-- Bendeka market share of 97% with record
royalty revenue of $41.4 million --
-- Revenue grows 67% year-over-year to $63.0
million --
-- New patent related to RYANODEX granted
--
-- Tentative FDA approval for PEMFEXY
(pemetrexed injection) --
-- Net income was $0.98 per diluted share and
Adjusted Non-GAAP net income was $1.22 per diluted share --
Eagle Pharmaceuticals, Inc. (“Eagle” or “the Company”) (Nasdaq:
EGRX) today announced its financial results for the three- and
nine-months ended September 30, 2017. Highlights of and subsequent
to the third quarter of 2017 include:
Financial Highlights:
- Total revenue for the third quarter of
2017 grew 67% to $63.0 million compared to $37.8 million in the
third quarter of 2016;
- Royalty revenue increased to $43.6
million compared to $26.2 million in Q3 2016;
- Product sales decreased to $6.9 million
compared to $7.8 million in Q3 2016;
- Q3 2017 income before income tax
provision was $24.5 million;
- Q3 2017 net income was $15.4 million,
or $1.03 per basic and $0.98 per diluted share, compared to a net
income of $12.0 million, or $0.77 per basic and $0.73 per diluted
share in Q3 2016;
- Q3 2017 Adjusted Non-GAAP net income
was $19.2 million, or $1.27 per basic and $1.22 per diluted share,
compared to Adjusted Non-GAAP net income of $14.7 million, or $0.95
per basic and $0.89 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 $97.5
million and accounts receivable were $71.6 million as of September
30, 2017.
Business and Recent Highlights:
- BENDEKA® total market share of 97%, as
of September 30, 2017;
- Sales of RYANODEX® grew 29% to $3.3
million during the third quarter of 2017 compared to $2.5 million
in Q3 2016;
- Received tentative U.S. Food and Drug
Administration (FDA) approval for PEMFEXY™ (pemetrexed injection)
ready-to-dilute formulation;
- Granted a new patent related to
RYANODEX formulation (dantrolene sodium) by the United States
Patent and Trademark Office, expiring June 2022;
- Licensed Japanese rights for
bendamustine hydrochloride ready-to-dilute and rapid infusion
injection products to SymBio Pharmaceuticals Limited and received a
$12.5 million upfront payment;
- Announced positive results of an
initial study in over 50 rodents to evaluate the neuroprotective
effects of RYANODEX in an established rodent model of Nerve
Agent-induced seizures and seizure-related brain damage;
- Filed for a second source drug product
manufacturing site for BENDEKA;
- 2017 R&D and SG&A guidance
updated:
- We expect our full year 2017 R&D
expense will be consistent with the upper end of the $31-$35
million range. This reflects ongoing expenses for the enrollment of
the fulvestrant and RYANODEX for Ecstasy and methamphetamine
intoxication clinical trials. Excluding stock based compensation,
the R&D expense would be in the range of $27 - $31
million.
- We expect our full year SG&A
expense to be in the range of $67 - $70 million, slightly higher
than previous guidance. Excluding stock based compensation and
other non-cash items, SG&A expense would be in the range of $53
- $56 million.
“This was another strong quarter for Eagle with record revenue
driven by BENDEKA, a growing cash position and significant movement
in our pipeline,” stated Scott Tarriff, Chief Executive Officer of
Eagle Pharmaceuticals.
“During the quarter, we advanced multiple pipeline candidates.
We plan to begin dosing patients in our fulvestrant study in a few
weeks and expect to file an NDA in the fourth quarter of 2018. With
one dose, our formulation will deliver a 5mL solution, using a
smaller needle and in less time than the current commercially
available product. In addition, we received tentative approval from
the FDA for PEMFEXY, our ready-to-dilute pemetrexed IV formulation.
As the first company to receive tentative approval for this product
using the 505(b)2 pathway, we hope to find a way to market as soon
as possible, once our litigation with Eli Lilly is resolved,” added
Tarriff.
