Pernix Prescriptions DirectTM Achieves Increased Penetration
MORRISTOWN, N.J., May 05, 2016 (GLOBE NEWSWIRE) -- Pernix Therapeutics Holdings, Inc. PTX ("Pernix" or the "Company"), a specialty pharmaceutical company, today announced financial results for the first quarter ended March 31, 2016.
First Quarter 2016 Financial Highlights:
- Net Revenue decreased 4% year-over-year to $32.5 million, principally due to lower sales volumes and higher managed care rebates for Treximet® and Silenor®
- Gross Margin of 65% was comparable to the first quarter 2015
- Adjusted EBITDA decreased to negative $(4.5) million compared with $4.6 million in the prior year period
Business Highlights:
- Continued Expansion of Pernix Prescriptions Direct (PPD) program
- Over 10,000 patients enrolled in the program since inception
- Average weekly growth in prescriptions of 16% since launch in August 2015
- PPD currently represents 11% of Treximet and 6% of Silenor weekly total prescriptions
- Fourth Orange Book patent issued for Zohydro ER® with BeadTekTM adding intellectual property protection through 2033; three additional patents in this family expected to issue in May 2016
"We are positioned for growth across each of our core brands over the remaining months of 2016," said Doug Drysdale, Chairman and Chief Executive Officer. "In support of this growth, the launch and continued ramp of our PPD program is meeting our internal expectations and we are optimistic about our ability to grow the number of physicians recommending and patients using PPD. Refill rates in the PPD program are higher than retail levels, which will create a compounding effect for our script volumes as more patients utilize PPD and as we add more new scripts."
Financial Results – First Quarter 2016
For the first quarter of 2016, net revenue was $32.5 million compared to $33.9 million for the first quarter of 2015. A summary of net revenue is outlined below (dollars in millions):
| Three Months Ended | |||||||||||
| March 31, | Increase | ||||||||||
| 2016 | 2015 | (Decrease) | |||||||||
| Treximet | $ | 16.3 | $ | 21.0 | $ | (4.7 | ) | ||||
| Silenor | 3.6 | 5.0 | (1.4 | ) | |||||||
| Zohydro | 5.5 | - | 5.5 | ||||||||
| Other products | 7.0 | 7.6 | (0.6 | ) | |||||||
| Net product sales | 32.4 | 33.6 | (1.2 | ) | |||||||
| Co-promotion and other revenue | 0.1 | 0.3 | (0.2 | ) | |||||||
| Total net revenues | $ | 32.5 | $ | 33.9 | $ | (1.4 | ) | ||||
Treximet net sales decreased by $4.7 million or 22% during the three months ended March 31, 2016 compared to the three months ended March 31, 2015 due to a decrease in sales volume and higher revenue deductions for managed care rebates. Silenor net sales decreased by $1.4 million, or 28%, compared to the first quarter of 2015. The decrease in sales of Silenor was primarily driven by a decrease in sales volume and higher revenue deductions for managed care rebates. Zohydro ER was acquired in April 2015 with the first sale occurring on May 4, 2015. Other net product sales decreased by $582,000, or 8%, compared to the first quarter of 2015. This decrease was primarily due to (i) the discontinuation of certain less profitable products, primarily generics, and certain OTC monograph seasonal cough and cold products and (ii) the termination of certain contracts pursuant to which we marketed and distributed products for others and invoiced those sales. The decrease in Other net product sales was partially offset by price increases on certain products. Co-promotion and other revenue decreased by $199,000 compared to the prior year, primarily attributable to the termination of a co-promotion agreement.
Gross margins for the first quarter of 2016 were 65.4%, consistent with the 65.8% in the first quarter of 2015.
Selling, general and administrative expense (SG&A) in the first quarter 2016 increased by $5.5 million, or 27%, to $26.0 million as compared to $20.5 million in the first quarter of 2015. The increase was driven primarily by selling and marketing costs for Zohydro ER with BeadTek, which was acquired in April 2015.
