INSYS Therapeutics, Inc. (NASDAQ:INSY) (“INSYS” or “the company”),
today reported financial results for its third quarter ended Sept.
30, 2017.
OVERALL HIGHLIGHTS
- Gross revenue was $48.9 million, resulting in net revenue of
$30.7 million
- Net revenue was unfavorably impacted by approximately $5
million due to product returns
- Total R&D investment was $19.6 million
- Accrued minimum liability of $150.0 million paid over five
years in connection with ongoing Department of Justice (DOJ)
investigation
- Net loss totaled $166.3 million, which included DOJ accrual, or
($2.30) per basic and diluted share
- Launched SYNDROS® (dronabinol) oral solution, first and only
FDA-approved liquid dronabinol, generating $0.7M of revenue in
first two months
- Filed New Drug Application (NDA) for novel formulation of
buprenorphine as sublingual spray for management of
moderate-to-severe acute pain
- Completed pharmacokinetics (PK) study of proprietary intranasal
naloxone spray formulation for treatment of opioid overdose
“Earlier this year, we took meaningful, strategic steps to
restore trust with our key stakeholders, including patients,
clinicians, regulators, and investors,” said Saeed Motahari,
president and chief executive officer of INSYS Therapeutics. “The
past few months have only strengthened our commitment to move
forward and continue our efforts to address unmet medical needs. In
the third quarter, our team soundly executed against the
organization’s strategic initiatives and we made strong progress to
transform and diversify our business over the long term. This
included further work to stabilize our SUBSYS® product through the
signing of additional managed care contracts. These wins should
help solidify the product’s base revenue beginning in 2018. We also
continued to realize the benefits of our strong pipeline as we
brought our second commercial product to market and delivered on
several of our R&D commitments, including the early filing of
our NDA for buprenorphine as a sublingual spray. I am pleased with
our progress to date across the business and recognize there is
still more to be done.”
Mr. Motahari concluded, “As part of our effort to broaden the
company’s capabilities, we’ve expanded and upgraded our
fully-integrated manufacturing facility in Round Rock, Texas over
the last year. The expansion component of the project is
complete, and the related upgrade will be finished by the end of
the year. This facility will be a distinct competitive advantage
for us when it is complete, as we will be one of the only companies
in the United States that can manufacture synthetic cannabinoids
ranging from clinical to commercial scale. Further, it will allow
us to continue to pursue partnership opportunities with supportive
institutions, including those in academia and the scientific
community, all of whom are currently looking to further the science
of cannabinoids.”
Financial & Operating Highlights
- Net revenue for the third quarter of 2017 was $30.7 million,
compared to $57.8 million for the third quarter of 2016. The
results reflect a decline in SUBSYS® prescription volumes due to
ongoing softness in overall demand in the TIRF category, and was
partially offset by $0.7 million in revenues from the recently
launched SYNDROS® product.
- Gross margin was 75.6% for the third quarter of 2017, compared
to 91.9% in the same period of 2016. Gross margin was negatively
impacted by product returns and inventory expiration.
- Sales and marketing investment was $12.8 million during the
third quarter of 2017, compared to $16.7 million for the third
quarter of 2016. The reduction was driven by cost management in
light of lower revenue.
- Research and development investment increased to $19.6 million
for the third quarter of 2017, compared to $16.5 million for the
same period in 2016, reflecting the company’s commitment to its
robust new product pipeline including filing fees associated with
our NDA for buprenorphine.
- General and administrative expense decreased to $15.7 million
for the third quarter of 2017 from $17.7 million for the third
quarter of 2016, driven by a stock compensation charge taken in the
third quarter of 2016, and a reduction in outside legal
expenses.
- Income tax benefit was $9.0 million for the third quarter of
2017, compared to a benefit of $0.4 million during the third
quarter of 2016.
- The company accrued an aggregate reserve of $150.0
million in connection with the DOJ investigation.
- Net loss for the third quarter of 2017 was $166.3 million, or
($2.30) per basic and diluted share, compared to net income of $2.9
million, or $0.04 per basic and diluted share, for the third
quarter of 2016.
