-- Bendeka market share of 96% --
-- Revenue grows 22% year-over-year to $50.1
million --–
-- Board of Directors approves additional share
buyback program of $100 million --–
-- Company enters into $150 million Amended and
Restated Credit Agreement --–
-- Implements initial expense reduction program
--
Eagle Pharmaceuticals, Inc. (“Eagle” or “the Company”)
(Nasdaq:EGRX) today announced its financial results for the three
and six months ended June 30, 2017. Highlights of and subsequent to
the second quarter of 2017 include:
Business Highlights:
- Bendeka® total market share of 96%, as
of June 30, 2017;
- Sales of RYANODEX® grew 54% to $5.2
million during the second quarter of 2017 compared to $3.4 million
in Q2 2016, and up from $4.4 million in the first quarter of 2017
and $3.9 million during the fourth quarter of 2016, and also added
120 new accounts for a total of 1300 accounts stocking
RYANODEX;
- Received a Complete Response Letter
(CRL) from the US Food and Drug Administration (FDA) regarding the
Company’s 505(b)(2) New Drug Application for RYANODEX (dantrolene
sodium) for the treatment of exertional heat stroke (EHS), in
conjunction with external cooling methods;
- Requested a “Type A” meeting with the
FDA regarding the CRL for RYANODEX for EHS;
- Board of Directors approved an
additional share buyback program of $100 million;
- Entered into a $150 million Amended and
Restated Credit Agreement comprised of a senior secured $100
million, three-year term loan facility at LIBOR + 225 basis points
and a senior secured $50 million, three-year revolving credit
facility, adding $100 million to the Company’s available credit
capacity. JPMorgan was the lead arranger. Cantor Fitzgerald acted
as a financial advisor to the Company;
- Implemented an initial expense
reduction program, and have identified $10 million in expense
reductions on an annualized basis; these expense reduction
initiatives will begin impacting the Company’s P&L in 2018;
and,
- 2017 SG&A and R&D guidance
remains unchanged:
- FY 2017 SG&A expense expected to be
in the range of $65 - $68 million, or $50 - $53 million excluding
stock based compensation and other non-cash items; and,
- FY 2017 R&D expense expected to be
in the range of $31 - $35 million, or $26 - $30 million excluding
stock based compensation, reflecting ongoing expenses for the
anticipated commencement and completion of the fulvestrant and
RYANODEX for Ecstasy and methamphetamine intoxication clinical
trials, as well as second sourcing of drug product and API
manufacturers for fulvestrant.
Financial Highlights:
Second Quarter
- Total revenue for the second quarter of
2017 grew 22% to $50.1 million compared to $40.9 million in the
second quarter of 2016;
- Product sales increased to $12.7
million compared to $9.6 million in Q2 2016;
- Royalty revenue increased to $37.4
million compared to $31.3 million in Q2 2016;
- Q2 2017 income before income tax
provision was $5.9 million;
- Q2 2017 net income was $4.5 million, or
$0.30 per basic and $0.28 per diluted share, compared to a net
income of $13.1 million, or $0.84 per basic and $0.80 per diluted
share in Q2 2016;
- Q2 2017 Adjusted Non-GAAP net income
was $7.9 million, or $0.52 per basic and $0.49 per diluted share,
compared to Adjusted Non-GAAP net income of $15.9 million, or $1.02
per basic and $0.97 per diluted share in the prior year quarter.
For a full reconciliation of Adjusted Non-GAAP net income to the
most comparable GAAP financial measures, please see the tables at
the end of this press release; and,
- Cash and cash equivalents were $55.4
million and accounts receivable were $53.2 million as of June 30,
2017.
“We continue to be pleased with our top line growth, driven by
Bendeka and RYANODEX, with sequential and year-over-year growth in
revenue. While we are extremely disappointed by the CRL that we
received for RYANODEX for exertional heat stroke, we remain
committed to gaining approval for this important indication and
have requested a meeting with the FDA. We believe this will provide
us with further clarity regarding EHS. We intend to manage our cash
prudently by investing in our robust pipeline and reducing our
SG&A spend. We remain committed to advancing fulvestrant, and
RYANODEX for EHS, and Ecstasy and methamphetamine intoxication, for
which we plan to initiate trials shortly. The Board’s approval of
the periodic return of capital to shareholders through an
additional share repurchase program reflects our belief in the
potential of our business to continue to deliver value over the
long term,” stated Scott Tarriff, Chief Executive Officer of Eagle
Pharmaceuticals.
