be effective in speeding the
resolution of acute exacerbations of multiple sclerosis. However,
there is no evidence that it affects the ultimate outcome or
natural history of the disease." When Acthar is used, it is
typically prescribed as second line treatment for patients with MS
exacerbations.
- Infantile Spasms (IS): "as monotherapy for the treatment
of infantile spasms in infants and children under 2 years of
age."
- Collagen Diseases: "during an exacerbation or as
maintenance therapy in selected cases of: systemic lupus
erythematosus, systemic dermatomyositis (polymyositis)."
- Rheumatic Disorders: "as adjunctive therapy for
short-term administration (to tide the patient over an acute
episode or exacerbation) in: Psoriatic arthritis, Rheumatoid
arthritis, including juvenile rheumatoid arthritis (selected cases
may require low-dose maintenance therapy), Ankylosing
spondylitis."
Non-GAAP Financial Measures
The Company believes it is important to share non-GAAP financial
measures with investors as these measures may better represent the
ongoing economics of the business and reflect how we manage the
business. Accordingly, management believes investors' understanding
of the Company's financial performance is enhanced as a result of
the disclosure of these non-GAAP financial measures. Non-GAAP
financial measures should not be viewed in isolation, or as a
substitute for, or as superior to, reported GAAP financial
measures. The reconciliation between GAAP and Non-GAAP financial
measures are provided with the financial tables included with this
release.
Conference Call and Webcast Details
The Company will host a conference call and slide presentation
via webcast today, July 30, 2013, at
4:30 p.m. ET/ 1:30 p.m. PT. The call can be accessed three
ways:
- By webcast: At Questcor's investor relations website,
http://ir.questcor.com/
- By telephone: For both "listen-only" participants and those
participants who wish to take part in the question-and-answer
portion of the call, the dial-in number in the U.S. is (877)
354-0215. For participants outside the U.S., the dial-in number is
(253) 237-1173.
- By audio replay: A replay of the conference call will be
available for seven business days following conclusion of the live
call. The telephone dial-in number for U.S. participants is
(855) 859-2056. For participants outside the U.S., the replay
dial-in number is (404) 537-3406. The replay access code for all
callers is 16591264.
About Questcor
Questcor Pharmaceuticals, Inc. is a biopharmaceutical company
focused on the treatment of patients with serious,
difficult-to-treat autoimmune and inflammatory disorders. Questcor
also provides specialty contract manufacturing services to the
global pharmaceutical industry through its wholly-owned subsidiary
BioVectra Inc. Questcor's primary product is H.P. Acthar® Gel
(repository corticotropin injection), an injectable drug that is
approved by the FDA for the treatment of 19 indications. Of these
19 indications, Questcor currently generates substantially all of
its net sales from the following approved indications: the
treatment of proteinuria in the nephrotic syndrome of the
idiopathic type, or NS, the treatment of acute exacerbations of
multiple sclerosis, or MS, in adults, the treatment of infantile
spasms, or IS, in infants and children under two years of age, and
the treatment of certain rheumatology related conditions. With
respect to nephrotic syndrome, the FDA has approved Acthar to
"induce a diuresis or a remission of proteinuria in the nephrotic
syndrome without uremia of the idiopathic type or that due to lupus
erythematosus." Questcor has announced its intent to initiate a
pilot commercialization effort for Acthar for the treatment of
respiratory manifestations of symptomatic sarcoidosis. The
FDA approved package insert for Acthar includes "symptomatic
sarcoidosis" under the heading "Respiratory Diseases".
Questcor is also exploring the possibility of developing markets
for other on-label indications and the possibility of pursuing FDA
approval of additional indications not currently on the Acthar
label where there is high unmet medical need. Questcor also has
agreed to acquire certain international rights for Synacthen®
(tetracosactide) and Synacthen Depot®, and has licensed the right
to develop and seek FDA approval for these products in the United
States. For more information about Questcor, please visit
www.questcor.com.