- Adjusted EBITDA loss for the third quarter of 2017 was $18.4
million, compared to Adjusted EBITDA of $12.2 million in the
prior-year quarter. The reconciliation of net income to Adjusted
EBITDA is included at the end of this news release.
- The company had $177.2 million in cash, cash equivalents, and
short-term and long-term investments; no debt; and $106.0 million
in stockholders’ equity as of Sept. 30, 2017.
Webcast InformationA conference call is
scheduled for 8:30 a.m. Eastern Standard Time on Nov. 2, 2017, to
discuss the financial and operational results for the third quarter
of fiscal year 2017. Investors, analysts and members of the media
interested in listening to the live presentation are encouraged to
join a webcast of the call available through the INVESTORS section
of the company’s website at http://www.insysrx.com. Interested
parties may also participate in the call by dialing 844-263-8304
(from inside the U.S.) or 213-358-0958 (from outside the U.S.). A
replay of the conference call will be available a few hours after
the event through the website’s INVESTORS section, under the NEWS
& EVENTS tab for “Presentations.”
About INSYSINSYS Therapeutics is a specialty
pharmaceutical company that develops and commercializes innovative
drugs and novel drug delivery systems of therapeutic molecules that
improve patients’ quality of life. Using proprietary spray
technology and capabilities to develop pharmaceutical cannabinoids,
INSYS is developing a pipeline of products intending to address
unmet medical needs and the clinical shortcomings of existing
commercial products. INSYS currently markets SUBSYS® (fentanyl
sublingual spray), CII, and SYNDROS® (dronabinol) oral solution,
CII, a proprietary, orally administered liquid formulation of
dronabinol. INSYS is committed to developing medications for
potentially treating addiction to opioids, opioid overdose,
epilepsy, and other disease areas with a significant unmet
need.
SUBSYS® and SYNDROS® are trademarks of INSYS Development
Company, Inc., a subsidiary of INSYS Therapeutics, Inc.
NOTE: All trademarks and registered trademarks are the property
of their respective owners.
Forward-Looking Statements This news
release contains forward-looking statements, including discussions
about future revenue and product development, as well as the
reserve taken in connection with the DOJ investigation. These
forward-looking statements are based on management’s expectations
and assumptions as of the date of this news release; actual results
may differ materially from those in these forward-looking
statements as a result of various factors, many of which are beyond
our control. These factors include, but are not limited to, risk
factors described in our filings with the United States Securities
and Exchange Commission, including those factors discussed under
the caption “Risk Factors” in our Annual Report on Form 10-K for
the year ended Dec. 31, 2016 and subsequent updates that may occur
in our Quarterly Reports on Form 10-Q. Forward-looking statements
speak only as of the date of this news release, and we undertake no
obligation to publicly update or revise these statements, except as
may be required by law.
Non-GAAP Financial MeasuresIn addition to
reporting all financial information required in accordance with
generally accepted accounting principles (GAAP), the company is
also reporting Adjusted EBITDA, Adjusted net income and Adjusted
net income per diluted share, which are non-GAAP financial
measures. Since Adjusted EBITDA, Adjusted net income and Adjusted
net income per diluted share are not GAAP financial measures, they
should not be used in isolation or as a substitute for consolidated
statements of comprehensive income (loss) and cash flow data
prepared in accordance with GAAP. In addition, the company's
definitions of Adjusted EBITDA, Adjusted net income and Adjusted
net income per diluted share may not be comparable to similarly
titled non-GAAP financial measures reported by other companies. For
a full reconciliation of Adjusted EBITDA and Adjusted net income to
GAAP net income, please see the attachments to this earnings
release.
Adjusted EBITDA, as defined by the company, is
calculated as follows:
Net income, plus:
- Interest income (expense), net;
- The recorded provision for income taxes;
- Depreciation and amortization; and
- Non-cash expenses, such as stock compensation expense and
accrual for expected litigation judgment.
