Eurand N.V. (NASDAQ: EURX)
Recent Highlights:
-- First quarter 2010 revenues grew to EUR 31.1 million ($42.0
million), an increase of 7%, or 11% in constant currency, from the
first quarter of 2009.
-- Net income for the three months ended March 31, 2010 was EUR
360,000 ($487,000), or EUR 0.01 per diluted share ($0.01 per
diluted share).
-- The U.S. Food and Drug Administration (FDA) enforced its
previously stated guidance for pancreatic enzyme products (PEPs),
declaring April 28, 2010 a Stop Distribution date for manufacturers
of unapproved PEPs.
-- The Centers for Medicare & Medicaid Services (CMS)
announced that as of April 29th, certain unapproved PEPs were no
longer eligible for reimbursement under the Medicaid Drug Rebate
program.
-- For the week ended April 30, 2010, ZENPEP® (pancrelipase)
Delayed-Release Capsules and the 5,000-unit dose authorized generic
to ZENPEP together held 6% of the total market for pancreatic
enzyme products (PEPs).
Eurand N.V. (NASDAQ: EURX), a global specialty pharmaceutical
company, today reported revenues for the first quarter of 2010 of
EUR 31.1 million ($42.0 million), an 11% increase in constant
currency from the first quarter of 2009. Net income was EUR 360,000
($487,000), or EUR 0.01 per diluted share ($0.01 per diluted
share), versus a net loss of EUR 974,000 ($1.3 million), or EUR
(0.02) per diluted share ($(0.03) per diluted share) for the first
quarter of 2009.
"We are delighted to report another solid quarter," said Gearóid
Faherty, Chairman and Chief Executive Officer, "and we are
particularly pleased by the recent growth in ZENPEP sales. We
believe that the FDA's recent enforcement of its April 28th, 2010
deadline and the decision by CMS to cease Medicaid rebates for
certain unapproved PEPs create a substantial market opportunity for
ZENPEP."
Gross margins improved significantly during the first quarter
versus the first quarter of 2009, owing to changes in the product
mix to higher margin products. Other factors affecting the first
quarter results were higher operating expenses, primarily due to
costs associated with the ZENPEP launch. This increase was offset
somewhat by lower research and development costs versus the first
quarter of 2009, reflecting reduced clinical study activity.
ZENPEP Launch Update
In late March 2010, the U.S. Food and Drug Administration, in
accordance with its previously stated guidance that all marketed
PEPs were required to have FDA approval by April 28, 2010, declared
this a Stop Distribution date for unapproved PEPs and advised that
patients not currently taking an approved product begin working
with their healthcare professionals to switch to an FDA-approved
PEP. On April 29, 2010, the Centers for Medicare & Medicaid
Services (CMS) announced that, effective immediately, certain
unapproved PEPs would no longer be eligible for inclusion in the
Medicaid Drug Rebate program.
"These actions have created a competitive landscape that we
believe presents a unique window of opportunity for ZENPEP -- as
one of just two currently FDA-approved PEPs on the market -- to
gain market share," Faherty said. "In addition, we are beginning to
see positive results from the extensive sampling program we
undertook in the first quarter, our authorized generic is gaining
ground in the low-dose market, and we continue to make steady
progress in obtaining full Medicaid and Medicare Part D
reimbursement for ZENPEP. All of these factors leave us very
encouraged about the growth prospects for this franchise as the
year unfolds."
Eurand launched ZENPEP, a treatment for pancreatic
insufficiency, in November 2009. In mid-December 2009, Eurand
introduced PANCRELIPASE™, an authorized generic (AG) to the
5000-unit dose of ZENPEP. The AG is intended to retain the market
share the unbranded Pancrelipase captured in 2009 in the low-dose
segment of the gastroenterology market, which historically has
moved to the lowest-cost product.