Note: Except for the historical information contained herein,
this press release contains forward-looking statements that have
been made pursuant to the Private Securities Litigation Reform Act
of 1995. These statements relate to future events or our future
financial performance. In some cases, you can identify
forward-looking statements by terminology such as "believes,"
"continue," "could," "ensuring," "estimates," "expects," "growth,"
"may," "momentum," "plans," "potential," "remain," "should,"
"start," "substantial," "sustainable" or "will" or the negative of
such terms and other comparable terminology. These statements are
only predictions. Actual events or results may differ materially.
Factors that could cause or contribute to such differences include,
but are not limited to, the following:
- Our reliance on Acthar for substantially all of our net sales
and profits;
- Reductions in vials used per prescription resulting from
changes in treatment regimens by physicians or patient compliance
with physician recommendations;
- Our ability to receive high reimbursement levels from third
party payers;
- The complex nature of our manufacturing process and the
potential for supply disruptions or other business
disruptions;
- The lack of patent protection for Acthar; and the possible FDA
approval and market introduction of competitive products;
- Our ability to continue to generate revenue from sales of
Acthar to treat on-label indications associated with NS, MS, IS or
rheumatology-related conditions, and our ability to develop other
therapeutic uses for Acthar;
- Research and development risks, including risks associated with
Questcor's work in the area of NS and Lupus, efforts to develop and
obtain FDA approval of Synacthen, our reliance on third-parties to
conduct research and development, and the ability of research and
development to generate successful results;
- The results of any pending or future litigation, investigations
or claims, including with respect to the investigation by
the United States Attorney's
Office for the Eastern District of Pennsylvania regarding the Company's
promotional practices and litigation brought by certain
shareholders arising from the federal securities laws, currently
pending in the United States District Court for the Central
District of California;
- Our ability to comply with federal and state regulations,
including regulations relating to pharmaceutical sales and
marketing practices;
- Regulatory changes or other policy actions by governmental
authorities and other third parties in connection with U.S. health
care reform or efforts to reduce federal and state government
deficits;
- An increase in the proportion of our Acthar unit sales
comprised of Medicaid-eligible patients and government
entities;
- Our ability to estimate reserves required for Acthar used by
government entities and Medicaid-eligible patients and the impact
that unforeseen invoicing of historical Medicaid prescriptions may
have upon our results;
- Our ability to effectively manage our growth, including the
expansion of our sales forces, planned international expansion, and
our reliance on key personnel;
- Our ability to integrate the BioVectra business with our
business and to manage, and grow, a contract manufacturing
business;
- Our ability to comply with foreign regulations related to the
operation of BioVectra's business and the international sales of
Synacthen;
- The impact to our business caused by economic conditions;
- Our ability to protect our proprietary rights;
- The risk of product liability lawsuits;
- Our ability to successfully enter into, and operate in,
international markets;
- The risk of unfavorable changes in currency exchange
rates;
- Unforeseen business interruptions and security breaches;
- Volatility in Questcor's Acthar shipments, estimated channel
inventory, and end-user demand, as well as volatility in our stock
price;
- Our ability and willingness to continue to pay our quarterly
dividend or make future increases in our quarterly dividend;
and
- Other risks discussed in Questcor's annual report on Form 10-K
for the year ended December 31, 2012
as filed with the Securities and Exchange Commission, or SEC, on
February 27, 2013, and other
documents filed with the SEC.
The risk factors and other information contained in these
documents should be considered in evaluating Questcor's prospects
and future financial performance.
Questcor undertakes no obligation to publicly release the result
of any revisions to these forward-looking statements, which may be
made to reflect events or circumstances after the date of this
release.
For more information, please visit www.questcor.com or
www.acthar.com.