Research and development expenses decreased by $66,000, to $928,000 in the first quarter of 2016, compared to $994,000 million in the first quarter of 2015. The decrease was related to the timing of on-going work for new formulations of Treximet and Zohydro ER.
Depreciation and amortization expense was $23.7 million in the first quarter of 2016 versus $18.4 million in the prior year period, an increase of $5.3 million. The increase was primarily a result of the Zohydro ER acquisition.
Interest expense for the three months ended March 31, 2016 was $9.0 million compared to $9.4 million last year, a decrease of $374,000, primarily due to the principal payments related to our 12% Senior Secured Notes, issued in August 2014.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, a non-GAAP measure) was ($4.5) million for the first quarter of 2016 compared to $4.6 million in the first quarter of 2015. See the table at the end of this press release for a reconciliation of net loss to Adjusted EBITDA.
Prescription Trends
The prescription trends for the first quarter of 2016 highlighted below are derived from Symphony Health Solutions' Integrated DataVerse (IDV)® solution:
- Treximet total prescriptions decreased by 6% and new prescriptions increased by 4% as compared to the first quarter of the prior year. Total and new prescriptions decreased by 13% and 7%, respectively, versus the fourth quarter of 2015, both in line with the sequential quarterly decline in the branded migraine market.
- Silenor total and new prescriptions increased by 17% and 9%, respectively, as compared to the first quarter of the prior year. These increases are in contrast to decreases in the Insomnia Market total and new scripts of negative 3% and 4%, respectively. Total prescriptions decreased by 3%, while new prescriptions increased by 4% compared to the fourth quarter of 2015.
Liquidity
As of March 31, 2016, the Company had total liquidity of $47.4 million, consisting of $36.6 million of cash and approximately $10.8 million available to draw under its $50.0 million revolving credit facility. Total principal amount of debt outstanding at the end of the quarter was $339.1 million and net debt was $302.5 million. The total principal amount of debt consists of $195.1 million of 12% Senior Secured notes, $130.0 million of 4.25% convertible notes and $14.0 million under our revolving credit facility.
Pernix continues to pursue a number of actions to improve its financial flexibility and strengthen its balance sheet. These actions include improving the Company's operating cash flow generation by optimizing its product portfolio, continuing to examine its cost structure, engaging with lenders to constructively restructure existing debt and exploring strategic partnerships and collaborations. While Pernix is committed to actively pursuing these activities, there can be no assurance that these initiatives will result in any transaction.
2016 Full-Year Guidance
For the next several months, Pernix management and Board of Directors expect to be fully engaged in driving the initiatives discussed above. During this time Pernix is temporarily withdrawing its prior 2016 financial guidance. The Company intends to update its guidance upon the conclusion of these initiatives.
Conference Call
As previously announced, Pernix will hold a conference call to discuss results for the first quarter:
- Date: Thursday, May 5, 2016
- Time: 8:30 A.M. EST
- Live webcast: http://public.viavid.com/index.php?id=119195
- Toll free: 888-312-9865
- International: 719-457-2605
- Passcode: 7364975
The webcast of the call will be archived for 30 days via the Investors section of the Company's website.
About Pernix Therapeutics
Pernix Therapeutics is a specialty pharmaceutical business with a focus on acquiring, developing and commercializing prescription drugs primarily for the U.S. market. The Company targets underserved therapeutic areas such as CNS, including neurology and psychiatry, and has an interest in expanding into additional specialty segments. The Company promotes its branded products to physicians through its Pernix sales force, uses contracted sales organizations to market its non-core, cough and cold products, and markets its generic portfolio through its wholly owned subsidiaries, Macoven Pharmaceuticals, LLC and Cypress Pharmaceutical, Inc.
To learn more about Pernix Therapeutics, visit www.pernixtx.com.
