Osmotica Pharmaceuticals plc Reports Second Quarter 2019 Results

Second quarter 2019 total revenue of $57.5 million

On track to submit NDA for RVL-1201 (oxymetazoline hydrochloride ophthalmic solution, 0.1%) for acquired blepharoptosis, or droopy eyelid, by end of Q3 2019

BRIDGEWATER, N.J., Aug. 08, 2019 (GLOBE NEWSWIRE) -- Osmotica Pharmaceuticals plc ("Osmotica" or the "Company") OSMT, a fully integrated biopharmaceutical company, today announced business highlights and financial results for the quarter ended June 30, 2019.

"During the second quarter, we continued to make meaningful progress in our ongoing transition towards becoming a specialty branded pharmaceutical company.  We once again saw prescription  growth from key promoted brands – Divigel^®, methylphenidate hydrochloride ER 72 mg (M-72), and Osmolex ER™ (amantadine extended-release tablets) – as well as the previously announced successful completion of our clinical program for RVL-1201, our potential first-in-class ophthalmic solution in development for the treatment of droopy eyelid.  We remain on track to submit our NDA for RVL-1201 by the end of the third quarter of 2019.  We are also in dialogue with the FDA to discuss the potential resubmission of our NDA for arbaclofen ER, and remain optimistic based on the strength of our clinical efficacy and safety data in M.S. spasticity," stated Brian Markison, Chief Executive Officer.

"Combined with the significant and compelling opportunity we have with RVL-1201, our late-stage pipeline represents a tremendous opportunity," added Markison.

Second Quarter 2019 Financial Results

• Total revenues were $57.5 million, compared to $71.9 million in the second quarter of 2018;
• Net loss was $124.7 million, including an impairment charge of $125.8 million, compared to net income of $5.9 million in the second quarter of 2018;
• Adjusted EBITDA¹ was $14.5 million, compared to Adjusted EBITDA of $34.6 million in the second quarter of 2018; and
• Cash and cash equivalents were $63.7 million and debt (net of deferred financing costs) was $267.4 million as of June 30, 2019.

¹Adjusted EBITDA is a non-GAAP measure. Adjusted EBITDA is more fully described and reconciled from net loss determined under U.S. generally accepted accounting principles ("GAAP") in "Presentation of Non-GAAP Measures" and the attached table "Osmotica Pharmaceuticals plc GAAP to Non-GAAP Reconciliations."

Second Quarter 2019 Financial Results

Total revenues decreased by $14.3 million to $57.5 million for the three months ended June 30, 2019, as compared to $ 71.9 million for the three months ended June 30, 2018, primarily due to a decrease in net product sales.

Net product sales decreased by $15.8 million to $56.2 million for the three months ended June 30, 2019, as compared to $72.0 million for the three months ended June 30, 2018, largely due to declines in sales of methylphenidate ER and venlafaxine ER tablets (VERT). Net sales of methylphenidate ER (including M-72 which was launched in the second quarter of 2018) decreased by 56% during the quarter due to additional competitors entering the market resulting in significantly lower net selling prices.  VERT net sales decreased 7%, reflecting lower sales volumes following the launch of a competing product in the largest dosage strength during the quarter, partially offset by higher realized net selling prices due to lower than estimated product returns.

Selling, general and administrative expenses increased $8.8 million during the three months ended June 30, 2019 to $25.5 million as compared to $16.7 million in the three months ended June 30, 2018. The increase reflects additions to salesforce headcount and marketing costs associated with the launch of Osmolex ER, together with share compensation expense and higher costs associated with being a public company.

Research and development expenses decreased by $3.5 million in the three months ended June 30, 2019 to $5.4 million as compared to $8.9 million in the three months ended June 30, 2018. The decrease reflects the completion of Phase III clinical trials of both arbaclofen ER and RVL-1201 during the first and second quarters of 2019, respectively, partially offset by share compensation expense.

The Company incurred an impairment of intangible assets charge of $125.8 million during the three months ended June 30, 2019, primarily related to the write down to fair value of VERT due to price and volume decreases resulting from competing generic products, a slower sales uptake of Osmolex ER  and the decision to discontinue selling a formulation of Corvite

Net loss for the second quarter of 2019 was $124.7 million, compared to net income of $5.9 million in the second quarter of 2018.

Adjusted EBITDA for the second quarter of 2019 was $14.5 million, compared to Adjusted EBITDA of $34.6 million in the second quarter of 2018.

For a reconciliation of Adjusted EBITDA to net loss (income), the most comparable GAAP financial measure, please see the "Osmotica Pharmaceuticals plc GAAP to Non-GAAP Reconciliations" table at the end of this press release.