QUESTCOR
PHARMACEUTICALS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
(In thousands, except
net income per share data)
(unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Revenue
|
|
|
|
|
|
|
|
|
Pharmaceutical net
sales
|
|
$
|
177,045
|
|
|
$
|
112,452
|
|
|
$
|
303,817
|
|
|
$
|
208,421
|
|
Contract
manufacturing net sales
|
|
7,528
|
|
|
—
|
|
|
15,885
|
|
|
—
|
|
Total net
sales
|
|
184,573
|
|
|
112,452
|
|
|
319,702
|
|
|
208,421
|
|
Cost of sales
(exclusive of amortization of purchased technology and IPR&D
asset)
|
|
17,221
|
|
|
6,379
|
|
|
33,410
|
|
|
11,900
|
|
Gross
profit
|
|
167,352
|
|
|
106,073
|
|
|
286,292
|
|
|
196,521
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling and
marketing
|
|
37,900
|
|
|
27,609
|
|
|
73,362
|
|
|
49,324
|
|
General and
administrative
|
|
13,126
|
|
|
8,647
|
|
|
25,675
|
|
|
14,089
|
|
Research and
development
|
|
12,240
|
|
|
8,485
|
|
|
23,033
|
|
|
14,150
|
|
Depreciation and
amortization
|
|
1,014
|
|
|
321
|
|
|
2,084
|
|
|
612
|
|
Impairment of purchased
technology
|
|
—
|
|
|
—
|
|
|
719
|
|
|
—
|
|
Total
operating expenses
|
|
64,280
|
|
|
45,062
|
|
|
124,873
|
|
|
78,175
|
|
Income from
operations
|
|
103,072
|
|
|
61,011
|
|
|
161,419
|
|
|
118,346
|
|
Interest and other
(expense) income, net
|
|
20
|
|
|
218
|
|
|
(322)
|
|
|
434
|
|
Foreign currency
transaction loss
|
|
—
|
|
|
—
|
|
|
(488)
|
|
|
—
|
|
Income before income
taxes
|
|
103,092
|
|
|
61,229
|
|
|
160,609
|
|
|
118,780
|
|
Income tax
expense
|
|
33,969
|
|
|
19,724
|
|
|
52,424
|
|
|
38,732
|
|
Net income
|
|
$
|
69,123
|
|
|
$
|
41,505
|
|
|
$
|
108,185
|
|
|
$
|
80,048
|
|
Change in unrealized
gains or losses on available-for-sale securities, net of related
tax effects and changes in foreign currency translation
adjustments.
|
|
(1,480)
|
|
|
(14)
|
|
|
(2,674)
|
|
|
77
|
|
Comprehensive
income
|
|
$
|
67,643
|
|
|
$
|
41,491
|
|
|
$
|
105,511
|
|
|
$
|
80,125
|
|
|
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.17
|
|
|
$
|
0.68
|
|
|
$
|
1.86
|
|
|
$
|
1.28
|
|
Diluted
|
|
$
|
1.12
|
|
|
$
|
0.65
|
|
|
$
|
1.79
|
|
|
$
|
1.23
|
|
Shares used in
computing net income per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
58,938
|
|
|
61,112
|
|
|
58,075
|
|
|
62,308
|
|
Diluted
|
|
61,498
|
|
|
64,113
|
|
|
60,581
|
|
|
65,305
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per share of common stock
|
|
$
|
0.25
|
|
|
$
|
—
|
|
|
$
|
0.50
|
|
|
$
|
—
|
|
Reconciliation of
Non-GAAP Adjusted Financial Disclosure
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
June
30,
|
June
30,
|
|
2013
|
2012
|
2013
|
2012
|
Adjusted net
income
|
$83,323
|
$44,244
|
$128,987
|
$84,514
|
Share-based
compensation expense (1)
|
(4,382)
|
(2,521)
|
(8,546)
|
(4,054)
|
Depreciation and
amortization expense (2)
|
(1,882)
|
(218)
|
(3,131)
|
(412)
|
Interest expense
associated with contingent consideration (3)
|
(194)
|
0
|
(391)
|
0
|
Compensation expense
associated with BV Trust (4)
