CHADDS FORD, PA -- (MARKET WIRE) -- 07/31/08 -- Endo Pharmaceuticals (NASDAQ: ENDP) today
reported double-digit growth in net sales and adjusted earnings for the
second quarter of 2008.
Net sales during the second quarter of 2008 increased 19% to $306.2 million
compared with $257.1 million in the second quarter of 2007. Net income for
the three months ended June 30, 2008 was $59.0 million compared with $60.5
million in the comparable 2007 period. As detailed in the Supplemental
Financial Information below, adjusted net income for the three months ended
June 30, 2008 was $70.0 million compared with $64.3 million in the same
period in 2007.
Diluted earnings per share for the three months ended June 30, 2008 were
$0.48 compared with $0.45 in the second quarter of 2007. Adjusted diluted
earnings per share for the three months ended June 30, 2008 were $0.57
compared with $0.48 in the same period in 2007.
Net sales for the six months ended June 30, 2008 were $596.4 million
compared with $511.6 million in the comparable 2007 period. Diluted
earnings per share for the six months ended June 30, 2008 were $0.92
compared with $0.88 in the comparable 2007 period. Adjusted diluted
earnings per share for the six months ended June 30, 2008 were $1.07
compared with $0.94 in the same period in 2007.
Update on R&D Review
During the second quarter, the company completed an in-depth review of its
research and development (R&D) activities. The review included an analysis
of the company's R&D priorities, focus and available resources for current
and future projects as well as the commercial potential for each product.
As a result of this review, the company has decided to discontinue
development of EN 3267, Rapinyl, the sub-lingual, fast-dissolving tablet of
fentanyl intended for treatment of breakthrough cancer pain, and EN 3269,
Topical Ketoprofen Patch, being studied for the treatment of acute pain
associated with soft-tissue injuries. Endo will work closely with
development partners Orexo AB and ProEthic Pharmaceuticals to facilitate a
smooth transition of work as Endo transfers these activities. As a result
of these decisions, the company recorded impairment charges during the
second quarter totaling $11.2 million to write down all of the balance of
its Rapinyl intangible asset and other long-lived assets.
Endo currently intends to continue its development of EN 3270, the
Transdermal Sufentanil Patch for the relief of moderate-to-severe chronic
pain, EN 3284, Staccato® fentanyl, that uses Alexza's proprietary
Staccato® system inhalation technology to deliver fentanyl for the
treatment of breakthrough pain, and EN 3285, Oral Rinse for the prevention
or delay of severe oral mucositis. There can be no assurance that these
development projects will progress and if they do, that they will be
successful.
Revised Operating Model
Endo also completed a review of operations to assess its core competencies
and cost infrastructure. As a result of this review, the company has begun
an initiative to improve the efficiency of its business operations and
reduce expenses. In addition to reductions in staff which resulted in a
pre-tax second quarter charge of $6.4 million, the company also plans to
change its business structure and reduce its utilization of outside
consultants to create a more efficient operating model. With these
changes, the company's operating priorities will be to increase sales of
branded products, pursue new business opportunities and support its most
promising R&D programs and its generics business.
Selected Product Review
LIDODERM®: For the three months ended June 30, 2008, net sales of
LIDODERM increased 10% to $185.1 million compared with $168.5 million in
the same period a year ago. Prescription volume for LIDODERM increased 7%
in the second quarter of 2008 versus the comparable 2007 period. For the
six months ended June 30, 2008, net sales of LIDODERM increased 13% to
$365.6 million compared with $322.6 million in the same period a year ago.
Prescription volume for LIDODERM increased 9% in the first half of 2008
versus the comparable 2007 period.
OPANA® ER and OPANA®: Combined net sales for the OPANA franchise
increased 86% to $46.4 million for the second quarter 2008 compared with
$25.0 million in the same period a year ago. Prescription volume for
OPANA ER and OPANA increased 97% in the second quarter 2008 versus the
comparable 2007 period. For the six months ended June 30, 2008, net sales
for the OPANA franchise increased 60% to $86.7 million compared with $54.3
million in the same period a year ago. The 2007 first-half results include
the recognition of $13.8 million in deferred revenue for commercial
shipments of OPANA ER and OPANA made to customers in 2006.