Treximet® and Silenor® are registered trademarks of Pernix Therapeutics Holdings, Inc.
Zohydro® ER is a registered trademark of Pernix Therapeutics Holdings, Inc.
BeadTek™ is a trademark used by Pernix under license.
Non-GAAP Financial Measures
Pernix is disclosing non-GAAP financial measures in this press release. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our operating results because they exclude amounts that management and the board of directors do not consider part of core operating results or that are non-recurring when assessing the performance of the organization. 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.
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.
| PERNIX THERAPEUTICS HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| (In thousands, except per share data) | ||||||||||
| (unaudited) | ||||||||||
| March 31, | December 31, | |||||||||
| Assets | 2016 | 2015 | ||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 36,646 | $ | 56,135 | ||||||
| Restricted cash | 10,003 | 10,002 | ||||||||
| Accounts receivable, net | 51,756 | 61,209 | ||||||||
| Inventory, net | 11,827 | 10,035 | ||||||||
| Prepaid expenses and other current assets | 12,112 | 11,574 | ||||||||
| Income tax receivable | 6,856 | 6,735 | ||||||||
| Total current assets | 129,200 | 155,690 | ||||||||
| Property and equipment, net | 2,459 | 2,346 | ||||||||
| Goodwill | 54,865 | 54,865 | ||||||||
| Intangible assets, net | 262,393 | 285,943 | ||||||||
| Other | 326 | 347 | ||||||||
| Total assets | $ | 449,243 | $ | 499,191 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable and accrued expenses | $ | 37,406 | $ | 27,772 | ||||||
| Accrued allowances | 62,483 | 62,678 | ||||||||
| Interest payable | 6,726 | 11,903 | ||||||||
| Treximet Secured Notes – current | - | 13,335 | ||||||||
| Restricted cash payable | 10,003 | 10,002 | ||||||||
| Other liabilities - current | 4,572 | 6,753 | ||||||||
| Total current liabilities | 121,190 | 132,443 | ||||||||
| Convertible notes – long-term | 100,818 | 99,776 | ||||||||
| Derivative liability | 2,371 | 9,165 | ||||||||
| Contingent consideration | 8,553 | 14,055 | ||||||||
| Treximet Secured Notes – long-term | 189,278 | 188,715 | ||||||||
| Credit facilities – long-term | 14,000 | 15,000 | ||||||||
| Deferred income tax liability - long-term | 65 | 202 | ||||||||
| Other liabilities - long-term | 4,357 | 6,738 | ||||||||
| Total liabilities | 440,632 | 466,094 | ||||||||
| Stockholders' equity: | ||||||||||
| Preferred stock, $0.01 par value, authorized 10,000,000 shares; no shares issued | ||||||||||
| and outstanding | - | - | ||||||||
| Common stock, $0.01 par value, 140,000,000 shares authorized, 63,899,899 | ||||||||||
| and 63,874,549 issued and 61,127,965 and 61,112,527 outstanding | ||||||||||
| at March 31, 2016 and December 31, 2015, respectively | 611 | 611 | ||||||||
| Additional paid-in capital | 228,306 | 226,837 | ||||||||
| Treasury stock, at cost, 2,771,934 and 2,762,022 shares held at March 31, 2016 | ||||||||||
| and December 31, 2015, respectively | (5,567 | ) | (5,548 | ) | ||||||
| Accumulated deficit | (214,739 | ) | (188,803 | ) | ||||||
| Total stockholders' equity | 8,611 | 33,097 | ||||||||
| Total liabilities and stockholders' equity | $ | 449,243 | $ | 499,191 | ||||||
| PERNIX THERAPEUTICS HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
| (in thousands, except per share data) | ||||||||||
| (unaudited) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2016 | 2015 | |||||||||
| Net revenues | $ | 32,469 | $ | 33,889 | ||||||