Second Quarter 2017 Financial Results
Total revenue for the three months ended June 30, 2017 was $50.1
million, as compared to $40.9 million for the three months ended
June 30, 2016. A summary of total revenue is outlined below:
Three Months Ended June 30, 2017
2016 Revenue: Product sales $
12,704 $ 9,607 Royalty revenue 37,404 31,311 Total revenue 50,108
40,918
Product sales increased to $12.7 million on net product sales of
Bendeka, RYANODEX, docetaxel injection non-alcohol formulation, and
Argatroban, offset by a decrease in net product sales of
diclofenac-misoprostol. Royalty revenue increased to $37.4 million,
as a result of the increased sales of Bendeka.
Research and development expenses increased to $6.7 million in
the three months ended June 30, 2017, compared to $3.8 million in
the prior year quarter. The increase was due to continued spending
on the Company’s R&D pipeline.
SG&A expenses increased to $23.7 million in the second
quarter of 2017 compared to $12.0 million in the three months ended
June 30, 2016. Sales and marketing pre-launch related expenses
accounted for the bulk of the increase for the commercial launch of
RYANODEX for EHS.
An income tax provision of $1.4 million was recorded during the
second quarter of 2017.
Net income for the second quarter of 2017 was $4.5 million, or
$0.30 per basic share and $0.28 per diluted share, compared to net
income of $13.1 million, or $0.84 per basic and $0.80 per diluted
share in the three months ended June 30, 2016, due to the factors
discussed above.
Adjusted Non-GAAP net income for the second quarter of 2017 was
$7.9 million, or $0.52 per basic and $0.49 per diluted share,
compared to Adjusted Non-GAAP net income of $15.9 million or $1.02
per basic and $0.97 per diluted share in the prior year quarter.
For a full reconciliation of Adjusted Non-GAAP net income to the
most comparable GAAP financial measures, please see the tables at
the end of this press release. Our Adjusted Non-GAAP diluted EPS of
$0.49 would have been $0.81, if we excluded pre-launch expenses of
$5.9 million and Spectrum sales force expenses of $2.3 million.
Liquidity
As of June 30, 2017, the Company had $55.4 million in cash and
cash equivalents and $53.2 million in net accounts
receivable, $39.0 million of which was due from Teva. This
represents an increase of $13.7 million in cash and cash
equivalents and net accounts receivable compared to December 31,
2016. The Company had no outstanding debt.
As part of our stock repurchase plan, we purchased $25.3 million
worth of our shares in the first six months of 2017 and have now
repurchased $62.3 million, or 896,746 shares since the beginning of
the third quarter of 2016. We are expanding our share buyback
program by an additional $100 million.
Conference Call
As previously announced, Eagle management will host its second
quarter 2017 conference call as follows:
Date Wednesday,
August 9, 2017 Time 8:30 A.M. EDT Toll free (U.S.) 888-632-3382
International 785-424-1677 Webcast (live and replay)
www.eagleus.com, under the “Investor Relations” section
A replay of the conference call will be available for one week
after the call's completion by dialing 800-388-6197 (US) or
402-220-1115 (International) and entering conference call ID
EGRXQ217. The webcast will be archived for 30 days at the
aforementioned URL.
About Eagle Pharmaceuticals, Inc.
Eagle is a specialty pharmaceutical company focused on
developing and commercializing injectable products that address the
shortcomings, as identified by physicians, pharmacists and other
stakeholders, of existing commercially successful injectable
products. Eagle’s strategy is to utilize the FDA's 505(b)(2)
regulatory pathway. Additional information is available on the
Company’s website at www.eagleus.com.
Forward-Looking Statements
This press release contains forward-looking information within
the meaning of the Private Securities Litigation Reform Act of
1995, as amended, and other securities laws. Forward-looking
statements are statements that are not historical facts. Words and
phrases such as “anticipated,” “forward,” “will,” “may,” “remain,”
“potential,” “prepare,” “expected,” “believe,” “plan,” “near
future,” “belief,” and similar expressions are intended to identify
forward-looking statements. These statements include, but are not
limited to, statements regarding future events including, but not
limited to: the Company’s initiation of an expense reduction
program and its anticipated impact on expenses; the Company’s plans
for gaining approval of the label expansion of RYANODEX to treat
EHS patients and for the treatment of Ecstasy and methamphetamine
intoxication, including the request for a meeting with the FDA
relating thereto and the anticipated results of such meeting; the
Company’s plans for the development of fulvestrant; the Company's
ability to continue to deliver value over the long term; and the
Company’s timing and ability to repurchase additional shares of the
Company's common stock, if any, under its share repurchase program.