For the week ended April 30, 2010, Eurand's total pancrelipase
franchise (including Pancrelipase, ZENPEP, and the AG,
PANCRELIPASE™) held 10% of total prescriptions in the coated PEP
market. Performance by product is as follows:
Total Weekly Share of PEP
Eurand Products Rx* Market*
------------ -----------
Pancrelipase 829 4%
------------ -----------
ZENPEP 684 3%
------------ -----------
PANCRELIPASE™(AG) 569 3%
------------ -----------
Total 2,082 10%
------------ -----------
* Source: IMS Health Incorporated
RECENT DEVELOPMENTS
Axcan did not receive approval for the New Drug Application
(NDA) of its coated PEP, ULTRASE® MT, by the FDA's April 28, 2010
deadline or by the May 5, 2010 Prescription Drug User Fee Act
(PDUFA) date. On May 6, 2010, Axcan announced that the FDA issued a
complete response letter, requiring that deficiencies with respect
to the manufacturing and control processes at the manufacturer of
the active ingredient of ULTRASE be addressed before approval can
be granted (Eurand is not the manufacturer of the active
ingredient). Axcan stated that they are confident that ULTRASE will
be approved but cannot give any guidance at this point as to when
that might occur.
In accordance with the FDA's guidance, Axcan has stated that
they stopped distribution of ULTRASE, effective April 28, 2010.
Eurand licenses, manufactures and supplies ULTRASE capsules to
Axcan. Eurand is currently analyzing and monitoring the situation
to determine any potential impact on its future revenues.
PRODUCT DEVELOPMENT PIPELINE UPDATE:
EUR-1008 - ZENPEP® (pancrelipase) Delayed-Release Capsules
In late 2009, the European Medicines Evaluation Agency (EMEA)
finalized its draft guidelines on the clinical development and
evaluation of medicinal products, including PEPs, for the treatment
of cystic fibrosis. Based on these guidelines and the feedback
Eurand received from the EMEA on the clinical and regulatory path
forward for EUR-1008 (ZENPEP), the Company anticipates initiating a
Phase III study in Europe in the second half of 2010. Eurand
intends to out-license the distribution rights for EUR-1008 in
Europe and Asia and discussions are ongoing with potential partners
in those regions.
EUR-1073 - CLIPPER™ (beclomethasone dipropionate)
Chiesi Farmaceutici S.p.A., the licensor of EUR-1073, a
proprietary development product for the treatment of ulcerative
colitis, has completed a Phase IIIb clinical study in Europe
comparing CLIPPER™ to the current standard of care, prednisolone,
in ulcerative colitis. The results of this study showed that
CLIPPER met the primary efficacy endpoint of non-inferiority.
Eurand is currently evaluating these results to determine if the
safety profile of EUR-1073 can be differentiated from other
comparable marketed products.
EUR-1025 - Once-Daily Formulation of Ondansetron
In March, Eurand submitted a protocol to the FDA for a Phase III
study evaluating EUR-1025 in the prevention of nausea and vomiting.
If the protocol is accepted, the Company expects to initiate the
trial in the fourth quarter of 2010.
FIRST QUARTER 2010 FINANCIAL RESULTS
Total revenues were EUR 31.1 million ($42.0 million) in the
first quarter of 2010, an increase of approximately 7%, or 11% at
constant currency rates, compared with the first quarter of 2009.
Following the recent FDA announcements indicating that unapproved
PEPs would not be recalled, the Company reviewed its product return
provision relative to Pancrelipase, its unapproved PEP, and
accordingly recognized revenues of EUR 2.1 million ($2.8 million),
concomitantly reducing the provision for product returns.
Product sales grew 12%, or 16% at constant currency rates, to
EUR 26.9 million ($36.3 million) in the first quarter of 2010
compared with the same period of 2009. This increase can be
attributed mainly to sales of ZENPEP. Royalties were EUR 2.8
million ($3.8 million), up 5% at constant currency rates from the
first quarter of 2009. Development fees for the first quarter of
2010 were EUR 1.4 million ($1.9 million), down 38%, or 35% at
constant currency rates, from the same period in 2009. Revenue from
development fees can fluctuate from quarter to quarter since a
significant portion of fees is recognized upon achievement of
development milestones.