PERCOCET®: Net sales of PERCOCET were $33.4 million for the three months
ended June 30, 2008 compared with $29.0 million in the same period in 2007.
Net sales of PERCOCET were $65.2 million for the first half of 2008
compared with $59.5 million in the same period in 2007.
FROVA®: Net sales of FROVA were $12.9 million for the three months ended
June 30, 2008 compared with $12.8 million for the same period in 2007.
Prescription volume increased 10% for the second quarter of 2008 versus the
comparable 2007 period. For the six months ended June 30, 2008, net sales
of FROVA were $26.9 million compared with $24.9 million in the same period
in 2007.
VOLTAREN GEL®: Net sales of VOLTAREN GEL were $1.0 million for the six
months ended June 30, 2008. Although the company began the commercial
shipments of VOLTAREN GEL to its customers at the end of the first quarter
2008, the company did not recognize revenue for these shipments in the
first quarter of 2008.
Generic Products: For the second quarter of 2008, net sales from the
company's generic products were $24.0 million compared with $19.3 million
in the same period in 2007. For the six months ended June 30, 2008, net
sales of the company's generic products were $45.8 million compared with
$45.1 million in the same period in 2007.
2008 Financial Guidance
Endo Pharmaceuticals reiterates its previous adjusted full-year 2008
earnings guidance for fully diluted earnings per share to be between $2.15
and $2.19. The company reiterates guidance for 2008 annual net sales to be
between $1.245 billion and $1.280 billion. The financial guidance for 2008
excludes the impact of any future business development transactions or
acquisitions, estimated milestone payments to partners, the expensing of
stock-based compensation charges, certain separation benefits, and any
asset impairment charges.
Note to Investors
Endo will conduct a conference call with financial analysts to discuss this
news release today at 11:00 a.m. ET. Investors and other interested
parties may access the conference call by dialing 888-713-4213 (domestic)
or 617-213-4865 (international). Please dial in 10 minutes prior to the
scheduled start time and reference passcode 45330334.
A replay of the call will be available from July 31 at 1:00 p.m. ET by
dialing 888-286-8010 (domestic) or 617-801-6888 (international), passcode
15128485, and will run until 12:00 a.m. ET on August 7.
A simultaneous webcast of the call for interested investors and others may
be accessed by visiting www.endo.com. In addition, a replay of the webcast
will be available until 12:00 a.m. ET on August 7. The replay can be
accessed by clicking on "Events" in the Investor Relations section of the
website.
Supplemental Financial Information
A reconciliation of net income as determined by GAAP to adjusted net income
for the three months ended June 30, 2008 and June 30, 2007 is as follows:
(Unaudited)
Three Months Ended
June 30,
----------------------
2008 2007
---------- ----------
(in thousands, except
per share data)
GAAP net income $ 59,025 $ 60,546
Add: Income tax 27,615 34,090
---------- ----------
GAAP income before income tax 86,640 94,636
---------- ----------
Add: Upfront and milestone payments to partners (4,450) 2,031
Add: Stock-based compensation expense 4,561 4,165
Add: Impairment of long-lived assets 11,198 -
Add: Separation benefits 6,445 -
---------- ----------
Adjusted income before income tax 104,394 100,832
Pro forma income tax 34,383 36,486
---------- ----------
Adjusted net income $ 70,011 $ 64,346
========== ==========
Diluted weighted average shares outstanding 123,388 134,616
Adjusted diluted earnings per share $ 0.57 $ 0.48
========== ==========
A reconciliation of net income as determined by GAAP to adjusted net income
for the six months ended June 30, 2008 and June 30, 2007 is as follows:
(Unaudited)
Six Months Ended
June 30,
----------------------
2008 2007
---------- ----------
(in thousands, except
per share data)
GAAP net income $ 118,553 $ 117,695
Add: Income tax 62,223 66,869
---------- ----------
GAAP income before income tax 180,776 184,564
Add: Upfront and milestone payments to partners 2,000 7,631
Add: Stock-based compensation expense 8,958 7,233
Add: Impairment of long-lived assets 11,198 -
Add: Separation benefits 9,723 -
---------- ----------
Adjusted income before income tax 212,655 199,428
Pro forma income tax 74,307 72,572
---------- ----------
Adjusted net income $ 138,348 $ 126,856
========== ==========
Diluted weighted average shares outstanding 128,964 134,468
Adjusted diluted earnings per share $ 1.07 $ 0.94
========== ==========
For an explanation of Endo's reasons for using non-GAAP measures, see
Endo's Current Report on Form 8-K filed today with the Securities and
Exchange Commission.
