Eagle Pharmaceuticals, Inc. Reports Second Quarter 2018 Results
WOODCLIFF LAKE, N.J.--(BUSINESS WIRE)--Aug 7, 2018--Eagle Pharmaceuticals, Inc. (“Eagle” or “the Company”) (Nasdaq:EGRX) today announced its financial results for the three and six months ended June 30, 2018. Highlights of and subsequent to the second quarter of 2018 include:
Business and Recent Highlights:EHS clinical trial for RYANODEX ® will be conducted August 20 – 24, 2018 during the Hajj pilgrimage; Eagle received a favorable decision by the U.S. District Court for the District of Columbia granting seven years of orphan drug exclusivity (ODE) in the U.S., for BENDEKA™ (bendamustine hydrochloride injection, or bendamustine HCI) until December 2022 and denying the Food and Drug Administration’s (FDA’s) attempt to preemptively exclude TREANDA generics from the scope of exclusivity; Data from the fulvestrant clinical trial expected in the fourth quarter of 2018; Advancing discussions with U.S. military to formalize clinical and regulatory plans for RYANODEX in the treatment of nerve agent exposure; United States Patent and Trademark Office issued patent number 10,010,533 for BENDEKA. The USPTO has now issued or allowed a total of 15 U.S. patents in the BENDEKA family of patents expiring from 2021 to 2033; Eagle was first to file a vasopressin 1ml injection ANDA, which was accepted for filing by the FDA in April; and A second source manufacturing facility for Eagle’s bendamustine products has been approved by the FDA.
Second quarter 2018Total revenue for the second quarter of 2018 was $59.3 million, compared to $50.1 million in the second quarter of 2017; Eagle launched bendamustine hydrochloride 500ml solution (“Big Bag”) on May 15, 2018 and Big Bag product sales were $8.1 million in the second quarter of 2018; Q2 2018 Ryanodex product sales were $7.2 million, up 38% compared to Q2 2017; Q2 2018 net income was $2.7 million, or $0.18 per basic and $0.17 per diluted share, compared to net income of $4.5 million, or $0.30 per basic and $0.28 per diluted share in Q2 2017; Q2 2018 Adjusted Non-GAAP net income was $14.7 million, or $0.99 per basic and $0.95 per diluted share, compared to Adjusted Non-GAAP net income of $7.9 million, or $0.52 per basic and $0.49 per diluted share in Q2 2017; During Q2 2018, Eagle purchased an additional $3.5 million of Eagle common stock as part of its share buyback program; since August 2016, Eagle has repurchased $91.3 million of Eagle common stock; and Cash and cash equivalents were $100.2 million, accounts receivable was $69.4 million, and debt was $47.5 million as of June 30, 2018. Reiterating 2018 Expense Guidance: R&D expense is expected to be in the range of $46 - $50 million ($40 – $44 million on a non-GAAP basis)SG&A expense is expected to be in the range of $61 - $64 million ($44 – $47 million on a non-GAAP basis)
“We believe 2018 will be another solid year of growth for Eagle, with continued near-term value creation, and strong upside potential with our advanced pipeline that could meaningfully contribute to the long-term value of the business. This includes protecting the value and longevity of our existing bendamustine franchise where we recently prevailed in litigation and received orphan drug exclusivity until December 2022 for BENDEKA, as well as having recently launched “Big Bag”, our 500 mL liquid form bendamustine solution that does not require reconstitution, filling an important need in the market for a lower-cost alternative. Our RYANODEX portfolio is advancing as we take advantage of product and label expansion opportunities for Exertional Heat Stroke and evaluate the neurological impact of nerve agent exposure in collaboration with the U.S. military,” stated Scott Tarriff, Chief Executive Officer of Eagle Pharmaceuticals.
“As a result of the favorable court ruling requiring the FDA to grant BENDEKA orphan drug exclusivity, the FDA will not be able to approve any drug applications referencing BENDEKA until the ODE expires in December 2022. The court also denied the FDA’s attempt to preemptively exclude TREANDA generics from the scope of BENDEKA’s ODE. We continue to believe that an appropriate application of ODE would first allow generic TREANDA entrants in December 2022, rather than November 2019 and intend to vigorously pursue our position with the FDA and through additional litigation, if necessary,” added Tarriff.
