Strong Pre-Season Sales of New Over-The-Counter (OTC) Mucinex(R)
Items Drive CHESTER, N.J., Nov. 8 /PRNewswire-FirstCall/ -- Adams
Respiratory Therapeutics, Inc. (NASDAQ:ARxT) today announced
financial results for the fiscal first quarter ended Sept. 30,
2007. Commenting on the quarterly financial results, president and
CEO Michael J. Valentino said, "I am extremely pleased with our
performance during the September quarter, which is considered to be
the pre-season or 'table-setting' quarter for the retail trade. We
recently doubled our product portfolio and initial retail orders of
our new items have been very strong. Our sales and marketing teams
did an outstanding job gaining retail distribution and promotional
support for these new products, as well as enhanced shelf
positioning for our overall over-the-counter portfolio. Our
promotional efforts are now underway and we believe our Mucinex
brand can achieve market leadership within the
cough/cold/allergy/sinus category during this cough/cold season."
Valentino added, "Last week we communicated our increased
confidence in the anticipated benefit from the enforcement action
regarding unapproved timed-release guaifenesin combination products
similar to our Mucinex DM and Mucinex D initiated by the U.S. Food
and Drug Administration, or FDA. Based on our current assessment of
early customer response and product orders, we now expect fiscal
2008 net sales and diluted EPS to be at the higher end of our
previously stated guidance ranges. We also remain focused on
executing against our strategy to expand into the prescription
market, and we view the recent FDA approvable letter for Mucinex
with Codeine as a positive step. Beyond Mucinex with Codeine, we
also have many other development projects that we believe will
support our longer-term goals in both the prescription and OTC
markets." Summary of First Quarter Financial Results Net sales for
the fiscal 2008 first quarter increased nearly $20 million or 22
percent to $110.0 million, from sales of $90.1 million in the prior
year period. The higher quarterly revenue reflects strong initial
retail orders of Adams' new OTC cough/cold products, including
Maximum Strength Mucinex and Mucinex Nasal Sprays. Pre-season trade
purchases of many of our base OTC products, including Delsym(R),
were also solid during the fiscal 2008 first quarter. As a
percentage of net sales, the total gross margin was 74.1 percent
for the fiscal 2008 first quarter, in line with previous guidance
provided in an Aug. 21 press release. This compared to a gross
margin of 67.4 percent in the prior year period, which included
non-recurring expenses recorded in connection with the repurchase
of the Fort Worth manufacturing assets that reduced the prior year
gross margin by approximately 10 percentage points. The fiscal 2008
first quarter gross margin was also impacted by higher
year-over-year raw material costs and changes in the product sales
mix due to increased sales of lower-margin products, such as the
new line of Maximum Strength Mucinex products. The effective tax
rate for the 2008 fiscal first quarter was 36.7 percent compared to
36.3 percent in the fiscal 2007 first quarter. The increase was
mainly due to additional state filing requirements resulting from
the Company's expanded activity within various states, partially
offset by a favorable increase in the allowable tax deduction
provided to U.S. manufacturers. Fiscal 2008 first quarter results
included net income of $29.2 million or $0.79 in diluted EPS,
compared to net income of $16.2 million, or $0.44 in diluted EPS,
in the fiscal 2007 first quarter, which included a one-time pretax
charge of $9.7 million, or $0.17 in diluted EPS, related to the
July 2006 repurchase of the manufacturing assets in Fort Worth,
Texas. First quarter earnings benefited from strong top-line
growth, which produced improved operating leverage. First Quarter
Product Sales Total net sales were $110.0 million in the fiscal
2008 first quarter, primarily driven by higher sales of adult
Mucinex products. Quarterly net revenue of the oral-solid adult
Mucinex line of products-including regular and maximum strength
products-was $89.4 million, an increase of 24 percent versus the
prior year period. Sales of the Company's new Maximum Strength
Mucinex products represented approximately 23 percent of the total
oral-solid, adult Mucinex line of products. Please see the product
sales table on the last page of this press release for the sales
breakdown of Mucinex, Mucinex DM and Mucinex D. Retail consumption
of the Mucinex adult franchise increased by 18.6 percent versus the
prior year period, according to IRI for the four weeks ended Oct.