The company believes that Adjusted EBITDA can be a meaningful
indicator, to both company management and investors, of the past
and expected ongoing operating performance of the company. EBITDA
is a commonly used and widely accepted measure of financial
performance. Adjusted EBITDA is deemed by the company to be a
useful performance indicator because it includes an add-back of
non-cash and non-recurring operating expenses that may be subject
to uncontrollable factors not reflective of the company's true
operational performance.
Adjusted net income, as defined by the company,
is calculated as follows:
Net income, plus:
- The recorded provision for income taxes;
- Non-cash expenses, such as stock compensation expense, non-cash
interest, and non-cash other expense (i.e., accrual for expected
litigation judgment); and;
- Less an estimated cash tax provision, net of the benefit from
utilizing NOL carry-forwards and windfalls from employee stock
option exercises.
Adjusted net income per diluted share is equal
to Adjusted net income divided by the diluted share count for the
applicable period.
The company believes that Adjusted net income and Adjusted net
income per diluted shares are meaningful financial indicators, to
both company management and investors, in that they exclude
non-cash income and expense items, as well as other income and
expense items that are not expected to recur and therefore are not
reflective of continuing operating performance.
While the company uses Adjusted EBITDA, Adjusted net income and
Adjusted net income per diluted share in managing and analyzing its
business and financial condition and believes these non-GAAP
financial measures to be useful to investors in evaluating the
company's performance, each of these financial measures has certain
shortcomings. Adjusted EBITDA does not take into account the impact
of capital expenditures on either the liquidity or the GAAP
financial performance of the company and likewise omits share-based
compensation expenses, which may vary over time and may represent a
material portion of overall compensation expense. Adjusted net
income does not take into account non-cash expenses that reflect
the amortization of past expenditures, or include stock-based
compensation, which is an important and material element of the
company's compensation package for its directors, officers and
other key employees. As a result of the inherent limitations of
each of these non-GAAP financial measures, the company's management
utilizes comparable GAAP financial measures to evaluate the
business in conjunction with Adjusted EBITDA, Adjusted net income
and Adjusted net income per diluted share and encourages investors
to do likewise.
— Financial tables follow —
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except share and per share
amounts) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Net
revenue |
$ |
30,670 |
|
|
$ |
57,773 |
|
|
$ |
109,208 |
|
|
$ |
187,415 |
|
|
Cost of
revenue |
|
7,472 |
|
|
|
4,677 |
|
|
|
16,032 |
|
|
|
15,588 |
|
|
Gross
profit |
|
23,198 |
|
|
|
53,096 |
|
|
|
93,176 |
|
|
|
171,827 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
Sales and
marketing |
|
12,825 |
|
|
|
16,662 |
|
|
|
