Eurand N.V. (NASDAQ: EURX)
Recent Highlights:
-- Second quarter revenues grew 8% to EUR 32.9 million ($40.5 million)
versus second quarter 2009.
-- Product sales rose 22% to EUR 29.4 million ($36.2 million) in the
second quarter of 2010 compared with the same period of 2009, driven
by sales of ZENPEP® (pancrelipase) Delayed-Release Capsules.
-- Revenues for the first half of 2010 were EUR 64.0 million ($78.7
million), up 7% from the same period in 2009.
-- For the week ended July 23, 2010, combined sales of the ZENPEP
franchise (ZENPEP and its 5,000-unit dose authorized generic,
PANCRELIPASE™) held 15% of the total market for all pancreatic
enzyme products (PEPs). This compares with 6% share for the week
ended April 23, 2010, the last week before the U.S. Food and Drug
Administration (FDA) declared April 28, 2010 a Stop Distribution date
for manufacturers of unapproved PEPs.
Eurand N.V. (NASDAQ: EURX), a global specialty pharmaceutical
company, today reported revenues for the second quarter of 2010 of
EUR 32.9 million ($40.5 million), an increase of 8%, or 3% in
constant currency, from the second quarter of 2009. For the six
months ended June 30, 2010, revenues totaled EUR 64.0 million
($78.7 million), up 7% from the first half of 2009 both in current
and constant currency.
"The highlight of our second quarter performance was the
substantial market share gains made by our ZENPEP franchise," said
Gearóid Faherty, Chairman and Chief Executive Officer. "Clearly,
the sampling and other promotional initiatives we undertook earlier
in 2010 have begun to pay off, and we are delighted with the
progress we have made. I believe we are taking full advantage of
the competitive situation created by the FDA's enforcement of its
April 28th deadline and the decision by the Centers for Medicare
& Medicaid Services (CMS) to cease Medicaid rebates for
unapproved PEPs. We look forward to continued growth of the ZENPEP
franchise in the second half of 2010."
Sales of ZENPEP in the second quarter of 2010 more than offset
lower product sales and royalties from Axcan for ULTRASE® compared
with the second quarter of 2009. In addition, gross margins
improved significantly during the second quarter versus the second
quarter of 2009, reflecting a shift in the product mix to
higher-margin products, notably ZENPEP. Other factors affecting the
2010 second quarter results were higher operating expenses,
primarily due to costs associated with the ZENPEP launch.
ZENPEP Launch Update
In late March 2010, the U.S. Food and Drug Administration
declared April 28, 2010 a Stop Distribution date for unapproved
PEPs. On April 29, 2010, the Centers for Medicare & Medicaid
Services (CMS) announced that, effective immediately, certain
unapproved PEPs would no longer be reimbursed.
Using the week ended April 23, 2010 as the benchmark, total
weekly retail prescriptions for ZENPEP grew nearly four-fold
through the week ended July 23, 2010, from 585 to 2,140, and
prescriptions filled with the authorized generic roughly doubled,
from 581 to 1,070. In addition, ZENPEP has gained seven share
points during that time and its share of total prescriptions in the
PEP market has risen to 15%, including the authorized generic.
Performance by product is as follows:
Total Total Share of Share of
Weekly Rx Weekly Rx PEP PEP
Eurand ZENPEP at at Market at Market at
Franchise 4/23/10* 7/23/10* 4/23/10* 7/23/10*
---------- ---------- --------- ---------
ZENPEP 585 2,140 3% 10%
---------- ---------- --------- ---------
PANCRELIPASE(TM)(AG) 581 1,070 3% 5%
---------- ---------- --------- ---------
Total 1,166 3,210 6% 15%
---------- ---------- --------- ---------
* Source: IMS Health Incorporated
"As one of only two available FDA-approved PEPs on the market
until recently, we have clearly seized the opportunity to gain
share for the ZENPEP franchise," Faherty said. "We see this trend
continuing in the second half of 2010 due primarily to the
investments we have made in generating awareness and adoption of
both ZENPEP and the authorized generic and the progress we have
made in securing reimbursement for these products. We expect that
other market entrants will face varying reimbursement hurdles,
adding to the favorable competitive climate for ZENPEP. In
addition, approximately 30% of total prescriptions are currently
being written and dispensed for unapproved PEPs, and we believe
ZENPEP -- with good access to managed-care and government
reimbursement plans, increasing brand awareness and competitive
share of voice -- is well positioned to take advantage of the
market conversion to FDA-approved products."