Liquidity

As of June 30, 2019, Osmotica had cash and cash equivalents of $63.7 million and $267.4 million in debt (net of deferred financing costs). The Company had $50.0 million of unused borrowing capacity available under its revolving credit facility as of June 30, 2019

Presentation of Non-GAAP Measures

In addition to the results provided in accordance with GAAP throughout this press release, the Company has presented Adjusted EBITDA, which is a non-GAAP measurement.  Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization ("EBITDA") adjusted for (i) non-operating income or expense, and (ii) the impact of certain non-cash, nonrecurring or other items that are included in net loss and EBITDA that we do not consider indicative of our ongoing operating performance. In particular, Adjusted EBITDA excludes the following from EBITDA:  impairment of intangible assets, management fees, IPO expenses, severance expenses, foreign currency translation, legal settlements and share-based compensation expense. We use Adjusted EBITDA for business planning purposes, in assessing our performance and determining the compensation of substantially all of our employees, including our executive officers, and in measuring our performance relative to that of our competitors.  We also believe that Adjusted EBITDA provides investors with useful information to understand our operating results and analyze financial and business trends on a period-to-period basis.  Adjusted EBITDA has important limitations as an analytical tool, however, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.  Adjusted EBITDA is not intended to replace, and should not be considered superior to, the presentation of our financial results in accordance with GAAP.  Our definition of Adjusted EBITDA may differ from similar measures reported by other companies and may not be comparable to other similarly titled measures.  Adjusted EBITDA is reconciled from the net loss as determined under GAAP in the attached table "Osmotica Pharmaceuticals plc GAAP to Non-GAAP Reconciliations." 

Forward Looking Statements

This press release includes statements that express the Company's opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, "forward-looking statements." The Company's actual results may vary significantly from the results anticipated in these forward-looking statements, which can generally be identified by the use of forward-looking terminology, including the terms "believes," "expects," "may," "will," "should," "seeks," "projects," "approximately," "intends," "plans," "estimates" or "anticipates," or, in each case, their negatives or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They include statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, financial guidance, growth plan, strategies, trends and other events, particularly relating to sales of current products and the development, approval and introduction of new products, FDA and other regulatory applications, approvals and actions, the continuation of historical trends, our ability to operate our business under our new capital and operating structure, and the sufficiency of our cash balances and cash generated from operating and financing activities for future liquidity and capital resource needs.  By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We may not achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place significant reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make.  Important factors that could cause actual results and events to differ materially from those indicated in the forward-looking statements include the following: our ability to successfully develop or commercialize new products, or do so on a timely or cost effective basis; our dependence on a limited number of products; failures of or delays in clinical trials or other delays in obtaining regulatory approval or commencing product sales for new products; the impact of legal proceedings; our ability to service our substantial debt; our ability to raise additional capital; the impact of competition from both brand and generic companies; any interruption at our manufacturing facility, our warehouses or at facilities operated by third parties that we rely on for our products; our dependence on our major customers; our ability to develop and maintain our sales capabilities; the impact of any litigation related to allegations of infringement of intellectual property; any changes to the coverage and reimbursement levels for our products by governmental authorities and other third-party payors as a result of healthcare reform or otherwise; the impact of any changes in the extensive governmental regulation that we face; manufacturing or quality control issues that we may face; and other risks and uncertainties more fully described in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2018 and other filings that the Company makes with the Securities and Exchange Commission. These forward-looking statements speak only as of the time of this release and we do not undertake to publicly update or revise them, whether as a result of new information, future events or otherwise, except as required by law.

Conference Call

As previously announced, Osmotica management will host its second quarter 2019 conference call as follows:

The webcast will be archived for 30 days at the aforementioned URL.

About Osmotica Pharmaceuticals plc
Osmotica Pharmaceuticals plc is a fully integrated biopharmaceutical company focused on the development and commercialization of specialty products that target markets with underserved patient populations. Our diversified product portfolio in the specialty neurology and women's health therapeutic areas, together with our non-promoted complex formulations of generic drugs, form the foundation of our unwavering commitment to improve patients' lives. 

Osmotica has a late‑stage development pipeline highlighted by two NDA candidates that recently completed Phase III clinical trials: arbaclofen ER for spasticity in multiple sclerosis patients and RVL‑1201 for the treatment of acquired blepharoptosis, or droopy eyelid.

Osmotica has operations in the United States, Argentina, and Hungary. 

Investor and Media Relations for Osmotica Pharmaceuticals plc
Lisa M. Wilson
In-Site Communications, Inc.
T: 212-452-2793
E: lwilson@insitecony.com

-Financial tables follow-