Financial Results
For the second quarter of 2012, net revenues were $10.5 million,
compared to $12.0 million for the second quarter of 2011. The decrease
in net revenues, as expected, was due primarily to the weak cough and
cold season. The decrease was partially offset by sales from the initial
trade launch of Omeclamox-Pak®. Sales of generic products represented
37% of the consolidated net product sales revenue of Pernix for the
second quarter of 2012. The performance of Macoven was primarily due to
several products launched subsequent to June 30, 2011.
The net loss for the second quarter of 2012 was approximately $0.9
million, or $0.03 per basic and diluted share, compared to net income of
$1.5 million, or $0.07 per basic and diluted share, for the second
quarter of 2011.
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Cooper Collins, President and Chief Executive Officer of Pernix, said,
“During the past few months, we completed several important initiatives
that are expected to position the Company for future success. These
initiatives include the launch of Omeclamox-Pak® by our new
Gastroenterology sales force, the acquisition of Great Southern
Laboratories, a private pharmaceutical contract manufacturing company,
and the renegotiation of our co-promotion and supply agreements with
ParaPRO for Natroba. With our strengthened financial position, we
continue to move forward with our horizontal integration strategy across
branded, generic and OTC products.”
Earnings before interest, taxes, depreciation and amortization (EBITDA,
a non-GAAP measure) was a loss of $0.7 million for the second quarter of
2012, compared to EBITDA of $3.0 million for the second quarter of 2011.
See the table at the end of this press release for a reconciliation of
net income to EBITDA.
Selling, general and administrative (SG&A) expenses in the second
quarter of 2012 increased by approximately 59% to $7.6 million, compared
to $4.8 million for the second quarter of 2011. The increase was
primarily due to hiring and training of the Company’s new
gastroenterology sales force, pre-launch expenses associated with
Omeclamox-Pak® and an increase in stock compensation expense.
Depreciation and amortization expense was $0.8 million for the second
quarter of 2012, compared to $0.6 million for the second quarter of
2011. The Company recognized an income tax benefit of $0.5 million for
the second quarter of 2012, compared to income tax expense of $0.9
million in the second quarter of 2011.
For the six months ended June 30, 2012, net revenues increased by
approximately 13% to $25.0 million, compared to $22.1 million for the
prior year period. The increase in net revenues was due primarily to a
higher volume of sales of CEDAX, certain generic products and the launch
of Omeclamox-Pak®.
Net income for the six months ended June 30, 2012 was approximately $0.3
million, or $0.01 per basic and diluted share, compared to approximately
$2.5 million, or $0.11 per basic and diluted share, for the prior year
period.
EBITDA was $2.0 million for the six months ended June 30, 2012, compared
to EBITDA of $5.2 million for the prior year period. See the table at
the end of this press release for a reconciliation of net income to
EBITDA.
SG&A expenses in the six months ended June 30, 2012 increased by
approximately 44% to $14.5 million, compared to $10.0 million for the
prior year period. As previously stated, the increase was primarily due
to hiring and training of the Company’s new gastroenterology sales
force, pre-launch expenses associated with Omeclamox-Pak® and an
increase in stock compensation expense.
Depreciation and amortization expense was $1.4 million for the six
months ended June 30, 2012, compared to $1.1 million for the prior year
period. The Company recognized an income tax expense of $0.2 million for
the six months ended June 30, 2012, compared to $1.6 million in the
prior year period.
Business Update
Launch of Omeclamox-Pak®
In July 2012, Pernix launched Omeclamox-Pak® by its newly-established
gastroenterology sales force. Omeclamox-Pak® is a triple combination
medication taken orally to treat Helicobacter pylori (H. pylori)
infection and eradicate duodenal ulcer disease in adults.
Omeclamox-Pak® is a ten-day therapy of omeprazole delayed-release
capsules, clarithromycin tablets, and amoxicillin capsules for the
treatment of Helicobacter pylori (H. pylori) infection and duodenal
ulcer disease (active or one-year history), and to eradicate H. pylori
in adult patients. The product is co-packaged in twice-daily patient
compliance packs and was approved by the U.S. Food and Drug
Administration (FDA) in 2011.
Restructuring of Co-Promotion and Supply Agreements with ParaPRO LLC
for Natroba™
In July 2012, the Company and ParaPRO replaced their then-existing
co-promotion and supply agreements relating to Natroba™ with a new
agreement to restructure the terms for marketing and distributing
Natroba. Under the terms of the new agreement, the Company will no
longer have the minimum inventory purchase commitments related to the
marketing and promotion of Natroba that were required under the previous
agreements. If the Company fails to meet certain future prescription
volumes, the Company or ParaPRO would have the option to either modify
or terminate the new agreement. The Company and ParaPRO will continue to
work together to co-promote and market Natroba.
