Brand & Generic Business Units Drive Strong Earnings WOODCLIFF
LAKE, N.J., Aug. 4 /PRNewswire-FirstCall/ -- Par Pharmaceutical
Companies, Inc. (NYSE:PRX) today reported results for the second
quarter ended June 27, 2009. For the second quarter ended June 27,
2009, Par reported total revenues of $404.0 million and net income
of $23.8 million, or $0.71 per diluted share, which included a
one-time gain related to the acquisition of certain assets of
MDRNA's Hauppauge, NY facility. Adjusting for this item, earnings
per diluted share were $0.65 for the three month period ended June
27, 2009. This is compared to reported revenues of $112.9 million
and a net loss of $21.2 million, or $0.64 loss per diluted share
for the same period in 2008, which included a one-time development
milestone payment to a partner. Adjusting for this item, loss per
diluted share was $0.61 for the three month period ended June 28,
2008. For the six months ended June 27, 2009, total revenue was
$608.0 million with net income of $39.9 million, or $1.18 per
diluted share. This is compared to total revenues of $267.9 million
and a net loss of $19.8 million, or $0.60 per diluted share in the
same period of 2008. Second Quarter Highlights Key Product Sales
(Net sales comparisons at the product level are to first quarter
2009) -- Metoprolol: For the quarter ended June 27, 2009, net sales
of metoprolol succinate reached $306 million, an increase of 173%
from the first quarter 2009. The increase was driven by market
exclusivity and additional product supply which led to increased
volume and price. Par remained the exclusive supplier of metoprolol
succinate through the second quarter. Par is the authorized generic
for all strengths of AstraZeneca's Toprol XL. -- Sumatriptan: Net
sales of sumatriptan injection were $21.8 million for the quarter
ended June 27, 2009 compared to $16.0 million in the first quarter.
The increase was principally due to trade buying patterns, which
included the release of backorders. Par remained the exclusive
supplier of generic Imitrex 4mg and 6mg starter kits and 4mg
prefilled cartridges and had one competitor in the 6mg prefilled
cartridges throughout the second quarter. -- Meclizine: Net sales
for the three months ended June 27, 2009 were $8.9 million compared
to $9.8 million in the first quarter of 2009. The decrease was due
primarily to trade buying patterns. Par was the exclusive supplier
of meclizine in the first half of 2009. -- Dronabinol: Net sales
for the second quarter 2009 were $5.5 million compared to $7.0
million in the first quarter. The decrease was due to competitive
pricing pressures. -- Other generic products: For the second
quarter 2009, net sales from all other generic products were $39.6
million compared to $43.0 million in the first quarter. The
decrease primarily reflects the discontinuation of fluticasone and
a decline in volume and price of certain products, including
ibuprofen, due to continued competition in the market, tempered by
an increase in volume of certain products such as tramadol APAP and
fluoxetine HCl, as well as the launch of risperidone ODT in June
2009. -- Megace ES: Net sales were $17.1 million for the three
months ended June 27, 2009 compared to $13.5 million in the first
quarter. The increase in net sales was due to the increase in
prescription demand and the return to normal trade buying patterns.
-- Nascobal B12 Nasal Spray: Net sales were $2.2 million for the
three months ended June 27, 2009. Strativa Pharmaceutical purchased
Nascobal from QOL Medical, LLC on March 31, 2009 and re-launched
the product on June 15, 2009. Total net revenues for the three
months ended June 27, 2009, were $404 million, up $291 million, or
nearly 258%, from the year ago period, principally driven by the
lack of competition in metoprolol succinate and meclizine, as well
as the launches of sumatriptan injection and dronabinol in the
second half of 2008. Gross margin for the second quarter 2009 was
$86.4 million, or 21.4% of total revenue, an increase of $61.3
million from the comparable period in 2008. Total generic gross
margin in the second quarter 2009 was $70.7 million, or 18.5% of
total generic revenue, compared to $9.2 million, or 9.9% of total
generic revenue in the second quarter 2008. This increase is due
primarily to higher sales of metoprolol and meclizine and the
launches of sumatriptan and dronabinol. These four products
contributed $52.5 million of gross margin, or 15.3% of such generic
revenue. Gross margin of all other generic products was
approximately $18.2 million, or 46% of other generic revenue. This
compares to $5.4 million, or 10.0% of other generic revenue, in the
second quarter of 2008. The increase in gross margin percentage was
due to 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 $15.7 million, or 72% of total Strativa
revenue, decreased compared to the second quarter of 2008 due to
lower sales of Megace ES. Research and development (R&D)
expenses decreased 63% to $5.9 million in the second quarter of
2009 compared to the second 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 second
quarter 2009 increased to $44.1 million compared to $36.7 million
in the second quarter 2008. The increase reflects an increase of
$6.8 million related to on-going expenditures supporting Strativa
sales and marketing, driven primarily by an increase in the field
force and other activities in preparation for the re-launch of
Nascobal B12 Nasal Spray, as well as development costs of other
products. Cash and cash equivalents and marketable securities
aggregate balance as of June 27, 2009, was $202.3 million and
reflects significant one-time cash outflows related to the purchase
of Nascobal B12 Nasal Spray (approximately $55 million), the
year-to-date repurchase of $13.8 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). Face Value of Convertible Debt as of