“We look forward to completing our clinical study for RYANODEX for EHS scheduled during the Hajj Pilgrimage, to support the data we have previously collected. We anticipate reporting results for our fulvestrant study later this year, along with progress on other products under development. We look forward to sharing our continued progress to create value for patients and shareholders,” concluded Tarriff.
Second Quarter 2018 Financial Results
Total revenue for the three months ended June 30, 2018 was $59.3 million, as compared to $50.1 million for the three months ended June 30, 2017. Royalty revenue was $36.3 million, compared to $37.4 million in the second quarter of 2017. BENDEKA royalties were $34.7 million, compared to $35.1 million in the second quarter of 2017. A summary of total revenue is outlined below:
Gross margin was 69% in the second quarter of 2018, as compared to 72% in the second quarter of 2017. The gross margin on Big Bag was 68%, reflecting royalty obligations to our partners as well as cost of goods sold.
Research and development expenses increased to $15.3 million for the second quarter of 2018, compared to $6.7 million in the second quarter of 2017, largely due to external clinical costs associated with the fulvestrant clinical study. Excluding stock-based compensation and other non-cash and non-recurring items, R&D expense during the second quarter of 2018 was $13.4 million.
SG&A expenses decreased to $16.0 million in the second quarter of 2018 compared to $23.3 million in the second quarter of 2017. The decrease was due to the expiration of the Spectrum co-promotion agreement at the end of June 2017, as well as a reduction in marketing expenses. Excluding stock-based compensation and other non-cash and non-recurring items, second quarter 2018 SG&A expense was $11.7 million.
Net income for the second quarter of 2018 was $2.7 million, or $0.18 per basic and $0.17 per diluted share, compared to net income of $4.5 million, or $0.30 per basic and $0.28 per diluted share in the three months ended June 30, 2017, due to the factors discussed above.
Adjusted Non-GAAP net income for the second quarter of 2018 was $14.7 million, or $0.99 per basic and $0.95 per diluted share, compared to Adjusted Non-GAAP net income of $7.9 million or $0.52 per basic and $0.49 per diluted share in the second quarter of 2017. For a full reconciliation of Adjusted Non-GAAP net income to the most comparable GAAP financial measures, please see the tables at the end of this press release.
As of June 30, 2018, the Company had $100.2 million in cash and cash equivalents and $69.4 million in net accounts receivable, $45.9 million of which was due from Teva Pharmaceutical Industries Ltd. The Company had $47.5 million in outstanding debt.
In the second quarter of 2018, we purchased $3.5 million of Eagle’s common stock as part of our expanded $100 million share buyback program. Since August 2016, we have repurchased $91.3 million of our common stock.
2018 Expense Guidance
2018 R&D expense is expected to be in the range of $46 - $50 million. This reflects expenses for (i) the enrollment of fulvestrant and RYANODEX EHS clinical trials; (ii) API outlays for the fulvestrant and vasopressin programs; and (iii) additional development work on the RYANODEX nerve agent program. Excluding stock-based compensation and other non-cash and non-recurring items, R&D expense is expected to be in the range of $40 - $44 million.
2018 SG&A expense is expected to be in the range of $61 - $64 million. Excluding stock-based compensation and other non-cash and non-recurring items, SG&A expense is expected to be in the range of $44 - $47 million.
As previously announced, Eagle management will host its second quarter 2018 conference call as follows:
A replay of the conference call will be available for one week after the call’s completion by dialing 800-727-5306 (US) or 402-220-2670 (International) and entering conference call ID EGRXQ218. The webcast will be archived for 30 days at the aforementioned URL.
About Eagle Pharmaceuticals, Inc.
Eagle is a specialty pharmaceutical company focused on developing and commercializing injectable products that address the shortcomings, as identified by physicians, pharmacists and other stakeholders, of existing commercially successful injectable products. Eagle’s main strategy is to utilize the FDA’s 505(b)(2) regulatory pathway. Additional information is available on the Company’s website at www.eagleus.com.