As previously disclosed by Axcan, 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. Eurand licenses,
manufactures and supplies ULTRASE capsules to Axcan and receives
royalties based on a percentage of Axcan's net sales of the
product. 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 has stated publicly 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. As a result, in the second quarter of 2010 Eurand
revenues from ULTRASE decreased substantially compared with the
second quarter of 2009 and the first quarter of 2010. Pending FDA
approval and launch, Eurand anticipates lower product sales and
royalties from Axcan for ULTRASE in the second half of 2010
compared with the first half. Eurand expects that, compared with
the second half of 2009, the revenue decrease due to ULTRASE should
be more than offset by increasing ZENPEP franchise revenues.
PRODUCT DEVELOPMENT PIPELINE UPDATE:
EUR-1008 -- ZENPEP®
In late 2009, the European Medicines Agency (EMA) 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 EMA 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.
The EMA has deemed a ZENPEP marketing authorization application
eligible for evaluation under the Centralized Procedure, which
enables a single marketing authorization that is valid across the
European Union and provides for 10 years of marketing exclusivity
once the product is approved. The Company believes that ZENPEP
could be the first product to be filed under the Centralized
Procedure since the EMA guidelines were issued.
Eurand plans to out-license the distribution rights for this
product in Europe and Asia, and discussions are ongoing with
potential partners in those regions.
EUR-1025 -- Once-Daily Formulation of Ondansetron
Following a meeting with the FDA in late 2009, Eurand submitted
a protocol to the FDA for two Phase III studies evaluating
EUR-1025, a proprietary once-a-day oral modified-release
formulation of ondansetron, in the prevention of nausea and
vomiting. The FDA recently provided its response, and Eurand is
incorporating this feedback into the protocol design.
EUR-1073 -- CLIPPER™ (beclomethasone dipropionate)
Chiesi Farmaceutici S.p.A., the licensor of EUR-1073, a
corticosteroid for the treatment of ulcerative colitis, completed a
Phase IIIb clinical study in Europe comparing CLIPPER™ to the
current standard of care, prednisolone, in ulcerative colitis.
Following a thorough analysis of the data from this study, Eurand
has decided to discontinue development of this product and return
the rights to Chiesi at no cost to Eurand.
SECOND QUARTER 2010 FINANCIAL RESULTS
Total revenues were EUR 32.9 million ($40.5 million) in the
second quarter of 2010, an increase of approximately 8%, or 3% at
constant currency rates, compared with the second quarter of 2009.
Product sales rose 22%, or 17% at constant currency rates, to EUR
29.4 million ($36.2 million) in the second quarter of 2010 compared
with the same period of 2009. This increase is due to sales of
ZENPEP and its authorized generic (which were both launched in late
2009), which more than offset lower second quarter sales of ULTRASE
to Axcan and no sales from Eurand's low-cost Pancrelipase. Both
ULTRASE and Pancrelipase generated significant sales in 2009.
Royalties were EUR 1.8 million ($2.3 million), down 25%, or 29%
at constant currency rates, from the second quarter of 2009 because
of lower royalties from ULTRASE of Axcan. Development fees for the
second quarter of 2010 were EUR 1.7 million ($2.0 million), down
59%, or 62% at constant currency rates, from the same period in
2009, which included a milestone payment from GSK related to the
launch of LAMICTAL® ODT™. 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 15.6 million ($19.2 million) for the
three months ended June 30, 2010, and did not change compared with
the same period in 2009. At constant currency, cost of goods sold
decreased by 4%. During the second quarter of 2010, Eurand sold
some inventory of ZENPEP that had been expensed in previous periods
prior to receiving regulatory approval in the third quarter of 2009
for commercial launch in the U.S. If the related inventory had not
been expensed in previous periods, cost of goods sold in the three
months ended June 30, 2010 would have been higher by approximately
EUR 400,000. The margin on product sales increased from 35.4% in
the second quarter of 2009 to 46.9% in the second quarter of 2010,
mainly as a result of higher-margin ZENPEP product sales.