|
(193)
|
0
|
(339)
|
0
|
Foreign currency
transaction loss (5)
|
0
|
0
|
(328)
|
0
|
Medicaid adjustment
for 2002 - 2009 (6)
|
(7,717)
|
0
|
(7,751)
|
0
|
BioVectra purchase
price adjustment (7)
|
168
|
0
|
169
|
0
|
Impairment of
purchased technology (8)
|
0
|
0
|
(485)
|
0
|
Net income -
GAAP
|
$69,123
|
$41,505
|
$108,185
|
$80,048
|
|
|
|
|
|
Adjusted net income
per share - basic
|
$1.41
|
$0.72
|
$2.20
|
$1.36
|
Share-based
compensation expense (1)
|
(0.07)
|
(0.04)
|
(0.15)
|
(0.07)
|
Depreciation and
amortization expense (2)
|
(0.03)
|
0.00
|
(0.05)
|
(0.01)
|
Interest expense
associated with contingent consideration (3)
|
0.00
|
—
|
(0.01)
|
—
|
Compensation expense
associated with BV Trust (4)
|
0.00
|
—
|
(0.01)
|
—
|
Foreign currency
transaction loss (5)
|
—
|
—
|
(0.01)
|
—
|
Medicaid adjustment
for 2002 - 2009 (6)
|
(0.13)
|
—
|
(0.13)
|
—
|
BioVectra purchase
price adjustment (7)
|
0.00
|
—
|
0.00
|
—
|
Impairment of
purchased technology (8)
|
—
|
—
|
(0.01)
|
—
|
Net income per share
- basic
|
$1.17
|
$0.68
|
$1.86
|
$1.28
|
|
|
|
|
|
Adjusted net income
per share - diluted
|
$1.35
|
$0.69
|
$2.13
|
$1.29
|
Share-based
compensation expense (1)
|
(0.07)
|
(0.04)
|
(0.14)
|
(0.06)
|
Depreciation and
amortization expense (2)
|
(0.03)
|
0.00
|
(0.05)
|
(0.01)
|
Interest expense
associated with contingent consideration (3)
|
0.00
|
—
|
(0.01)
|
—
|
Compensation expense
associated with BV Trust (4)
|
0.00
|
—
|
(0.01)
|
—
|
Foreign currency
transaction loss (5)
|
—
|
—
|
(0.01)
|
—
|
Medicaid adjustment
for 2002 - 2009 (6)
|
(0.13)
|
—
|
(0.13)
|
—
|
BioVectra purchase
price adjustment (7)
|
0.00
|
—
|
0.00
|
—
|
Impairment of
purchased technology (8)
|
—
|
—
|
(0.01)
|
—
|
Net income per share
- diluted
|
$1.12
|
$0.65
|
$1.79
|
$1.23
|
|
|
|
|
|
Net sales -
Questcor
|
$177,045
|
$112,452
|
$303,817
|
$208,421
|
Net sales -
BioVectra
|
7,528
|
0
|
15,885
|
0
|
Consoldiated net
sales
|
184,573
|
112,452
|
319,702
|
208,421
|
Medicaid
adjustment
|
11,500
|
0
|
11,500
|
0
|
Adjusted consolidated
net sales
|
$196,073
|
$112,452
|
$331,202
|
$208,421
|
|
|
|
|
|
Notes to
Reconciliation of Non-GAAP Adjusted Financial
Disclosure
|
Net income per share
– basic and diluted may not foot due to rounding.
|
Use of Non-GAAP
Financial Measures
|
Our "non-GAAP
adjusted net income" excludes the following items from GAAP net
income:
|
1. Share-based
compensation expense.
|
2. Depreciation and
amortization expense, including amortization expense on our
purchased intangibles.
|
3. Interest expense
associated with the net present value adjustment on our contingent
consideration.
|
4. Compensation
expense associated with the BV Trust agreement.
|
5. Foreign
currency transaction loss.
|
6. Medicaid
adjustment for prior period 2002 - 2009
|
7. BioVectra
purchase price adjustment related to a labor rebate received in the
second quarter 2013
|
8. Impairment
of purchased technology related to our acquisition of
Doral.