“We remain confident in our RYANODEX portfolio. We are
continuing our dialogue with the FDA regarding EHS, while advancing
our clinical work for the Ecstasy and methamphetamine, and nerve
agent programs. We have also made progress on an intramuscular
delivery formulation for RYANODEX, which we believe will provide
patients and healthcare professionals with a valuable delivery
option,” Tarriff added.
“Eagle continues to generate strong cash flow, which allows us
to invest in our pipeline, evaluate additional strategic
opportunities and return capital to shareholders when it maximizes
value. We have completed the first $75 million share repurchase
program and will continue purchasing up to an additional $100
million shares under our current share repurchase plan, reflecting
our belief in the potential of our products and pipeline,”
concluded Tarriff.
Third Quarter 2017 Financial Results
Total revenue for the three months ended September 30, 2017 was
$63.0 million, as compared to $37.8 million for the three months
ended September 30, 2016. A summary of total revenue is outlined
below:
Three Months Ended September 30,
2017 2016 Revenue ($ in 000’s):
Product sales $ 6,905 $ 7,837 Royalty revenue 43,616 26,246 License
and other income 12,500 3,750 Total revenue 63,021 37,833
Product sales decreased to $6.9 million driven by lower net
product sales of BENDEKA and Argatroban, partially offset by an
increase in net product sales of RYANODEX. Royalty revenue
increased to $43.6 million, as a result of the increased market
share on Teva sales of BENDEKA, as well as an increase in the
royalty rate from 20% to 25%.
Research and development expenses increased to $9.0 million in
the three months ended September 30, 2017, compared to $3.2 million
in the prior year quarter. The increase is due to continued
spending on the Company’s pipeline, and in particular, our
fulvestrant, RYANODEX for Ecstasy and methamphetamine intoxication,
and pemetrexed projects.
SG&A expenses increased to $16.7 million in the third
quarter of 2017 compared to $11.7 million in the three months ended
September 30, 2016. Personnel-related expenses grew as a result of
the expansion of our sales force in the second quarter of 2017.
External legal expenses also increased, due to ongoing
litigation.
An income tax provision of $9.0 million was recorded during the
third quarter of 2017.
Net income for the third quarter of 2017 was $15.4 million, or
$1.03 per basic share and $0.98 per diluted share, compared to net
income of $12.0 million, or $0.77 per basic and $0.73 per diluted
share in the three months ended September 30, 2016, due to the
factors discussed above.
Adjusted Non-GAAP net income for the third quarter of 2017 was
$19.2 million, or $1.27 per basic and $1.22 per diluted share,
compared to Adjusted Non-GAAP net income of $14.7 million or $0.95
per basic and $0.89 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.
Liquidity
As of September 30, 2017, the Company had $48 million in net
cash and cash equivalents and $72 million in net accounts
receivable, $46 million of which was due from Teva. For the nine
months ended September 30, 2017, net cash provided by operating
activities, excluding the increase in net accounts receivable, was
$62 million. The Company had $50 million in outstanding debt.
As part of our stock repurchase plan, we purchased $13.5 million
worth of our shares during the quarter, completing our original $75
million share repurchase plan initiated in August 2016. We expanded
the program by $100 million during the second quarter of 2017.