June 27, 2009, was $128.2 million. An additional $35.5 million in
convertible debt was repurchased subsequent to the balance sheet
date at a discount. The face value of convertible debt currently
stands at $92.7 million and matures on September 30, 2010, unless
earlier converted or repurchased. Product and Pipeline Update
Strativa's New Drug Application (NDA) for ondansetron orally
dissolving film strip (ODFS) has been accepted by the FDA for
review. Pursuant to Prescription Drug User Fee Act (PDUFA),
Strativa expects the FDA will complete its review by February 7,
2010. If approved, ondansetron ODFS could launch by mid-2010.
BioAlliance Pharma, Strativa's development partner for miconazole,
mucoadhesive bucccal tablets (MBT), which is marketed under the
brand name Loramyc in Europe, submitted its NDA to the FDA.
Pursuant to PDUFA, BioAlliance expects the FDA will complete its
review by second quarter 2010. If approved, Strativa could launch
the product in the second half of 2010. Par successfully launched
five strengths of risperidone ODT, a generic version of Risperdal
M-TAB, during the second quarter, and was the exclusive supplier of
.25mg, 3mg and 4mg strengths of the product during the period.
Risperdal M-TAB had $108.0 million in annual sales in 2008
according to IMS Health. Par also launched calcitonin-salmon nasal
spray, the generic version of Miacalcin , during the quarter.
Annual U.S. sales of Miacalcin were approximately $104 million in
2008, according to IMS Health. Par currently has approximately 37
ANDAs pending with the FDA, 14 of which Par believes to be
first-to-file and/or first-to-market opportunities with a brand
value of approximately $5.9 billion. Conference Call Par has
scheduled a conference call for Tuesday, August 4 at 9:00 am EDT to
discuss results for the second 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 866-788-0539 for domestic
callers and 857-350-1677 for international callers. The access
number is 40463383. 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
95297063. 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 http://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. PAR PHARMACEUTICAL COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share
Data) (Unaudited) June 27, December 31, 2009 2008 ---- ---- ASSETS
------ Current assets: Cash and cash equivalents $139,359 $170,629
Available for sale marketable debt and equity securities 62,980
93,097 Accounts receivable, net 261,950 83,408 Inventories 55,072
42,504 Prepaid expenses and other current assets 15,581 20,040
Deferred income tax assets 37,474 53,060 Income taxes receivable
22,257 35,397 ------ ------ Total current assets 594,673 498,135
Property, plant and equipment, at cost less accumulated
depreciation and amortization 79,271 79,439 Available for sale
marketable debt and equity securities 1,150 1,949 Intangible
assets, net 78,252 35,208 Goodwill 63,729 63,729 Deferred financing
costs and other assets 828 1,159 Non-current deferred income tax
assets, net 67,211 68,618 ------ ------ Total assets $885,114
$748,237 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------ Current liabilities: Current
portion of long-term debt $- $130,141 Accounts payable 38,622
22,879 Payables due to distribution agreement partners 177,103
91,451 Accrued salaries and employee benefits 14,550 11,850 Accrued
expenses and other current liabilities 37,466 38,352 ------ ------
Total current liabilities 267,741 294,673 Long-term debt, less
current portion 120,038 - Other long-term liabilities 41,259 41,581
Commitments and contingencies - - Stockholders' equity Common
Stock, par value $0.01 per share, authorized 90,000,000 shares;
issued 37,560,564 and 37,392,469 shares 375 374 Additional paid-in
capital 325,173 319,976 Retained earnings 199,360 159,470
Accumulated other comprehensive gain 816 122 Treasury stock, at
cost 2,792,963 and 2,716,010 shares (69,648) (67,959) -------
------- Total stockholders' equity 456,076 411,983 ------- -------
Total liabilities and stockholders' equity $885,114 $748,237