About Endo
Endo Pharmaceuticals Holdings Inc. is a specialty pharmaceutical company
engaged in the research, development, sale and marketing of branded and
generic prescription pharmaceuticals used primarily to treat and manage
pain. More information, including this and past press releases of Endo
Pharmaceuticals Holdings Inc., is available at www.endo.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 regarding, among
other things, the company's financial position, results of operations,
market position, product development and business strategy, as well as
estimates of future net sales, future expenses, future net income and
future earnings per share. Statements including words such as "believes,"
"expects," "anticipates," "intends," "estimates," "plan," "will," "may,"
"intend," "guidance" or similar expressions are forward-looking statements.
Because these statements reflect our current views, expectations and
beliefs concerning future events, these forward-looking statements involve
risks and uncertainties. Investors should note that many factors could
affect our future financial results and could cause our actual results to
differ materially from those expressed in forward-looking statements
contained in this press release. These factors include, but are not limited
to: the inherent uncertainty of the timing and success of, and expense
associated with, research, development, regulatory approval and
commercialization of our products and pipeline products; competition in our
industry, including for branded and generic products, and in connection
with our acquisition of rights to assets, including intellectual property;
government regulation of the pharmaceutical industry; our dependence on a
small number of products and on outside manufacturers for the manufacture
of our products; our dependence on third parties to supply raw materials
and to provide services for certain core aspects of our business; new
regulatory action or lawsuits relating to our use of controlled substances
in many of our core products; our exposure to product liability claims and
product recalls and the possibility that we may not be able to adequately
insure ourselves; our ability to protect our proprietary technology; our
ability to successfully implement our in-licensing and acquisition
strategy; the availability of third-party reimbursement for our products;
the outcome of any pending or future litigation or claims by the
government; our dependence on sales to a limited number of large pharmacy
chains and wholesale drug distributors for a large portion of our total net
sales; a determination by a regulatory agency that we are engaging in
inappropriate sales or marketing activities, including promoting the
"off-label" use of our products; the loss of branded product exclusivity
periods and related intellectual property; and exposure to securities that
are subject to market risk; and other risks and uncertainties, including
those detailed from time to time in our periodic reports filed with the
Securities and Exchange Commission, including our current reports on Form
8-K, quarterly reports on Form 10-Q and annual reports on Form 10-K,
particularly the discussion under the caption "Item 1A, RISK FACTORS" in
our annual report on Form 10-K for the year ended December 31, 2007, which
was filed with the Securities and Exchange Commission on February 26, 2008.
The forward-looking statements in this press release and on the related
conference call are qualified by these risk factors. These are factors
that, individually or in the aggregate, we think could cause our actual
results to differ materially from expected and historical results. We
assume no obligation to publicly update any forward-looking statements,
whether as a result of new information, future developments or otherwise.
The following tables present Endo's unaudited net sales for the three
months ended June 30, 2008 and June 30, 2007:
Endo Pharmaceuticals Holdings Inc.
Net Sales (unaudited)
(in thousands)
Three Months Ended
June 30,
----------------------
2008 2007
---------- ----------
LIDODERM® $ 185,050 $ 168,529
OPANA ER® AND OPANA® 46,392 25,029
PERCOCET® 33,382 28,976
FROVA® 12,886 12,758
Other Brands 4,464 2,520
---------- ----------
Total Brands $ 282,174 $ 237,812
Total Generics $ 23,987 $ 19,335
---------- ----------
Total Net Sales $ 306,161 $ 257,147
========== ==========
The following tables present Endo's unaudited net sales for the six months
ended June 30, 2008 and June 30, 2007:
Endo Pharmaceuticals Holdings Inc.
