WOODCLIFF LAKE, N.J., Nov. 6 /PRNewswire-FirstCall/ -- Par Pharmaceutical Companies, Inc. today reported results for the third quarter ended October 3, 2009.
For the third quarter ended October 3, 2009, Par reported total revenues of $294.8 million and net income of $26.3 million, or $0.76 per diluted share. This is compared to reported revenues of $149.0 million and net income of $0.5 million, or $0.01 per diluted share for the same period in 2008, which included several one-time items.
For the nine months ended October 3, 2009, total revenue was $902.8 million with net income of $66.2 million, or $1.95 per diluted share. This is compared to total revenues of $416.8 million and a net loss of $19.3 million, or $0.57 per diluted share in the same period of 2008.
Third Quarter Highlights
Key Product Sales (Net sales comparisons at the product level are to second quarter 2009, which had 13 weeks of sales versus 14 weeks of sales in the third quarter 2009.)
Total net revenues for the three months ended October 3, 2009, were $294.8 million, up $145.8 million, or nearly 98%, from the year ago period, principally driven by limited competition in metoprolol succinate, sumatriptan succinate, meclizine, and dronabinol, as well as the launches of nateglinide and clonidine in the third quarter 2009.
Gross margin for the third quarter 2009 was $92.1 million, or 31.3% of total revenue, an increase of $40.7 million from the comparable period in 2008. Total generic gross margin in the third quarter 2009 was $72.9 million, or 27.1% of total generic revenue, compared to $35.9 million, or 27.8% of total generic revenue in the third quarter 2008. This increase is due primarily to higher sales of metoprolol coupled with the launches of sumatriptan, dronabinol, and clonidine, partially offset by lower sales of fluticasone and amoxicillin. The top five products, which include metoprolol, clonidine, sumatriptan, meclizine, and dronabinol, contributed $46.3 million of gross margin, or 21.5% of such generic revenue. Gross margin of all other generic products was approximately $26.6 million, or 49.3% of other generic revenue. This compares to $15.2 million, or 23.2% of other generic revenue, in the third quarter of 2008. The increase in gross margin percentage was due to new product launches, increased volume of certain existing products, as well as the trimming of the generic product line as part of the resizing of Par’s generic division in the fourth quarter of 2008. Strativa’s gross margin of $19.2 million, or 75.7% of total Strativa revenue, increased compared to the second quarter of 2008 due to higher sales of Megace((R)) ES and Nascobal((R)).
Research and development (R&D) expenses decreased 53% to $6.5 million in the third quarter of 2009 compared to the third quarter 2008 due primarily to the resizing of the generic division, which included a headcount reduction and lower development and biostudy costs.
Selling, general and administrative (SG&A) expenses for the third quarter 2009 increased to $45.3 million compared to $30.7 million in the third quarter 2008. This increase primarily reflects on-going expenditures supporting Strativa sales and marketing, driven primarily by an increase in the field force and other activities related to the re-launch of Nascobal B12 Nasal Spray, as well as accruals of higher bonus compensation expenses related to significantly better year-to-date financial performance through the first nine months of 2009.
Cash and cash equivalents and marketable securities aggregate balance as of October 3, 2009, was $210.5 million and includes significant one-time cash outflows related to the purchase of Nascobal B12 Nasal Spray (approximately $55 million), the first nine months repurchase of $63.5 million face value of Par’s convertible debt at a discount and, as previously reported in the first quarter, the settlement of litigation with Pentech (approximately $66 million).
On October 14, 2009 Par announced a “Modified Dutch Auction” tender offer for up to $65 million of its outstanding 2.875% Senior Subordinated Convertible Notes due September 30, 2010, at a price not greater than $990.00 nor less than $982.50 per $1,000 principal amount. As of that date, there was approximately $78.6 million aggregate principal amount of notes outstanding. The tender offer is scheduled to expire at 12:00 midnight, EST on Wednesday, November 11, 2009, unless the tender offer is extended. Par expects to fund the purchase of the convertible notes tendered in the tender offer with available cash on hand.
Product and Pipeline Update
Par successfully launched the 60mg and 120mg strengths of nateglinide in the third quarter. Nateglinide is a generic version of Novartis’ Starlix((R)). Annual U.S. sales of Starlix((R)) are approximately $124 million, according to IMS Health data.
In August, Par announced that the U.S. District Court for the District of Delaware ruled in favor of Par in its challenge of Purdue’s patents relating to extended-release tramadol, which are listed in the Orange Book for Ortho-McNeil’s Ultram((R)) ER product. Par has been awarded 180 days of marketing exclusivity, commencing at launch, for being the first to file an ANDA containing a paragraph IV certification for the product. Par currently has tentative approval on two of the three strengths (100mg and 200mg) of tramadol ER. Par intends to review its options with respect to its tramadol ER ANDA.
Par currently has approximately 27 ANDAs pending with the FDA, 13 of which Par believes to be first-to-file and/or first-to-market opportunities with a brand value of approximately $6.5 billion.
Conference Call
Par has scheduled a conference call for Friday, November 6 at 9:00 am EST to discuss results for the third quarter of 2009. Par invites investors and the general public to listen to a webcast of the conference call. Access to the live webcast can be made via the Company’s website at http://www.parpharm.com and will be available for two weeks. The dial-in number is 866-783-2144 for domestic callers and 857-350-1603 for international callers. The access number is 72513859. A replay of the conference call will be available commencing approximately one hour after the call. The replay dial-in number is 888-286-8010 for domestic callers and 617-801-6888 for international callers. The access number is 97865258.
Non-GAAP Measures
Par believes it prepared its condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) and pursuant to accounting requirements of the Securities and Exchange Commission applicable to quarterly reports on Form 10-Q. In an effort to provide investors with additional information regarding Par’s results and to provide a meaningful period-over-period comparison of Par’s financial performance, the Company sometimes uses non-GAAP financial measures as defined by the Securities and Exchange Commission. The differences between the U.S. GAAP and non-GAAP financial measures are reconciled in an attached schedule. In presenting comparable results, the Company discloses non-GAAP financial measures when it believes such measures will be useful to investors in evaluating Par’s underlying business performance. Management uses the non-GAAP financial measures to evaluate Par’s financial performance against internal budgets and targets. In addition, management internally reviews Par’s results excluding the impact of certain items, as it believes that these non-GAAP financial measures are useful for evaluating Par’s core operating results and facilitating comparison across reporting periods. Importantly, Par believes non-GAAP financial measures should be considered in addition to, and not in lieu of, U.S. GAAP financial measures. Par’s non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.
About Par
Par Pharmaceutical Companies, Inc. develops, manufactures and markets generic drugs and innovative branded pharmaceuticals for specialty markets. For press release and other company information, visit www.parpharm.com.
Safe Harbor Statement
Certain statements in this news release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. To the extent any statements made in this news release contain information that is not historical, these statements are essentially forward-looking and, as such, are subject to known and unknown risks, uncertainties and contingencies, many of which are beyond the control of the Company, which could cause actual results and outcomes to differ materially from those expressed herein. Risk factors that might affect such forward-looking statements include those set forth in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, in other of the Company’s filings with the SEC from time to time, including Current Reports on Form 8-K, and on general industry and economic conditions. Any forward-looking statements included in this news release are made as of the date hereof only, based on information available to the Company as of the date hereof, and, subject to any applicable law to the contrary, the Company assumes no obligation to update any forward-looking statements.
CONTACT: Allison Wey, Senior Director, Investor Relations and Corporate
Affairs, Par Pharmaceutical Companies, Inc., +1-201-802-4000
Web site: http://www.parpharm.com/