======== ======== PAR PHARMACEUTICAL COMPANIES, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per
Share Data) (Unaudited) Three Months Ended Six Months Ended
------------------ ---------------- June 27, June 28, June 27, June
28, 2009 2008 2009 2008 ---- ---- ---- ---- Revenues: Net product
sales $400,149 $108,289 $600,372 $259,526 Other product related
revenues 3,852 4,648 7,664 8,339 ----- ----- ----- ----- Total
revenues 404,001 112,937 608,036 267,865 Cost of goods sold 317,593
87,829 457,559 193,236 ------- ------ ------- ------- Gross margin
86,408 25,108 150,477 74,629 Operating expenses: Research and
development 5,937 15,955 13,109 33,113 Selling, general and
administrative 44,117 36,690 77,077 68,037 Settlements and loss
contingencies, net 61 - (3,315) - Restructuring costs 81 - 1,482 -
-- - ----- - Total operating expenses 50,196 52,645 88,353 101,150
------ ------ ------ ------- Gain on sale of product rights and
other 265 500 1,365 2,125 --- --- ----- ----- Operating income
(loss) 36,477 (27,037) 63,489 (24,396) Gain on bargain purchase
3,021 - 3,021 - Gain on extinguishment of senior subordinated
convertible notes 504 - 749 - Equity in loss of joint venture -
(310) - (330) Loss on marketable securities and other investments,
net - (433) (55) (433) Interest income 667 2,129 1,824 5,143
Interest expense (2,595) (3,544) (5,162) (7,054) ------- -------
------- ------- Income (loss) from continuing operations before
provision (benefit) for income taxes 38,074 (29,195) 63,866
(27,070) Provision (benefit) for income taxes 14,087 (8,236) 23,624
(7,495) ------ ------- ------ ------- Income (loss) from continuing
operations 23,987 (20,959) 40,242 (19,575) Discontinued operations:
Gain from discontinued operations - - - 505 Provision for income
taxes 176 268 352 713 --- --- --- --- Gain (loss) from discontinued
operations (176) (268) (352) (208) ---- ---- ---- ---- Net income
(loss) $23,811 ($21,227) $39,890 ($19,783) ======= ======== =======
======== Basic earnings (loss) per share of common stock: Income
(loss) from continuing operations $0.71 ($0.63) $1.20 ($0.59) Gain
(loss) from discontinued operations 0.00 (0.01) (0.01) (0.01) ----
----- ----- ----- Net income (loss) $0.71 ($0.64) $1.19 ($0.60)
===== ======= ===== ======= Diluted earnings (loss) per share of
common stock: Income (loss) from continuing operations $0.71
($0.63) $1.19 ($0.59) Gain (loss) from discontinued operations 0.00
(0.01) (0.01) (0.01) ---- ----- ----- ----- Net income (loss) $0.71
($0.64) $1.18 ($0.60) ===== ======= ===== ======= Weighted average
number of common shares outstanding: Basic 33,630 33,304 33,616
33,262 ====== ====== ====== ====== Diluted 33,771 33,304 33,772
33,262 ====== ====== ====== ====== Reconciliation Between Reported
(GAAP) and Adjusted Net Income (Loss) (In thousands, except per
share data) (Unaudited) Three Months Ended ------------------ June
27, June 28, 2009 2008 ---- ---- Reported Net Income (Loss) $23,811
($21,227) Development Milestone Payments - 1,250 Gain on Bargain
Purchase (3,021) - Restructuring Costs 81 - Estimated Tax on
Adjustments 1,094 (475) ----- ---- Adjusted Net Income (Loss)
(non-GAAP measure) $21,965 ($20,452) ======= ======== Diluted
Earnings (Loss) Per Share: Reported $0.71 ($0.64) ===== ======
Adjusted (non-GAAP measure) $0.65 ($0.61) ===== ====== Six Months
Ended ---------------- June 27, June 28, 2009 2008 ---- ----
Reported Net Income (Loss) $39,890 ($19,783) Change in Estimate
Related to Final Pentech Settlement (3,412) - Development Milestone
Payments 1,000 6,250 Gain on Bargain Purchase (3,021) -
Restructuring Costs 1,482 - Estimated Tax on Adjustments 1,462
(2,375) ----- ------ Adjusted Net Income (Loss) (non-GAAP measure)
$37,401 ($15,908) ======= ======== Diluted Earnings (Loss) Per
Share: Reported $1.18 ($0.60) ===== ====== Adjusted (non-GAAP
measure) $1.11 ($0.48) ===== ====== DATASOURCE: Par Pharmaceutical
Companies, Inc. CONTACT: Allison Wey, Senior Director, Investor
Relations and Corporate Affairs of Par Pharmaceutical Companies,
Inc., +1-201-802-4000 Web Site: http://www.parpharm.com/
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