41,775 |
|
|
|
56,153 |
|
|
|
Research and
development |
|
19,552 |
|
|
|
16,516 |
|
|
|
46,589 |
|
|
|
58,440 |
|
|
|
General and
administrative |
|
15,714 |
|
|
|
17,653 |
|
|
|
47,882 |
|
|
|
46,275 |
|
|
|
Charges related to
litigation award and government settlements |
|
150,850 |
|
|
|
- |
|
|
|
155,300 |
|
|
|
- |
|
|
Total
operating expenses |
|
198,941 |
|
|
|
50,831 |
|
|
|
291,546 |
|
|
|
160,868 |
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations |
|
(175,743 |
) |
|
|
2,265 |
|
|
|
(198,370 |
) |
|
|
10,959 |
|
|
Other
income (expense),net |
|
(83 |
) |
|
|
- |
|
|
|
(44 |
) |
|
|
44 |
|
|
Interest
income |
|
510 |
|
|
|
281 |
|
|
|
1,410 |
|
|
|
762 |
|
|
Income
(loss) before income taxes |
|
(175,316 |
) |
|
|
2,546 |
|
|
|
(197,004 |
) |
|
|
11,765 |
|
|
Income tax
expense (benefit) |
|
(8,996 |
) |
|
|
(379 |
) |
|
|
(15,976 |
) |
|
|
523 |
|
|
Net income
(loss) |
$ |
(166,320 |
) |
|
$ |
2,925 |
|
|
$ |
(181,028 |
) |
|
$ |
11,242 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) per common share: |
|
|
|
|
|
|
|
|
|
Basic |
$ |
(2.30 |
) |
|
$ |
0.04 |
|
|
$ |
(2.51 |
) |
|
$ |
0.16 |
|
|
|
Diluted |
$ |
(2.30 |
) |
|
$ |
0.04 |
|
|
$ |
(2.51 |
) |
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
Shares used
in computing net income per common share: |
|
|
|
|
|
|
|
|
|
Basic |
|
72,285,146 |
|
|
|
71,640,536 |
|
|
|
72,133,417 |
|
|
|
71,592,145 |
|
|
|
Diluted |
|
72,285,146 |
|
|
|
74,328,963 |
|
|
|
72,133,417 |
|
|
|
74,545,823 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Net revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue |
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
Cost of
revenue |
|
24.4 |
% |
|
|
8.1 |
% |
|
|
14.7 |
% |
|
|
8.3 |
% |
|
Gross
profit |
|
75.6 |
% |
|
|
91.9 |
% |
|
|
85.3 |
% |
|
|
91.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
Sales and
marketing |
|
41.8 |
% |
|
|
28.8 |
% |
|
|
38.3 |
% |
|
|
30.0 |
% |
|
|
Research and
development |
|
63.7 |
% |
|
|
28.6 |
% |
|
|
42.7 |
% |
|
|
31.1 |
% |
|
|
General and
administrative |
|
51.2 |
% |
|
|
30.6 |
% |
|
|
43.8 |
% |
|
|
24.7 |
% |
|
|
Charges related to
litigation award and government settlements |
|
491.9 |
% |
|
|
0.0 |
% |
|
|
142.2 |
% |
|
|
0.0 |
% |
|
Total
operating expenses |
|
648.6 |
% |
|
|
88.0 |
% |
|
|
267.0 |
% |
|
|
85.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations |
|
-573.0 |
% |
|
|
3.9 |
% |
|
|
-181.7 |
% |
|
|
5.9 |
% |
|
Other
income (expense),net |
|
-0.3 |
% |
|
|
0.0 |
% |
|
|
0.0 |
% |
|
|
0.0 |
% |
|
Interest
income |
|
1.7 |
% |
|
|
0.5 |
% |
|
|
1.3 |
% |
|
|
0.4 |
% |
|
Income
(loss) before income taxes |
|
-571.6 |
% |
|
|
4.4 |
% |
|
|
-180.4 |
% |
|
|
6.3 |
% |
|
Income tax
expense (benefit) |
|
-29.3 |
% |
|
|
-0.7 |
% |
|
|
-14.6 |
% |
|
|
0.3 |
% |
|
Net income
(loss) |
|
-542.3 |
% |
|
|
5.1 |
% |
|
|
-165.8 |
% |
|
|
6.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
INSYS THERAPEUTICS, INC. |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(In thousands) |
(unaudited) |
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
2017 |
|
2016 |
ASSETS: |
|
|
|
Cash and
cash equivalents |
$ |
35,755 |
|
$ |
104,642 |
Short-term
investments |
|
85,891 |
|
|
78,238 |