Research and development (R&D) expenses were EUR 5.6 million
($6.9 million) for the three months ended June 30, 2010, up
approximately 5%, or 1% 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
14.2 million ($17.4 million) were up 67%, or 58% at constant
currency rates, compared with the second quarter of 2009. The
increase in SG&A expenses is primarily attributable to an
increase in direct sales and marketing expenses associated with the
November 2009 launch of ZENPEP, the expansion of the sales force,
and related marketing, patient support and managed-care
programs.
The operating loss for the second quarter of 2010 was EUR 2.8
million ($3.4 million) compared with a profit of EUR 762,000
($937,000) in the comparable period of 2009. The net loss for the
second quarter of 2010 was EUR 3.4 million ($4.1 million), or EUR
(0.07) per diluted share ($(0.09) per diluted share), compared with
a net loss for the second quarter of 2009 of EUR 602,000
($740,000), or EUR (0.01) per diluted share ($(0.02) per
share).
At June 30, 2010, cash, cash equivalents and marketable
securities were EUR 38.3 million ($47.1 million), and debt was EUR
3.0 million ($3.7 million).
FIRST HALF 2010 FINANCIAL RESULTS
Total revenues were EUR 64.0 million ($78.7 million) for the six
months ended June 30, 2010, an increase of approximately 7%
compared with the first half of 2009. (The growth was not affected
by changes in currency exchange rates). The increase in revenues
can be primarily attributed to sales of ZENPEP and its authorized
generic.
Product sales grew 17% to EUR 56.3 million ($69.2 million) year
to date in 2010 compared with the same period of 2009. Royalties of
EUR 4.6 million ($5.7 million) were down 12%, or 11% at constant
currency rates, compared with the first six months of 2009.
Development fees were EUR 3.1 million ($3.8 million), down 52% from
the prior year period.
Cost of goods sold was EUR 28.4 million ($34.9 million) for the
six months ended June 30, 2010, down 5% from the prior year period,
or 6% at constant currency rates. During the first half of 2010,
Eurand sold some inventory of ZENPEP that had been expensed in
previous periods prior to receiving regulatory approval in the
third quarter of 2009 for commercial launch in the U.S. If the
related inventory had not been expensed in previous periods, cost
of goods sold in the six months ended June 30, 2010 would have been
higher by approximately EUR 500,000. The margin on product sales
was 49.6% in the first half of 2010 versus 38.0% a year ago as a
result of higher-margin ZENPEP sales in 2010.
R&D expenses were EUR 10.9 million ($13.5 million) for the
six months ended June 30, 2010, down 7% compared with the same
period in 2009, with no impact from foreign exchange rates.
SG&A expenses of EUR 25.1 million ($30.8 million) were up 51%,
or 49% at constant currency, compared with the first half of 2009
due primarily to the increased direct sales and marketing costs
associated with the launch of ZENPEP and expansion of the sales
force.
For the first six months in 2010, the operating loss was EUR 1.5
million ($1.9 million). This compares with operating income of EUR
823,000 ($1.0 million) for the same period of 2009.
The net loss for the first half of 2010 was EUR 3.0 million
($3.7 million), or EUR (0.06) per share ($(0.08) per share),
compared with a loss of EUR 1.6 million ($1.9 million), or EUR
(0.03) per share ($(0.04) per share), for the same period in
2009.
Attached to this earnings release are the following items:
1. Selected unaudited consolidated statements of operations for the three
months ended June 30, 2010 compared with the same period in 2009
2. Selected unaudited consolidated statements of operations for the six
months ended June 30, 2010 compared with the same period in 2009
3. Selected unaudited balance sheet data as of June 30, 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=$1.2291, the noon buying
rate at the Federal Reserve Bank of New York on June 30, 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 June 30, 2010 as they
were in the same period in 2009. As a guide, average exchange rates
were EUR 1=$1.271 in the three months to June 30, 2010, EUR
1=$1.327 in the six months to June 30, 2010, EUR 1=$1.362 in the
three months to June 30, 2009, and EUR 1=$1.333 in the six months
to June 30, 2009.
Conference Call Information
Eurand will host a conference call today, Friday, August 6,
2010, at 8:30 a.m. Eastern Time, 2:30 p.m. Central Europe Time,
covering the second quarter and six-months 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 September 6, 2010. To
participate in the replay of the call, U.S. participants dial
1-877-870-5176, international participants dial +1-858-384-5517.
The conference ID number is 353360.