Net Sales (unaudited)
(in thousands)
Six Months Ended
June 30,
----------------------
2008 2007
---------- ----------
LIDODERM® $ 365,574 $ 322,600
OPANA ER® AND OPANA® 86,675 54,276
PERCOCET® 65,182 59,539
FROVA® 26,941 24,900
Other Brands 6,280 5,130
---------- ----------
Total Brands $ 550,652 $ 466,445
Total Generics $ 45,780 $ 45,111
---------- ----------
Total Net Sales $ 596,432 $ 511,556
========== ==========
The following table presents Endo's consolidated statements of operations
for the three months and six months ended June 30, 2008 and June 30, 2007.
(Certain prior period amounts have been reclassified to conform to the
current period presentation):
Endo Pharmaceuticals Holdings Inc.
Consolidated Statements of Operations (unaudited)
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
--------- --------- --------- ---------
NET SALES $ 306,161 $ 257,147 $ 596,432 $ 511,556
COSTS AND EXPENSES:
Cost of sales 62,993 54,690 119,527 104,315
Selling, general and
administrative 126,524 88,465 241,526 182,586
Research and development 26,497 27,620 60,079 55,373
Impairment of other
intangible assets 8,083 - 8,083 -
--------- --------- --------- ---------
OPERATING INCOME 82,064 86,372 167,217 169,282
INTEREST EXPENSE 2,449 - 2,719 47
INTEREST AND OTHER INCOME (7,025) (8,264) (16,278) (15,329)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAX 86,640 94,636 180,776 184,564
INCOME TAX 27,615 34,090 62,223 66,869
--------- --------- --------- ---------
NET INCOME $ 59,025 $ 60,546 $ 118,553 $ 117,695
========= ========= ========= =========
NET INCOME PER SHARE:
Basic $ 0.48 $ 0.45 $ 0.92 $ 0.88
Diluted $ 0.48 $ 0.45 $ 0.92 $ 0.88
WEIGHTED AVERAGE SHARES:
Basic 122,985 133,820 128,561 133,725
Diluted 123,531 134,504 129,078 134,395
The following table presents Endo's unaudited condensed consolidated
balance sheet data at
June 30, 2008 and December 31, 2007:
Endo Pharmaceuticals Holdings Inc.
Condensed Consolidated Balance Sheet Data (unaudited)
(in thousands)
June 30, December 31,
2008 2007
ASSETS
Cash and cash equivalents $ 565,177 $ 350,325
Marketable securities 34,636 313,386
Accounts receivable, net 234,153 249,784
Inventories 89,406 69,228
Other current assets 77,822 82,724
------------ ------------
Total current assets 1,001,194 1,065,447
Marketable securities 263,353 283,339
Property and equipment, net 46,411 44,920
Goodwill 181,079 181,079
Other intangibles, net 224,812 70,949
Note receivable - 45,971
Other assets 54,630 10,933
------------ ------------
TOTAL ASSETS $ 1,771,479 $ 1,702,638
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Due to Endo Pharma LLC $ 342 $ 685
Other current liabilities 347,430 396,273
------------ ------------
Total current liabilities 347,772 396,958
Long-term debt 370,780 -
Other liabilities 53,363 13,390
Total stockholders' equity 999,564 1,292,290
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,771,479 $ 1,702,638
============ ============
The following table presents condensed consolidated cash flow data for the
six months ended June 30, 2008 and June 30, 2007:
Endo Pharmaceuticals Holdings Inc.
Condensed Consolidated Cash Flow Data (unaudited)
(in thousands)
Six Months Ended
June 30,
2008 2007
Net cash provided by operating activities $ 118,703 $ 201,103
Net cash provided by (used in) investing
activities 157,041 (370,933)
Net cash used in financing activities (60,892) (12,426)
----------- -----------
Net increase (decrease) in cash and cash
equivalents $ 214,852 $ (182,256)
Cash and cash equivalents, beginning of period $ 350,325 $ 628,085
----------- -----------
Cash and cash equivalents, end of period $ 565,177 $ 445,829
=========== ===========
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