|
QUESTCOR
PHARMACEUTICALS, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In thousands, except
share information)
(unaudited)
|
|
|
|
June 30,
2013
|
|
December 31,
2012
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
81,765
|
|
|
$
|
80,608
|
|
Short-term
investments
|
|
10,221
|
|
|
74,705
|
|
Total cash, cash
equivalents and short-term investments
|
|
91,986
|
|
|
155,313
|
|
Accounts receivable,
net of allowances for doubtful accounts of $345 and $0 at June 30,
2013 and December 31, 2012, respectively
|
|
70,659
|
|
|
61,417
|
|
Inventories, net of
allowances of $1,040 and $52 at June 30, 2013 and December 31,
2012, respectively
|
|
16,828
|
|
|
9,909
|
|
Current portion of
restricted cash
|
|
25,000
|
|
|
—
|
|
Prepaid expenses and
other current assets
|
|
5,082
|
|
|
4,900
|
|
Deferred tax
assets
|
|
4,908
|
|
|
5,737
|
|
Total current
assets
|
|
214,463
|
|
|
237,276
|
|
Property and
equipment, net
|
|
33,704
|
|
|
2,073
|
|
Purchased technology,
net
|
|
—
|
|
|
1,493
|
|
Goodwill
|
|
20,811
|
|
|
—
|
|
Other Intangibles,
net
|
|
32,130
|
|
|
—
|
|
In process R&D
asset, net
|
|
175,777
|
|
|
—
|
|
Restricted cash, less
current portion
|
|
50,000
|
|
|
—
|
|
Deposits and other
assets
|
|
1,324
|
|
|
70
|
|
Deferred tax
assets
|
|
11,519
|
|
|
11,519
|
|
Total assets
|
|
$
|
539,728
|
|
|
$
|
252,431
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
12,365
|
|
|
$
|
13,069
|
|
Accrued
compensation
|
|
10,520
|
|
|
21,300
|
|
Sales-related
reserves
|
|
35,590
|
|
|
37,376
|
|
Dividend
payable
|
|
15,000
|
|
|
—
|
|
Accrued
royalties
|
|
16,862
|
|
|
9,802
|
|
Current portion of
contingent consideration in conjunction with acquisition of
BioVectra
|
|
4,364
|
|
|
—
|
|
Current portion of in
process R&D liability in conjunction with acquisition of
Synacthen
|
|
25,000
|
|
|
—
|
|
Income taxes
payable
|
|
4,277
|
|
|
7,360
|
|
Current portion of
long-term debt
|
|
1,662
|
|
|
—
|
|
Other accrued
liabilities
|
|
4,776
|
|
|
1,492
|
|
Total current
liabilities
|
|
130,416
|
|
|
90,399
|
|
Long-term debt, less
current portion
|
|
15,125
|
|
|
—
|
|
Contingent
consideration in conjunction with acquisition of
BioVectra
|
|
25,399
|
|
|
—
|
|
In process R&D
liability in conjunction with acquisition of Synacthen
|
|
91,046
|
|
|
—
|
|
Non current deferred
tax liability
|
|
11,351
|
|
|
—
|
|
Other non current
liabilities
|
|
4,143
|
|
|
203
|
|
Total
liabilities
|
|
277,480
|
|
|
90,602
|
|
Shareholders'
equity:
|
|
|
|
|
Preferred stock, no
par value, 5,334,285 shares authorized; none outstanding
|
|
—
|
|
|
—
|
|
Common stock, no par
value, 105,000,000 shares authorized, 59,993,867 and 58,544,206
shares issued and outstanding at June 30, 2013 and
December 31, 2012, respectively
|
|
40,733
|
|
|
15,938
|
|
Retained
earnings
|
|
224,149
|
|
|
145,851
|
|
Accumulated other
comprehensive (loss) income
|
|
(2,634)
|
|
|
40
|
|
Total shareholders'
equity
|
|
262,248
|
|
|
161,829
|
|
Total liabilities and
shareholders' equity
|
|
$
|
539,728
|
|
|
$
|
252,431
|
|
QUESTCOR
PHARMACEUTICALS, INC.