Acquisition of Great Southern Laboratories
In July 2012, the Company completed its acquisition of the business
assets of Great Southern Laboratories (“GSL”), a pharmaceutical contract
manufacturing company located in Houston, Texas. The Company anticipates
closing on the related real estate in August 2012. Upon the final
closing, the Company will have paid an aggregate of $4.9 million, and
will have assumed certain liabilities, for substantially all of GSL’s
assets including the land and buildings in which GSL operates. GSL has
an established pharmaceutical manufacturing facility with an existing
base of customers in the pharmaceutical industry, which is expected to
provide the Company with additional revenue and potential cost savings.
The Company acquired the GSL assets through a wholly-owned subsidiary,
Pernix Manufacturing, LLC, and intends to continue to operate the
business under the name Great Southern Laboratories.
Financial Position
As of June 30, 2012, the Company had $50.5 million of cash and cash
equivalents.
During the second quarter of 2012, Pernix completed an At-the-Market
(ATM) equity offering sales program. As of June 30, 2012, Pernix sold
2,966,739 shares of common stock under the ATM agreement for total net
proceeds of approximately $23.8 million. No further sales of common
stock will be made under the ATM program.
Guidance
The Company expects net revenues, inclusive of manufacturing revenues,
for the full year 2012 to increase by approximately 20% as compared to
the full year 2011. In the second half of 2012, the Company expects to
record higher net revenues in the fourth quarter than the third quarter,
and third quarter net revenues are expected to be similar to the first
quarter of 2012. The Company estimates that its total operating expenses
will increase by a range of $9 to $12 million for the full year 2012 as
compared to 2011.
Conference Call Information
Management will host a conference call today at 9:00 a.m. EST to discuss
its financial results for the second quarter and six months ended June
30, 2012. The conference call will feature remarks from Cooper Collins,
President and Chief Executive Officer, and David Becker, Chief Financial
Officer.
Please allow extra time prior to the webcast to register and download
and install any necessary audio software.
About Pernix Therapeutics Holdings, Inc.
Pernix Therapeutics is a specialty pharmaceutical company primarily
focused on the sales, marketing, and development of branded, generic and
OTC pharmaceutical products. The Company manages a port-folio of branded
and generic products. The Company’s branded products for the pediatrics
market include CEDAX®, an antibiotic for middle ear infections,
NATROBA™, a topical treatment for head lice marketed under an exclusive
co-promotion agreement with ParaPRO, LLC, a family of prescription
treatments for cough and cold (BROVEX®, ALDEX® and PEDIATEX®). The
Company’s branded products for gastroenterology include OMECLAMOX-PAK®,
a 10-day treatment for H. pylori infection and duodenal ulcer disease,
and REZYST™, a probiotic blend to promote dietary management. The
Company promotes its branded pediatric and gastroenterology products
through its sales force. Pernix markets its generic products through its
wholly-owned subsidiary, Macoven Pharmaceuticals. A product candidate
utilizing cough-related intellectual property is in development for the
U.S. OTC market. Founded in 1996, the Company is based in The Woodlands,
TX.
Non-GAAP Financial Measures
Pernix is disclosing non-GAAP financial measures in this press release.
Primarily due to acquisitions, Pernix believes that an evaluation of its
ongoing operations (and comparisons of its current operations with
historical and future operations) would be difficult if the disclosure
of its financial results were limited to financial measures prepared
only in accordance with U.S. generally accepted accounting principles
(GAAP). In addition to disclosing its financial results determined in
accordance with GAAP, Pernix is disclosing non-GAAP results that exclude
items such as amortization expense and certain other expense and revenue
items in order to supplement investors' and other readers' understanding
and assessment of the Company's financial performance. Whenever Pernix
uses a non-GAAP measure, it will provide a reconciliation of non-GAAP
financial measures to the most closely applicable GAAP financial
measure. Investors and other readers are encouraged to review the
related GAAP financial measures and the reconciliation of non-GAAP
measures set forth herein and should consider non-GAAP measures only as
a supplement to, not as a substitute for or as a superior measure to,
measures of financial performance prepared in accordance with GAAP.
Cautionary Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Statements
including words such as “estimate,” “plan,” “project,” “forecast,”
“intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar
expressions are forward-looking statements. Because these
statements reflect the Company’s current views, expectations and beliefs
concerning future events, these forward-looking statements involve risks
and uncertainties. Investors should note that many factors, as more
fully described under the caption "Risk Factors" in our Form 10-K, Form
10-Q and Form 8-K filings with the Securities and Exchange Commission
and as otherwise enumerated herein or therein, could affect the
Company’s future financial results and could cause actual results to
differ materially from those expressed in forward-looking statements
contained in the Company’s Annual Report on Form 10-K. The
forward-looking statements in this press release are qualified by these
risk factors. These are factors that, individually or in the aggregate,
could cause our actual results to differ materially from expected and
historical results. The Company assumes no obligation to publicly update
any forward-looking statements, whether as a result of new information,
future developments or otherwise.