All of such statements are subject to certain risks and
uncertainties, many of which are difficult to predict and generally
beyond Eagle’s control, that could cause actual results to differ
materially from those expressed in, or implied or projected by, the
forward-looking information and statements. Such risks include, but
are not limited to: whether the Company will incur unforeseen
expenses or liabilities or other market factors; whether the FDA
will ultimately approve RYANODEX for the treatment of EHS and
Ecstasy and methamphetamine intoxication; whether the Company can
continue to make progress with the development of fulvestrant;
fluctuations in the trading volume and market price of shares of
the Company's common stock, general business and market conditions
and management's determination of alternative needs and uses of the
Company's cash resources all of which may affect the Company's
long-term performance and the share repurchase program; the success
of our commercial relationship with Teva and the parties’ ability
to work effectively together; whether Eagle and Teva will
successfully perform their respective obligations under the license
agreement; difficulties or delays in manufacturing; the
availability and pricing of third party sourced products and
materials; the outcome of litigation involving any of our products
or that may have an impact on any of our products, successful
compliance with FDA and other governmental regulations applicable
to product approvals, manufacturing facilities, products and/or
businesses; general economic conditions; the strength and
enforceability of our intellectual property rights or the rights of
third parties; competition from other pharmaceutical and
biotechnology companies and the potential for competition from
generic entrants into the market; the timing of product launches;
the successful marketing of our products; the risks inherent in the
early stages of drug development and in conducting clinical trials;
and other factors that are discussed in Eagle’s Annual Report on
Form 10-K for the year ended December 31, 2016, as filed with the
U.S. Securities and Exchange Commission (SEC) on March 15, 2017 and
its other filings with the SEC. Readers are cautioned not to place
undue reliance on these forward-looking statements that speak only
as of the date hereof, and we do not undertake any obligation to
revise and disseminate forward-looking statements to reflect events
or circumstances after the date hereof, or to reflect the
occurrence of or non-occurrence of any events.
Non-GAAP Financial Performance Measures
In addition to financial information prepared in accordance with
U.S. GAAP, this press release also contains adjusted net income and
adjusted earnings per share from continuing operations attributable
to Eagle Pharmaceuticals. The Company believes these measures
provide investors and management with supplemental information
relating to operating performance and trends that facilitate
comparisons between periods and with respect to projected
information.
Adjusted net income from continuing operations excludes
share-based compensation expense, depreciation, amortization of
acquired intangible assets, changes in contingent purchase price,
non-cash interest expense and tax adjustments. The Company believes
these non-GAAP financial measures help indicate underlying trends
in the Company’s business and are important in comparing current
results with prior period results and understanding projected
operating performance. Non-GAAP financial measures provide the
Company and its investors with an indication of the Company’s
baseline performance before items that are considered by the
Company not to be reflective of the Company’s ongoing results. See
the attached Reconciliations of GAAP to Adjusted Net Income and
Adjusted Earnings per Share for explanations of the amounts
excluded and included to arrive at adjusted net income and adjusted
earnings per share amounts for the three and six month periods
ended June 30, 2017 and 2016.
These adjusted measures are non-GAAP and should be considered in
addition to, but not as a substitute for, the information prepared
in accordance with U.S. GAAP. The Company strongly encourages
investors to review its consolidated financial statements and
publicly-filed reports in their entirety and cautions investors
that the non-GAAP measures used by the Company may differ from
similar measures used by other companies, even when similar terms
are used to identify such measures.
-- Financial tables follow –
EAGLE PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands,
except per share amounts) June 30,
2017 December 31, 2016 (unaudited) ASSETS
Current assets: Cash and cash equivalents $ 55,385 $ 52,820
Accounts receivable 53,230 42,194 Inventories 3,587 2,739 Prepaid
expenses and other current assets 11,664
11,357 Total current assets 123,866 109,110 Property and
equipment, net 3,768 3,316 Intangible assets, net 31,949 33,372
Goodwill 39,743 39,743 Deferred tax asset, net 20,275 28,643 Other
assets 578 136 Total assets $ 220,179
$ 214,320