This press release contains forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, and other securities laws. Forward-looking statements are statements that are not historical facts. Words and phrases such as “anticipated,” “forward,” “will,” “would,” “may,” “remain,” “potential,” “prepare,” “expected,” “believe,” “plan,” “near future,” “belief,” and similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to, statements regarding future events including, but not limited to: the Company’s plans for gaining approval of the label expansion of RYANODEX to treat EHS patients and other indications, including the ongoing discussions with the FDA relating thereto, the planned clinical study of RYANODEX for the treatment of EHS at the Hajj, and the outcome of such discussions; the Company’s plans for the development of fulvestrant and the Company’s expected timing of data from the fulvestrant clinical trial; the Company’s ability to make progress with vasopressin and to work with the FDA during the ANDA review process; the Company’s ability to advance RYANODEX, including with the U.S. military or other parties, in the treatment of nerve agent exposure; the Company’s ability to maintain orphan drug exclusivity for BENDEKA; the FDA’s response to the U.S. District Court for the District of Columbia regarding the court’s decision on orphan drug exclusivity for BENDEKA; the Company’s ability to deliver value in 2018 and over the long term; and the Company’s timing and ability to repurchase additional shares of the Company’s common stock, if any, under its share repurchase program. All of such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond Eagle’s control, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Such risks include, but are not limited to: whether the Company will incur unforeseen expenses or liabilities or other market factors; whether the FDA will ultimately approve RYANODEX for the treatment of EHS and/or other indications; whether the Company can continue to make progress with the development of fulvestrant; whether the FDA will ultimately approve Eagle’s ANDA submission; whether the Company can successfully advance RYANODEX in the treatment of nerve agent exposure; how the FDA will respond to the court’s decision on orphan drug exclusivity for BENDEKA; fluctuations in the trading volume and market price of shares of the Company’s common stock, general business and market conditions and management’s determination of alternative needs and uses of the Company’s cash resources, all of which may affect the Company’s long-term performance and the share repurchase program; the success of our commercial relationship with Teva and the parties’ ability to work effectively together; whether Eagle and Teva will successfully perform their respective obligations under their license agreement; difficulties or delays in manufacturing; the availability and pricing of third party sourced products and materials; the outcome of litigation involving any of our products or that may have an impact on any of our products; successful compliance with the FDA and other governmental regulations applicable to product approvals, manufacturing facilities, products and/or businesses; general economic conditions; the strength and enforceability of our intellectual property rights or the rights of third parties; competition from other pharmaceutical and biotechnology companies and the potential for competition from generic entrants into the market; the timing of product launches; the successful marketing of our products; the risks inherent in the early stages of drug development and in conducting clinical trials; and other factors that are discussed in Eagle’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the U.S. Securities and Exchange Commission (SEC) on February 26, 2018 and its other filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof, and we do not undertake any obligation to revise and disseminate forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of or non-occurrence of any events.
Non-GAAP Financial Performance Measures
In addition to financial information prepared in accordance with U.S. GAAP, this press release also contains adjusted net income and adjusted earnings per share from continuing operations attributable to Eagle Pharmaceuticals. The Company believes these measures provide investors and management with supplemental information relating to operating performance and trends that facilitate comparisons between periods and with respect to projected information.
Adjusted net income from continuing operations excludes share-based compensation expense, depreciation, amortization of acquired intangible assets, changes in contingent purchase price, non-cash interest expense and tax adjustments. The Company believes these non-GAAP financial measures help indicate underlying trends in the Company’s business and are important in comparing current results with prior period results and understanding projected operating performance. Non-GAAP financial measures provide the Company and its investors with an indication of the Company’s baseline performance before items that are considered by the Company not to be reflective of the Company’s ongoing results. See the attached Reconciliation of GAAP to Adjusted Non-GAAP Net Income and Adjusted Non-GAAP Earnings per Share and Reconciliation of GAAP to Adjusted Non-GAAP EBITDA for explanations of the amounts excluded and included to arrive at adjusted net income and adjusted earnings per share amounts, and adjusted non-GAAP EBITDA amounts, respectively, for the three-month periods ended June 30, 2018 and 2017.
These adjusted measures are non-GAAP and should be considered in addition to, but not as a substitute for, the information prepared in accordance with U.S. GAAP. The Company strongly encourages investors to review its consolidated financial statements and publicly-filed reports in their entirety and cautions investors that the non-GAAP measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures.
-- Financial tables follow –
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