| Costs and operating expenses: | ||||||||||
| Cost of product sales | 11,238 | 11,596 | ||||||||
| Selling, general and administrative expense | 25,950 | 20,466 | ||||||||
| Research and development expense | 928 | 994 | ||||||||
| Depreciation and amortization expense | 23,664 | 18,433 | ||||||||
| Change in fair value of contingent consideration | (5,502 | ) | - | |||||||
| Restructuring costs | - | 1,305 | ||||||||
| Total costs and operating expenses | 56,278 | 52,794 | ||||||||
| Loss from operations | (23,809 | ) | (18,905 | ) | ||||||
| Other income (expense): | ||||||||||
| Interest income | - | 56 | ||||||||
| Foreign currency transaction gain | 138 | - | ||||||||
| Change in fair value of derivative liability | 6,794 | - | ||||||||
| Interest expense | (9,024 | ) | (9,398 | ) | ||||||
| Total other expense, net | (2,092 | ) | (9,342 | ) | ||||||
| Loss before income tax expense (benefit) | (25,901 | ) | (28,247 | ) | ||||||
| Income tax expense (benefit) | 35 | (4,573 | ) | |||||||
| Net loss | (25,936 | ) | (23,674 | ) | ||||||
| Net loss per common and potential common share | ||||||||||
| Basic | $ | (0.42 | ) | $ | (0.62 | ) | ||||
| Diluted | $ | (0.42 | ) | $ | (0.62 | ) | ||||
| Weighted-average common and potential common | ||||||||||
| shares outstanding: | ||||||||||
| Basic | 61,121 | 38,453 | ||||||||
| Diluted | 61,121 | 38,453 | ||||||||
Supplemental Financial Information
The following table presents a reconciliation of Pernix's net loss to adjusted EBITDA. The Company presents these measures to assist investors in evaluating Pernix's operating performance and comparing the Company's results with those of other companies. Adjusted EBITDA should not be considered in isolation from or as a substitute for net income.
| PERNIX THERAPEUTICS HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||||
| GAAP Net Loss to Adjusted EBITDA Reconciliation Table | |||||||||||||
| (in thousands, unaudited) | |||||||||||||
| Three Months Ended | |||||||||||||
| March 31, | |||||||||||||
| 2016 | 2015 | ||||||||||||
| GAAP net loss | $ | (25,936 | ) | $ | (23,674 | ) | |||||||
| Adjustments: | |||||||||||||
| Interest expense, net | 9,024 | 9,342 | |||||||||||
| Depreciation and amortization | 23,664 | 18,433 | |||||||||||
| Income tax expense (benefit) | 35 | (4,573 | ) | ||||||||||
| EBITDA | 6,787 | (472 | ) | ||||||||||
| Net revenue adjustments (1) | - | 303 | |||||||||||
| Cost of product sales adjustments (2) | - | 97 | |||||||||||
| Selling, general and administrative adjustments (3) | 1,146 | 3,358 | |||||||||||
| Change in fair value of contingent consideration | (5,502 | ) | - | ||||||||||
| Change in fair value of derivative liability | (6,794 | ) | - | ||||||||||
| Foreign currency transaction gains | (138 | ) | - | ||||||||||
| Restructuring costs (4) | - | 1,305 | |||||||||||
| Adjusted EBITDA | $ | (4,501 | ) | $ | 4,591 | ||||||||
(1) To exclude impact on returns from FDA reclass of Hydrocodone products from C3 to C2 classification of $0 and $303,000, for the three months ended March 31, 2016 and 2015, respectively.
(2) To exclude amortization of inventory step-up from acquisitions.
(3) To exclude deal costs of $142,000 and $742,000; stock compensation expense of $1.5 million and $1.2 million; severance expense of $490,000 and $0; and litigation settlement expenses of ($956,000) and $1.4 million for the three months ended March 31, 2016 and 2015, respectively.
(4) To exclude the cost related to the initiative to restructure operations and shut down the Charleston, South Carolina site.
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