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $ 12,148 $ 14,716
Accrued expenses 18,680 25,237 Current portion of contingent
consideration 1,125 1,012 Total current
liabilities 31,953 40,965 Contingent consideration, less current
portion 22,864 22,129 Commitments and contingencies
Stockholders' equity: Preferred stock, 1,500,000 shares
authorized and no shares issued or outstanding as of June 30, 2017
and December 31, 2016 — — Common stock, $0.001 par value;
50,000,000 shares authorized; 16,065,987 and 15,890,862 issued as
of June 30, 2017 and December 31, 2016, respectively 16 16
Additional paid in capital 225,892 213,872 Retained earnings
(Accumulated deficit) 1,768 (25,659 ) Treasury stock, at cost,
896,746 and 566,838 shares as of June 30, 2017 and December 31,
2016 (62,314 ) (37,003 ) Total stockholders' equity
165,362 151,226 Total liabilities and
stockholders' equity $ 220,179 $ 214,320
EAGLE PHARMACEUTICALS,
INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In
thousands, except share and per share amounts)
(unaudited) Three Months Ended June
30, Six Months Ended June 30, 2017 2016
2017 2016 Revenue: Product sales $
12,704 $ 9,607 $ 27,990 $ 23,729 Royalty revenue 37,404 31,311
73,911 40,779 License and other income — —
25,000 6,000 Total revenue
50,108 40,918 126,901 70,508
Operating expenses: Cost of
product sales 8,910 7,181 19,675 19,948 Cost of royalty revenue
4,910 4,292 12,140 6,114 Research and development 6,684 3,799
14,209 9,320 Selling, general and administrative 23,702 11,990
42,279 24,118 Gain on sale of asset — —
— (1,750 ) Total operating expenses
44,206 27,262 88,303
57,750 Income from operations 5,902 13,656 38,598 12,758
Interest income 14 30 17 51 Interest expense (40 ) (3
) (67 ) (4 ) Total other income (26 )
27 (50 ) 47
Income before income tax
provision 5,876 13,683 38,548 12,805 Income tax provision
(1,373 ) (584 ) (11,121 ) (603 )
Net
Income $ 4,503 $ 13,099 $ 27,427 $ 12,202
Earnings per share attributable to common stockholders:
Basic $ 0.30 $ 0.84 $ 1.80 $ 0.78 Diluted $ 0.28 $ 0.80 $ 1.70 $
0.74 Weighted average number of common shares outstanding: Basic
15,219,777 15,636,387 15,238,729 15,636,387 Diluted 16,100,615
16,466,020 16,135,276 16,526,596
EAGLE PHARMACEUTICALS, INC. RECONCILIATION
OF GAAP TO ADJUSTED NON-GAAP NET INCOME AND ADJUSTED
NON-GAAP EARNINGS PER SHARE (In thousands, except share and
per share amounts) (unaudited)
Three Months Ended June 30, Six Months Ended June
30, 2017 2016 2017 2016 Net
income from operations - GAAP $ 4,503 $ 13,099 $ 27,427 $ 12,202
Before tax adjustments: Cost of product revenues:
Amortization of acquired intangible assets (1) 306 156 612 260 Gain
on sale of asset (2) - - - (1,750 ) Research and development:
Share-based compensation expense 962 665 2,023 1,372 Selling,
general and administrative: Share-based compensation expense 2,735
1,755 5,867 3,917 Amortization of acquired intangible assets (3)
405 - 811 - Changes in contingent purchase price (4) 422 236 848
395 Depreciation 236 156 432 296 Other: Non-cash interest expense
40 - 67 - Tax adjustments (5) (1,699 ) (127 ) (3,559 ) (211 )
Adjusted Non-GAAP net income $
7,910 $ 15,940 $ 34,528 $ 16,481
Adjusted Non-GAAP earnings per share Basic $ 0.52 $ 1.02 $ 2.27 $
1.05 Diluted $ 0.49 $ 0.97 $ 2.14 $ 1.00 Weighted number of common
shares outstanding: Basic 15,219,777 15,636,387 15,238,729
15,636,387 Diluted 16,100,615 16,466,020 16,135,276 16,526,596
______________________________________________________________
Explanation of Adjustments: (1) Amortization of intangible
assets for Ryanodex and Docetaxel. (2) Gain on divestiture of
diclofenac-misoprostol. (3) Amortization of intangible assets for
Eagle Biologics. (4) Changes in the fair value of contingent
consideration (Docetaxel and Eagle Biologics). (5) Reflects the
estimated tax effect of the pretax adjustments. The Company
maintained a valuation allowance on our tax assets through the
third quarter of 2016 due to historical tax operating losses. The
adjustment for the 2016 periods reflects the tax which would have
been recorded during these periods.
EAGLE PHARMACEUTICALS
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP EBITDA (In
thousands) (unaudited)
Three Months Ended June 30, Six Months Ended June 30,
Twelve Months Ended
December 31,
Twelve Months Ended June
30,
2017 2016 2017 2016 2016
2017 Net income from operations - GAAP $ 4,503 $
13,099 $ 27,427 $ 12,202 $ 81,453 $ 96,678 Add back:
Interest expense (income), net 26 (27 ) 50 (47 ) (76 ) 21 Provision
for income taxes 1,373 584 11,121 603 (28,026 ) (17,508 )
Depreciation and amortization 947 312 1,855 556 1,589 2,888
Add back: Stock-based compensation 3,697 2,420 7,890 5,289 9,768
12,369 Changes in contingent purchase price 422 236 848 395 957
1,410 Gain on sale of asset - - - (1,750 ) (1,750 ) -
Adjusted Non-GAAP EBITDA
$ 10,968 $ 16,624 $ 49,191 $ 17,248 $ 63,915
$ 95,858
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170809005323/en/
Investor Relations for Eagle Pharmaceuticals,
Inc.:In-Site Communications, Inc.Lisa M. Wilson,
212-452-2793lwilson@insitecony.com
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