7. During the same four-week period, retail consumption within the
overall cough/cold/allergy/sinus (C/C/A/S) category was flat. The
Mucinex for Children product line generated sales of $7.3 million
in the 2008 fiscal first quarter and included initial orders for
two new children's products, Mucinex Cough Mini-Melts(TM) and
Mucinex Cold Liquid, introduced in August 2007. The line's
performance represents a decline of $2.6 million versus the prior
year period, which benefited from initial orders of the Mucinex for
Children line of products, which was introduced in August 2006. The
Delsym line of 12-hour OTC cough liquids, which was acquired by
Adams in June 2006, produced revenue of $9.9 million in the fiscal
2008 first quarter, an increase of 21 percent compared to the same
period last year, driven by its first full year of professional and
consumer marketing. Total Delsym consumption sales in dollars
increased 10 percent for the four weeks ended Oct. 7, according to
IRI, outperforming the OTC liquid cough/congestion liquids
category, which declined by 9 percent compared to the prior year
period. As previously announced, the Company's new grape-flavored
Delsym, available for both children and adults, received FDA
approval on Sept. 28, 2007. Distribution to trade customers began
Oct. 1, 2007. The Company's newly introduced line of Mucinex nasal
sprays generated sales of $3.3 million in the fiscal 2008 first
quarter, reflecting initial orders to retail trade customers.
Mucinex Full Force(TM) and Mucinex Moisture Smart(TM) nasal sprays
represent Adams' entry into the OTC nasal spray product category, a
$419 million market, according to IRI for the 52-weeks ended Oct.
7, 2007. Adams initiated a national consumer television advertising
campaign featuring Mucinex nasal sprays during the week of Oct. 8,
2007. Other Highlights: -- Mucinex and Delsym brands ranked No. 1
in their respective OTC therapeutic categories in the Pharmacy
Times 2007 OTC Survey of Pharmacist Recommendations. (July) --
Adams was named to Deloitte & Touche's prestigious Technology
Fast 50 Program for New Jersey, a ranking of the 50 fastest growing
technology, media, telecommunications, and life sciences companies
in the area. Adams was subsequently included in Deloitte's
Technology Fast 500 Program for North America, ranking number 100
in overall revenue for the past five years. (Aug./Oct.) -- Adams
entered into a license and collaboration agreement with Lipocine
Inc. for the development of adult prescription cough products.
(Sept.) -- The Company filed a lawsuit for the infringement of
Adams' U.S. Patent No. 6,372,252 against Perrigo Company in
response to Perrigo's Paragraph IV Certification. (Sept.) -- Adams
received an approvable letter from the FDA for its new drug
application (NDA) for Mucinex with Codeine. (Oct.) -- Adams was
presented with two DIANA Awards at the Healthcare Distribution
Management Association's 2007 Annual Leadership Forum. One for the
"Best New Pharmaceutical Product Introduction and/or Product
Promotion" for Mucinex for Children and one for the "Best Consumer
Products Overall Manufacturer with Sales to HDMA Distributors of
More Than $10 Million." (Oct.) -- Adams won the Gold Award for the
Best OTC Product Advertisement/Campaign at Medical Marketing &
Media's Fourth Annual Award Program. (Nov.) Business Outlook
Revenue -- As previously disclosed in an Oct. 29 press release,
Adams expects fiscal 2008 net sales to be at the higher end of the
previously stated guidance range of $400 to $440 million,
reflecting early customer response to the FDA enforcement action
regarding unapproved timed- release products containing guaifenesin
in combination with other active ingredients, similar to Mucinex D
and Mucinex DM and their maximum strength versions. This revenue
range assumes, among other things, an "average" cough/cold season.
Gross Margin -- As a ratio to net sales, Adams expects to produce a
gross margin in the range of 73 to 74 percent for fiscal 2008,
reflecting anticipated higher revenue of lower-margin products,
including the line of Maximum Strength Mucinex, Mucinex D (related
to the FDA enforcement action) and Delsym. Operating Expenses --
The rate of growth for Adams' fiscal 2008 operating expenses is
expected to trail the rate of top-line sales growth as the Company
begins to experience meaningful financial leverage in its business.
- Adams expects selling, general and administrative expenses in
fiscal 2008 to include legal expenses related to the ongoing patent
infringement lawsuit against Perrigo. As previously disclosed on
Aug. 21, Perrigo submitted an abbreviated new drug application
(ANDA) for guaifenesin 600 mg single-ingredient extended-release
tablets. - Adams expects product development expenses to include
costs related to fulfilling the requirements for obtaining final
FDA approval of Mucinex with Codeine. Adams anticipates that these
costs will be absorbed within the $5 to $7 million previously
budgeted for pre- launch marketing expenses for the product. This
expense was previously included in the fiscal 2008 guidance.