Conference Call
As previously announced, Eagle management will host its third
quarter 2017 conference call as follows:
Date Wednesday, November 8, 2017 Time 8:30 A.M. EST
Toll free (U.S.) 866-518-6930 International 203-518-9797 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 800-839-8705 (US) or
402-220-6075 (International) and entering conference call ID
EGRXQ317. 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 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 ongoing
discussions with FDA relating thereto and the outcome of such
discussions; 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; the ability of Eagle to
manufacture and commercialize its PEMFEXY product upon final
approval; the formation of a market for Eagle’s PEMFEXY product;
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 nine month periods
ended September 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)
September 30, 2017 December 31,
2016 (unaudited) ASSETS Current assets:
Cash and cash equivalents $ 97,545 $ 52,820 Accounts receivable
71,601 42,194 Inventories 4,878 2,739 Prepaid expenses and other
current assets 8,130 11,357 Total
current assets 182,154 109,110 Property and equipment, net 4,365
3,316 Intangible assets, net 24,002 33,372 Goodwill 39,743 39,743
Deferred tax asset, net 16,502 28,643 Other assets 124
136 Total assets $ 266,890 $ 214,320
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 8,902 $ 14,716 Accrued expenses
20,438 25,237 Current portion of contingent consideration 55 1,012
Current portion of long-term debt 5,000 —
Total current liabilities 34,395 40,965 Contingent
consideration, less current portion 17,482 22,129 Long-term debt,
less current portion 43,936 Commitments and contingencies
Stockholders' equity: Preferred stock, 1,500,000 shares
authorized and no shares issued or outstanding as of September 30,
2017 and December 31, 2016 — — Common stock, $0.001 par value;
50,000,000 shares authorized; 16,071,435 and 15,890,862 issued as
of September 30, 2017 and December 31, 2016, respectively 16 16
Additional paid in capital 229,655 213,872 Retained earnings
(Accumulated deficit) 17,199 (25,659 ) Treasury stock, at cost,
1,150,437 and 566,838 shares as of September 30, 2017 and December
31, 2016 (75,793 ) (37,003 ) Total stockholders'
equity 171,077 151,226 Total
liabilities and stockholders' equity $ 266,890 $ 214,320
EAGLE PHARMACEUTICALS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (In thousands, except
share and per share amounts) (unaudited)
Three Months Ended September 30, Nine Months Ended
September 30, 2017 2016 2017
2016 Revenue: Product sales $ 6,905 $ 7,837 $
34,895 $ 31,566 Royalty revenue 43,616 26,246 117,527 67,025
License and other income 12,500 3,750
37,500 9,750 Total revenue 63,021
37,833 189,922 108,341
Operating expenses: Cost of product
sales 4,815 6,000 24,490 25,949 Cost of royalty revenue 6,850 4,425
18,990 10,538 Research and development 8,954 3,207 23,163 13,612
Selling, general and administrative 16,669 11,661 58,100 34,300
Gain on sale of asset — — — (1,750 ) Asset impairment charges 7,235
— 7,235 — Changes in fair value of contingent consideration
(6,452 ) 232 (5,604 ) 627 Total
operating expenses 38,071 25,525
126,374 83,276 Income from operations 24,950
12,308 63,548 25,065 Interest income 35 26 52 76 Interest expense
(527 ) (3 ) (594 ) (6 ) Total other
income (492 ) 23 (542 ) 70
Income before income tax provision 24,458 12,331
63,006 25,135 Income tax provision (9,027 ) (379 )
(20,148 ) (983 )
Net Income $ 15,431 $
11,952 $ 42,858 $ 24,152 Earnings per share
attributable to common stockholders: Basic $ 1.03 $ 0.77 $ 2.82 $
1.55 Diluted $ 0.98 $ 0.73 $ 2.68 $ 1.46 Weighted average number of
common shares outstanding: Basic 15,047,917 15,570,740 15,174,426
15,614,328 Diluted 15,764,360 16,450,182 16,015,051 16,501,167
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
September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net income from operations - GAAP $ 15,431 $ 11,952 $ 42,858
$ 24,152 Before tax adjustments: Cost of product revenues:
Amortization of acquired intangible assets (1) 307 202 919 462 Gain
on sale of asset (2) - - - (1,750 ) Research and development:
Share-based compensation expense 933 666 2,956 2,039 Selling,
general and administrative: Share-based compensation expense 2,795
1,584 8,662 5,500 Amortization of acquired intangible assets (3)
405 - 1,216 - Depreciation 225 164 657 461 Debt issuance costs 286
- 286 - Other: Non-cash interest expense 77 3 144 3 Changes in fair
value of contingent consideration (4) (6,452 ) 232 (5,604 ) 627
Asset impairment charge 7,235 - 7,235 - Tax adjustments (5)
(2,088 )
(88
) (5,904 )
(287
)
Adjusted Non-GAAP net income $
19,154 $
14,715
$ 53,425 $
31,207
Adjusted Non-GAAP earnings per share Basic $ 1.27 $
0.95
$ 3.52 $
2.00
Diluted $ 1.22 $
0.89
$ 3.34 $
1.89
Weighted number of common shares outstanding: Basic 15,047,917
15,570,740 15,174,426 15,614,328 Diluted 15,764,360 16,450,182
16,015,051 16,501,167 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.