CONDENSDED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In
thousands)
(unaudited)
|
|
|
|
|
|
Six Months
Ended
|
|
|
June
30,
|
|
|
2013
|
|
2012
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net income
|
|
$
|
108,185
|
|
|
$
|
80,048
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Share-based
compensation expense
|
|
12,679
|
|
|
6,014
|
|
Deferred income
taxes
|
|
962
|
|
|
234
|
|
Amortization of
investments
|
|
245
|
|
|
928
|
|
Depreciation and
amortization
|
|
4,645
|
|
|
612
|
|
Impairment of
purchased technology and goodwill
|
|
719
|
|
|
—
|
|
Loss on disposal of
property and equipment
|
|
95
|
|
|
10
|
|
Changes in operating
assets and liabilities, net of business acquisition:
|
|
|
|
|
Accounts
receivable
|
|
(2,883)
|
|
|
(18,873)
|
|
Inventories
|
|
4,270
|
|
|
(1,191)
|
|
Prepaid income
taxes
|
|
—
|
|
|
2,948
|
|
Prepaid expenses and
other current assets
|
|
1,175
|
|
|
381
|
|
Accounts
payable
|
|
(2,569)
|
|
|
6,780
|
|
Accrued
compensation
|
|
(10,780)
|
|
|
(106)
|
|
Accrued
royalties
|
|
7,060
|
|
|
1,015
|
|
Sales-related
reserves
|
|
(1,786)
|
|
|
4,605
|
|
Income taxes
payable
|
|
(2,684)
|
|
|
—
|
|
Contingent
consideration
|
|
1,082
|
|
|
—
|
|
Other accrued
liabilities
|
|
2,555
|
|
|
920
|
|
Other non-current
liabilities
|
|
21
|
|
|
(221)
|
|
Net
cash flows provided by operating activities
|
|
122,991
|
|
84,104
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
Purchase of property
and equipment
|
|
(1,138)
|
|
|
(548)
|
|
Purchase of
short-term investments
|
|
(52,001)
|
|
|
(96,631)
|
|
Proceeds from
maturities of short-term investments
|
|
116,206
|
|
|
139,438
|
|
Restricted
cash
|
|
(75,000)
|
|
|
—
|
|
Acquisition of
BioVectra, net of cash acquired
|
|
(46,692)
|
|
|
—
|
|
Acquisition of
Synacthen
|
|
(60,000)
|
|
|
—
|
|
Proceeds from sale of
Doral
|
|
700
|
|
|
—
|
|
Deposits and other
assets
|
|
—
|
|
|
(1)
|
|
Net
cash flows (used in) / provided by investing activities
|
|
(117,925)
|
|
42,258
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
Repayment of funded
long-term debt
|
|
(613)
|
|
|
—
|
|
Repayment of other
long-term debt
|
|
(212)
|
|
|
—
|
|
Income tax benefit
realized from share-based compensation plans
|
|
5,173
|
|
|
4,261
|
|
Dividends
paid
|
|
(14,887)
|
|
|
—
|
|
Issuance of common
stock, net
|
|
6,943
|
|
|
2,663
|
|
Repurchase of common
stock
|
|
—
|
|
|
(185,093)
|
|
Net
cash flows used in financing activities
|
|
(3,596)
|
|
|
(178,169)
|
|
Effect of cash on
changes in exchange rates
|
|
(313)
|
|
|
—
|
|
Increase
(decrease) in cash and cash equivalents
|
|
1,157
|
|
|
(51,807)
|
|
Cash and cash
equivalents at beginning of period
|
|
80,608
|
|
|
88,469
|
|
Cash and cash
equivalents at end of period
|
|
$
|
81,765
|
|
|
$
|
36,662
|
|
Supplemental
Disclosures of Cash Flow Information:
|
|
|
|
|
Cash paid for
interest
|
|
$
|
380
|
|
|
$
|
12
|
|
Cash paid for income
taxes
|
|
$
|
49,234
|
|
|
$
|
31,285
|
|
Supplemental
Disclosures of Investing and Financing Activities:
|
|
|
|
|
Dividend
payable
|
|
$
|
15,000
|
|
|
$
|
—
|
|
In conjunction
with the acquisition of BioVectra at January 18,
2013:
|
|
|
|
|
Incremental fair
value of assets acquired, net
|
|
$
|
80,698
|
|
|
|
Less: fair value of
contingent consideration
|
|
(30,383)
|
|
|
|
|
|
50,315
|
|
|
|
Loss on foreign
exchange rate
|
|
488
|
|
|
|
Total cash paid for
acquisition of BioVectra
|
|
$
|
50,803
|
|
|
|
SOURCE Questcor Pharmaceuticals, Inc.