Cost of goods sold was EUR 12.8 million ($17.2 million) for the
three months ended March 31, 2010, down 11%, or 8% at constant
currency rates, compared with the same period in 2009. The margin
on product sales increased from 40.7% in the first quarter of 2009
to 52.5% in the first quarter of 2010, mainly as a result of
product mix changes that resulted in a shift to higher margin
products and the reduction in the provision for product returns
(EUR 2.1 million, or $2.8 million) in relation to Pancrelipase that
was reported as revenues during the first quarter of 2010 with no
corresponding cost of goods sold.
Research and development (R&D) expenses were EUR 5.3 million
($7.2 million) for the three months ended March 31, 2010, down 16%,
or 14% at constant currency rates, compared with the same period in
2009. Certain components of Eurand's R&D expenses, notably
clinical studies, can vary significantly from quarter to
quarter.
Selling, general and administrative (SG&A) expenses of EUR
10.9 million ($14.8 million) were up 34%, or 39% at constant
currency rates, compared with the first quarter of 2009. The
increase in SG&A expenses is primarily the result of an
increase in direct sales and marketing expenses associated with the
products commercialized and marketed by Eurand, notably ZENPEP,
which was launched at the end of 2009.
The operating profit for the first quarter of 2010 was EUR 1.3
million ($1.7 million) compared with a profit of EUR 61,000
($83,000) in the comparable period of 2009. Net income for the
first quarter of 2010 was EUR 360,000 ($487,000), or EUR 0.01 per
diluted share ($0.01 per diluted share) compared with a net loss
for the first quarter of 2009 of EUR 974,000 ($1.3 million), or EUR
(0.02) per diluted share ($(0.03) per diluted share).
At March 31, 2010, cash, cash equivalents and marketable
securities were EUR 35.3 million ($47.8 million). Attached to this
earnings release are the following items:
1. Selected consolidated statements of operations for the three
months ended March 31, 2010 compared with the same period in
2009
2. Selected balance sheet data as of March 31, 2010 and December
31, 2009
Note on Currency Presentation
This press release contains translations of euros into U.S.
dollars at a convenience rate of EUR 1=$1.3526, the noon buying
rate at the Federal Reserve Bank of New York on March 31, 2010.
Percentage variances quoted in "Constant Currency" represent the
increase or decrease recomputed as if euro/dollar exchange rates
had been the same in the three months ended March 31, 2010 as they
were in the same period in 2009. As a guide, average exchange rates
were EUR 1=$1.3842 in the three months to March 31, 2010, and EUR
1=$1.3024 in the three months to March 31, 2009.
Conference Call Information
Eurand will host a conference call today, Friday, May 14, 2010,
at 8:30 a.m. Eastern Time, 2:30 p.m. Central Europe Time, covering
the first quarter 2010 financial results.
To participate in the conference call, U.S. participants dial
1-877-407-9039, international participants dial +1-201-689-8470. A
replay of the call will be available until June 14, 2010. To
participate in the replay of the call, U.S. participants dial
1-877-660-6853, international participants dial +1-201-612-7415.
The account number is: 3055; conference ID number: 348936.
A live web cast of the call also will be available from the
investor relations section of the company website at
www.eurand.com. Following the live webcast, the archived version of
the call will be available at the same URL until June 14, 2010.
About Eurand
Eurand is a specialty pharmaceutical company that develops,
manufactures and commercializes enhanced pharmaceutical and
biopharmaceutical products based on its proprietary pharmaceutical
technologies. Eurand has had six products approved by the FDA since
2001 and has a pipeline of product candidates in development for
itself and its collaboration partners. Its technology platforms
include bioavailability enhancement of poorly soluble drugs, custom
release profiles and taste-masking orally disintegrating tablet
(ODT) formulations. Eurand is a global company with facilities in
the U.S. and Europe. For more information, visit
www.eurand.com.