EAGLE PHARMACEUTICALS RECONCILIATION OF GAAP TO
ADJUSTED NON-GAAP EBITDA (In thousands)
(unaudited)
Twelve Months
Twelve Months
Ended
Ended
Three Months Ended September 30, Nine Months Ended
September 30,
December 31,
September 30,
2017 2016 2017 2016
2016 2017 Net income from operations - GAAP $
15,431 $ 11,952 $ 42,858 $ 24,152 $ 81,453 $ 100,159 Add
back: Interest expense (income), net 493 (23 ) 543 (70 ) (76 ) 537
Provision for income taxes 9,027 379 20,148
983
(28,026 ) (8,860 ) Depreciation and amortization 936 366 2,790 922
1,589 3,457 Add back: - Stock-based compensation 3,728 2,250
11,618 7,539 9,768 13,849 Changes in fair value of contingent
consideration (6,452 ) 232 (5,604 ) 627 957 (5,274 ) Debt issuance
costs 286 - 286 - - 286 Asset impairment charges 7,235 - 7,235 - -
7,235 Gain on sale of asset - -
- (1,750 ) (1,750 ) -
Adjusted Non-GAAP EBITDA $ 30,684 $ 15,156 $
79,874 $
32,403
$ 63,915 $
111,389
EAGLE PHARMACEUTICALS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, except
share and per share amounts) (unaudited)
Nine Months Ended September 30, 2017
2016 Cash flows from operating activities: Net income
$ 42,858 $ 24,152 Adjustments to reconcile net income to net cash
provided by operating activities: Deferred income taxes 12,141 —
Depreciation expense 657 461 Amortization of intangible assets
2,135 461 Stock-based compensation 11,618 7,539 Change in fair
value of contingent consideration (5,604 ) 627 Amortization of debt
issuance costs 128 — Gain on sale of diclofenac-misoprostol —
(1,750 ) Asset impairment charge 7,235 —
Changes in operating
assets and liabilities: Increase in accounts receivable (29,407
) (20,783 ) (Increase) decrease in inventories (2,139 ) 7,936
Decrease (increase) in prepaid expenses and other current assets
3,227 (3,713 ) Decrease in other assets 12 49 (Decrease) increase
in accounts payable (5,814 ) 7,747 Decrease in deferred revenue —
(6,000 ) Decrease in accrued expenses and other liabilities
(4,049 ) (3,074 ) Net cash provided by operating activities
32,998 13,652
Cash flows from
investing activities: Purchase of property and equipment (1,706
) (1,083 ) Purchase of short term investments — (62,000 )
Maturities of short term investments — 62,000 Payment for business
acquisition — (4,850 ) Payment for intangible asset (750 ) (14,000
) Proceeds from sale of diclofenac-misoprostol —
1,750 Net cash used in investing activities
(2,456 ) (18,183 )
Cash flows from financing
activities: Proceeds from common stock option exercise 4,165
1,486 Payment of debt financing costs (1,192 ) — Payment of
contingent consideration — (230 ) Proceeds from long-term debt
50,000 Repurchases of common stock (38,790 ) (16,497
) Net cash provided by (used in) financing activities 14,183
(15,241 )
Net increase (decrease) in cash
44,725 (19,772 )
Cash and cash equivalents at beginning of
period 52,820 79,083
Cash and
cash equivalents at end of period $ 97,545 $ 59,311
Supplemental disclosures of cash flow information:
Cash paid during the period for: Income taxes $ 8,845 $
2,800
Non-cash investing activities Non-cash financing
activities Common stock repurchase not yet paid — 1,500 Contingent
consideration - business acquisition — 6,370
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171108005539/en/
Investor Relations for Eagle Pharmaceuticals,
Inc.:In-Site Communications, Inc.Lisa M. Wilson,
212-452-2793lwilson@insitecony.com
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