Diluted Earnings Per Share -- As previously disclosed in an Oct. 29
press release, Adams expects fiscal 2008 diluted EPS to be at the
high end or slightly exceed the previous diluted EPS guidance range
of $1.55 to $1.75 -- As also disclosed in an Oct. 29 press release,
Adams expects fiscal 2009 diluted EPS to grow in excess of 30
percent. Fiscal First Quarter 2008 Conference Call and Webcast
Adams Respiratory Therapeutics, Inc. (NASDAQ:ARxT) is scheduled to
announce its sales and earnings results for the fiscal first
quarter of 2008 on Thursday, Nov. 8, 2007, before the market opens.
At 9:00 a.m. (ET) on that day, Adams management will conduct a
conference call to review the fiscal first quarter results. To
listen live to the call, dial 1-877-669-8882 or 1-706-758-9391. A
replay of the call will be available starting at approximately 11
a.m. on Nov. 8 through 5 p.m. on Nov. 15. To listen to the replay,
dial 1-800-642-1687 or 1-706-645-9291 and enter the conference ID #
19788386. A live audio webcast of the conference call also will be
available by going to the Investor Relations section of the Adams'
web site, http://www.adamsrt.com/. A replay of the webcast will be
available starting at approximately 11 a.m. on Nov. 8 through 5
p.m. on Dec. 7. PLEASE NOTE: A slide presentation to accompany the
audio webcast of the conference call will be available by going to
the Investor Relations/News and Events section of Adams web site,
http://www.adamsrt.com/. About Adams Respiratory Therapeutics, Inc.
Adams is a specialty pharmaceutical company focused on the
late-stage development, commercialization and marketing of
over-the-counter and prescription pharmaceuticals for the treatment
of respiratory disorders. Forward-Looking Statements This press
release contains certain "forward-looking" statements, including
the FDA's approval of Adams' NDA for Mucinex with Codeine; the
expansion and diversification of the Company's product portfolio;
increased sales of Mucinex D, Mucinex DM and their maximum strength
versions as a result of the FDA's enforcement action; achievement
of OTC respiratory market leadership; increased revenue from
lower-margin products; Adams' costs related to its patent lawsuit
and its NDA filing for Mucinex with Codeine; and the Company's
future financial performance and growth. Such forward-looking
statements can be identified by the words "believe," "will,"
"expect," "estimate," "anticipate" and similar expressions and are
subject to risks and uncertainties that could cause actual results
to differ materially from those in the forward-looking statements.
Factors that could cause actual results to differ materially
include, among others, the Company's ability to maintain the
success of its existing products and successfully introduce and
commercialize new products; an FDA decision not to approve the
Company's NDA filing for Mucinex with Codeine; the Company's
ability to achieve projected growth and sales; competition from
other branded and generic products; the severity of the cough and
cold season; seasonality of product sales and other risk factors
set forth Item 1A. Risk Factors in the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 2007. Except to the
extent required by applicable securities laws, Adams is not under
any obligation to (and expressly disclaims any such obligation to)
update its forward-looking statements, whether as a result of new
information, future events, or otherwise. All statements contained
in this press release are made only as of the date of this release.
Adams Respiratory Therapeutics, Inc. Consolidated Statements of
Income (Amounts in thousands, except per share amounts) Three
Months ended September 30, 2007 2006 (unaudited) Net sales $
109,976 $ 90,142 Cost of goods sold 28,494 29,358 Gross margin
81,482 60,784 Selling, marketing & administrative 29,881 29,983
Product development 6,264 6,287 Other, net (831) (879) 35,314
35,391 Income before income taxes 46,168 25,393 Provision for
income taxes 16,929 9,215 Net income $ 29,239 $16,178 Income per
common share Basic $0.82 $0.46 Diluted $0.79 $0.44 Weighted-average
of common shares used in income per share calculation Basic 35,826
35,014 Diluted 37,184 36,965 Adams Respiratory Therapeutics, Inc.
Net Sales by Product (Amounts in thousands, except per share
amounts) Three Months Ended September 30, Product 2007 2006 Mucinex
SE $ 45,455 $ 40,772 Mucinex DM 33,872 24,259 Mucinex D 10,102
6,948 Total oral-solid adult Mucinex products 89,429 71,979 Mucinex
nasal sprays 3,307 - Mucinex products for children 7,344 9,950
Humibid SE - 53 Delsym 9,896 8,160 Net Sales $109,976 $ 90,142
DATASOURCE: Adams Respiratory Therapeutics, Inc. CONTACT: Investor
Relations, Media Contact, Janet M. Barth, +1-908-879-2428 Web site:
http://www.adamsrt.com/
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