Forward-Looking Statement
This release and oral statements made with respect to
information contained in this release, including statements about
the market potential of ZENPEP, constitute forward-looking
statements. Such forward-looking statements include those which
express plan, anticipation, intent, contingency, goals, targets or
future development and/or otherwise are not statements of
historical fact. The words "expects," "potentially," "anticipates,"
"could," "calls for" and similar expressions also identify
forward-looking statements. These statements are based upon
management's current expectations and are subject to risks and
uncertainties, known and unknown, which could cause actual results
and developments to differ materially from those expressed or
implied in such statements. Factors that could affect actual
results include risks associated with our ability to market,
commercialize and achieve market acceptance for ZENPEP or to
develop or partner any of our other products. A non-exclusive list
of important factors that may affect future results may be found in
Eurand's filings with the Securities and Exchange Commission,
including its annual report on Form 20-F and periodic reports on
Form 6-K. Investors should evaluate any statement in light of these
important factors. Forward-looking statements contained in this
press release are made as of this date, and we undertake no
obligation to publicly update any forward-looking statement,
whether as a result of new information, future events or otherwise.
Actual events could differ materially from those anticipated in the
forward-looking statements.
Item 1. Selected consolidated statements of operations for the three
months ended March 31, 2010 compared with the same period in 2009
Three months ended March 31, % Change
2010 2010 2009 At At
current constant
$'000(a) euro'000 euro'000 currency currency
Product sales 36,312 26,846 24,003 12% 16%
Royalty income 3,798 2,808 2,853 -2% 5%
Development fees 1,922 1,421 2,302 -38% -35%
---------- ---------- ---------- ------- -------
Total revenues 42,032 31,075 29,158 7% 11%
Cost of goods sold (17,252) (12,755) (14,245) -11% -8%
R & D expenses (7,169) (5,300) (6,339) -16% -14%
S,G & A expenses (14,781) (10,928) (8,158) 34% 39%
Amortization of
intangibles (415) (307) (355) -14% -10%
Other expenses (685) (506) - N.M. N.M.
---------- ---------- ---------- ------- -------
Operating income 1,730 1,279 61 N.M. N.M.
Financial income 716 529 109 N.M. N.M.
---------- ---------- ---------- ------- -------
Income before taxes 2,446 1,808 170 N.M. N.M.
Income taxes (1,959) (1,448) (1,144) N.M. N.M.
---------- ---------- ---------- ------- -------
Net income (loss) 487 360 (974) N.M. N.M.
========== ========== ========== ======= =======
Basic net income
(loss) per share $ 0.01 EUR 0.01 (EUR 0.02)
Diluted net income
(loss) per share $ 0.01 EUR 0.01 (EUR 0.02)
Weighted average
number of shares
used to compute
basic income (loss)
per share 47,864,709 47,864,709 45,752,722
Weighted average
number of shares
used to compute
diluted income
(loss) per share 48,326,628 48,326,628 45,752,722
(a) Figures in U.S. dollars are translated from the euro for convenience,
at a rate of 1Euro=$1.3526, the noon buying rate at the Federal
Reserve Bank of New York on March 31, 2010.
Item 2. Selected balance sheet data as of March 31, 2010 and December 31,
2009
March 31, December 31,
2010 2010 2009
$'000 (1) euro'000 euro'000
Cash and cash equivalents 21,310 15,755 16,893
Marketable securities 26,478 19,576 23,049
Total debt - - 207
Total shareholders' equity 153,340 113,367 111,574
(1) Figures in U.S. dollars are translated from the euro for convenience,
at a rate of 1Euro=$1.3526, the noon buying rate at the Federal
Reserve Bank of New York on March 31, 2010.
Contacts: Bill Newbould Vice President Investor Relations Eurand
N.V. +1 267-759-9335 Email Contact Nick Laudico/Sara Pellegrino The
Ruth Group +1 646-536-7030/7002 Email Contact Email Contact
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