Accounts
receivable, net |
|
23,249 |
|
|
20,654 |
Inventories |
|
18,424 |
|
|
20,414 |
Prepaid
expenses and other current assets |
|
16,544 |
|
|
5,695 |
Long-term
investments |
|
55,514 |
|
|
53,796 |
Other
non-current assets |
|
87,709 |
|
|
72,697 |
Total
assets |
$ |
323,086 |
|
$ |
356,136 |
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY: |
|
|
|
Liabilities |
$ |
217,069 |
|
$ |
86,547 |
Stockholders' equity |
|
106,017 |
|
|
269,589 |
Total
liabilities and stockholders' equity |
$ |
323,086 |
|
$ |
356,136 |
|
|
|
|
|
INSYS THERAPEUTICS, INC. |
|
RECONCILIATION OF NET INCOME (LOSS) TO
NON-GAAP ADJUSTED EBITDA |
|
(In thousands) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Net income
(loss) |
$ |
(166,320 |
) |
|
$ |
2,925 |
|
|
$ |
(181,028 |
) |
|
$ |
11,242 |
|
|
Adjustments
to arrive at EBITDA: |
|
|
|
|
|
|
|
|
|
Interest income |
|
(510 |
) |
|
|
(281 |
) |
|
|
(1,410 |
) |
|
|
(762 |
) |
|
|
Income tax expense
(benefit) |
|
(8,996 |
) |
|
|
(379 |
) |
|
|
(15,976 |
) |
|
|
523 |
|
|
|
Depreciation and
amortization expense |
|
1,817 |
|
|
|
1,511 |
|
|
|
5,505 |
|
|
|
4,534 |
|
|
EBITDA |
|
(174,009 |
) |
|
|
3,776 |
|
|
|
(192,909 |
) |
|
|
15,537 |
|
|
|
Non-cash stock
compensation expense |
|
4,768 |
|
|
|
8,399 |
|
|
|
13,048 |
|
|
|
17,471 |
|
|
|
Charges related to
litigation award and government settlements |
|
150,850 |
|
|
|
- |
|
|
|
155,300 |
|
|
|
- |
|
|
Adjusted
EBITDA |
$ |
(18,391 |
) |
|
$ |
12,175 |
|
|
$ |
(24,561 |
) |
|
$ |
33,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INSYS THERAPEUTICS, INC. |
RECONCILIATION OF NET INCOME (LOSS) TO
NON-GAAP ADJUSTED NET INCOME (LOSS) |
(In thousands, except per share
amounts) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net income
(loss) |
$ |
(166,320 |
) |
|
$ |
2,925 |
|
|
$ |
(181,028 |
) |
|
$ |
11,242 |
Income tax
expense (benefit) |
|
(8,996 |
) |
|
|
(379 |
) |
|
|
(15,976 |
) |
|
|
523 |
Income
(loss) before income taxes |
|
(175,316 |
) |
|
|
2,546 |
|
|
|
(197,004 |
) |
|
|
11,765 |
Adjustments
to arrive at Adjusted net income (loss): |
|
|
|
|
|
|
|
|
Non-cash stock
compensation expense |
|
4,768 |
|
|
|
8,399 |
|
|
|
13,048 |
|
|
|
17,471 |
|
Charges related to
litigation award and government settlements |
|
150,850 |
|
|
|
- |
|
|
|
155,300 |
|
|
|
- |
Adjusted
income (loss) before income taxes |
|
(19,698 |
) |
|
|
10,945 |
|
|
|
(28,656 |
) |
|
|
29,236 |
|
Less: Adjusted income
tax provision |
|
(4,363 |
) |
|
|
2,146 |
|
|
|
(8,423 |
) |
|
|
4,438 |
Adjusted
net income (loss) |
$ |
(15,335 |
) |
|
$ |
8,799 |
|
|
$ |
(20,233 |
) |
|
$ |
24,798 |
|
|
|
|
|
|
|
|
|
Adjusted
net income per diluted share (loss) |
$ |
(0.21 |
) |
|
$ |
0.12 |
|
|
$ |
(0.28 |
) |
|
$ |
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CONTACT:
Media RelationsJoe McGrathCorporate CommunicationsINSYS
Therapeutics480-500-3101jmcgrath@insysrx.com
Investor RelationsJackie Marcus or Chris HodgesAlpha IR
Group312-445-2870 INSY@alpha-ir.com
INSYS THERAPEUTICS, INC. (NASDAQ:INSY)
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From Mar 2024 to Apr 2024
INSYS THERAPEUTICS, INC. (NASDAQ:INSY)
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From Apr 2023 to Apr 2024