A live webcast 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 September 6,
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 Statements
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 and the uncertainty
surrounding the timing of the FDA's approval for Axcan's ULTRASE®
MT. 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 unaudited consolidated statements of operations for the
three months ended June 30, 2010 compared with same period in 2009
Three months ended June 30,
2010 2010 2009 % Change
At At
current constant
$'000 (a) euro'000 euro'000 currency currency
Product sales 36,186 29,441 24,095 22% 17%
Royalty income 2,260 1,839 2,445 -25% -29%
Development fees 2,017 1,641 4,010 -59% -62%
---------- ---------- ---------- -------- --------
Total revenues 40,463 32,921 30,550 8% 3%
Cost of goods sold (19,204) (15,624) (15,565) 0% -4%
R & D expenses (6,933) (5,641) (5,384) 5% 1%
S,G & A expenses (17,414) (14,168) (8,492) 67% 58%
Amortization of
intangibles (382) (311) (347) -10% -14%
Other expenses 43 35 - N.M. N.M.
---------- ---------- ---------- -------- --------
Operating (loss)
income (3,427) (2,788) 762 N.M. N.M.
Financial loss (14) (12) (278) N.M. N.M.
---------- ---------- ---------- -------- --------
(Loss) income
before taxes (3,441) (2,800) 484 N.M. N.M.
Income taxes (705) (573) (1,086) N.M. N.M.
---------- ---------- ---------- -------- --------
Net loss (4,146) (3,373) (602) N.M. N.M.
========== ========== ========== ======== ========
Basic and diluted
net loss per share 47,907,205 47,907,205 45,754,727
Weighted average
number of shares
used to compute
basic and diluted
loss per share $ (0.09) EUR (0.07) EUR (0.01)
(a) Figures in U.S. dollars are translated from the euro for convenience,
at a rate of 1Euro=$1.2291, the noon buying rate at the Federal
Reserve Bank of New York on June 30, 2010.
Item 2. Selected unaudited consolidated statements of operations for the
six months ended June 30, 2010 compared with the same period in 2009
Six months ended June 30,
2010 2010 2009 % Change
At At
current constant
$'000 (a) euro'000 euro'000 currency currency
Product sales 69,182 56,287 48,098 17% 17%
Royalty income 5,712 4,647 5,298 -12% -11%
Development fees 3,763 3,062 6,312 -52% -52%
---------- ---------- ---------- -------- --------
Total revenues 78,657 63,996 59,708 7% 7%
Cost of goods sold (34,881) (28,379) (29,810) -5% -6%
R & D expenses (13,448) (10,941) (11,723) -7% -7%
S,G & A expenses (30,845) (25,096) (16,650) 51% 49%
Amortization of
intangibles (759) (618) (702) -12% -12%
Other expenses (579) (471) - N.M. N.M.
---------- ---------- ---------- -------- --------
Operating (loss)
income (1,855) (1,509) 823 N.M. N.M.
Financial income
(loss) 636 517 (169) N.M. N.M.
---------- ---------- ---------- -------- --------
(Loss) income
before taxes (1,219) (992) 654 N.M. N.M.
Income taxes (2,484) (2,021) (2,230) N.M. N.M.
---------- ---------- ---------- -------- --------
Net loss (3,703) (3,013) (1,576) N.M. N.M.
========== ========== ========== ======== ========
Basic and diluted
net loss per share 47,885,957 47,885,957 45,753,725
Weighted average
number of shares
used to compute
basic and diluted
loss per share $ (0.08) EUR (0.06) EUR (0.03)
(a) Figures in U.S. dollars are translated from the euro for convenience,
at a rate of 1Euro=$1.2291, the noon buying rate at the Federal Reserve
Bank of New York on June 30, 2010.
Item 3. Selected unaudited balance sheet data as of June 30, 2010 and
December 31, 2009
June 30, December 31,
2010 2010 2009
$'000 (1) euro'000 euro'000
Cash and cash equivalents 25,467 20,720 16,893
Marketable securities 21,598 17,572 23,049
Total debt 3,687 3,000 207
Total shareholders' equity 137,184 111,613 111,574
(1) Figures in U.S. dollars are translated from the euro for convenience,
at a rate of 1Euro=$1.2291, the noon buying rate at the Federal Reserve
Bank of New York on June 30, 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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