Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - Impax Laboratories, LLC | ipxl-8x9x2017ex991.htm |
| 8-K - 8-K - Impax Laboratories, LLC | ipxl-8x9x2017x8k.htm |
1
Second Quarter 2017 Results
and Business Update
August 9, 2017
2
Impax Cautionary Statement Regarding
Forward Looking Statements
"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995:
To the extent any statements made in this presentation contain information that is not historical; these statements are forward-looking in nature
and express the beliefs and expectations of management. Such statements are based on current expectations and involve a number of known
and unknown risks and uncertainties that could cause the Company’s future results, performance, or achievements to differ significantly from
the results, performance, or achievements expressed or implied by such forward-looking statements. Such risks and uncertainties include, but
are not limited to, fluctuations in the Company’s operating results and financial condition, the volatility of the market price of the Company’s
common stock, the Company’s ability to successfully develop and commercialize pharmaceutical products in a timely manner, the impact of
competition, the effect of any manufacturing or quality control problems, the Company’s ability to manage its growth, risks related to
acquisitions of or investments in technologies, products or businesses, the risks related to the sale or closure of the Company’s Taiwan
manufacturing facility, effects from fluctuations in currency exchange rates between the U.S. dollar and the Taiwan dollar, risks relating to
goodwill and intangibles, the reduction or loss of business with any significant customer, the substantial portion of the Company’s total revenues
derived from sales of a limited number of products, the impact of consolidation of the Company’s customer base, the Company’s ability to
sustain profitability and positive cash flows, the impact of any valuation allowance on the Company’s deferred tax assets, the restrictions
imposed by the Company’s credit facility and indenture, the Company’s level of indebtedness and liabilities and the potential impact on cash
flow available for operations, the availability of additional funds in the future, any delays or unanticipated expenses in connection with the
operation of the Company’s manufacturing facilities, the effect of foreign economic, political, legal and other risks on the Company’s operations
abroad, the uncertainty of patent litigation and other legal proceedings, the increased government scrutiny on the Company’s agreements to
settle patent litigations, product development risks and the difficulty of predicting FDA filings and approvals, consumer acceptance and demand
for new pharmaceutical products, the impact of market perceptions of the Company and the safety and quality of the Company’s products, the
Company’s determinations to discontinue the manufacture and distribution of certain products, the Company’s ability to achieve returns on its
investments in research and development activities, changes to FDA approval requirements, the Company’s ability to successfully conduct
clinical trials, the Company’s reliance on third parties to conduct clinical trials and testing, the Company’s lack of a license partner for
commercialization of Numient® (IPX066) outside of the United States, impact of illegal distribution and sale by third parties of counterfeits or
stolen products, the availability of raw materials and impact of interruptions in the Company’s supply chain, the Company’s policies regarding
returns, rebates, allowances and chargebacks, the use of controlled substances in the Company’s products, the effect of current economic
conditions on the Company’s industry, business, results of operations and financial condition, disruptions or failures in the Company’s
information technology systems and network infrastructure caused by third party breaches or other events, the Company’s reliance on alliance
and collaboration agreements, the Company’s reliance on licenses to proprietary technologies, the Company’s dependence on certain
employees, the Company’s ability to comply with legal and regulatory requirements governing the healthcare industry, the regulatory
environment, the effect of certain provisions in the Company’s government contracts, the Company’s ability to protect its intellectual property,
exposure to product liability claims, changes in tax regulations, uncertainties involved in the preparation of the Company’s financial statements,
the Company’s ability to maintain an effective system of internal control over financial reporting, the effect of terrorist attacks on the Company’s
business, the location of the Company’s manufacturing and research and development facilities near earthquake fault lines, expansion of social
media platforms and other risks described in the Company’s periodic reports filed with the Securities and Exchange Commission. Forward-
looking statements speak only as to the date on which they are made, and the Company undertakes no obligation to update publicly or revise
any forward-looking statement, regardless of whether new information becomes available, future developments occur or otherwise.
Trademarks referenced herein are the property of their respective owners.
©2017 Impax Laboratories, Inc. All Rights Reserved.
3
Presentation Overview
Paul Bisaro – President & Chief Executive Officer
2Q 2017 Results
Business Update
Bryan Reasons – Senior Vice President, Chief Financial Officer
2Q 2017 Financial Review
Paul Bisaro
2017 Financial Guidance
Path Forward
4
Paul Bisaro
President & CEO
5
Solid Second Quarter 2017 Performance
$173
$184
$202
2Q16 1Q17 2Q17
$41
$32
$39
2Q16 1Q17 2Q17
$0.21
$0.11
$0.18
2Q16 1Q17 2Q17
Revenues
$ millions
Adjusted EBITDA
$ millions
Adjusted EPS
Refer to the GAAP to non-GAAP reconciliation tables in the appendix for a reconciliation of non-GAAP results
• Revenue growth of 17% over 2Q16
• Sequential revenue growth of 10% over 1Q17
› Adjusted EBITDA up 23%
› Adjusted EPS up 64%
• Focused on improving profitability and earnings
6
Generics Business Second Quarter Highlights
Second Quarter
• Approved and launched first-to-market generic Vytorin®
› Captured more than 40% share on launch
• Continued growth of epinephrine auto-injector
› 11% revenue growth over 2Q16
› 46% revenue growth over 1Q17
Post Second Quarter Events
• Generic product approvals
› AB-rated generic Concerta® - securing API quota, targeting late 4Q17 launch
› Additional strengths of Generic Focalin® XR – launched immediately
• Settled Opana® ER litigation with Endo Pharmaceuticals
7
• 27% revenue growth over 2Q16
• 10% sequential revenue growth over 1Q17
• Evaluating impact of marketing programs
• Revenue down 7% compared to 2Q16
• 25% sequential revenue growth over 1Q17
• Slowing growth rate due to additional competition
• Short-term Albenza supply disruption in May
impacted 2Q17 sales – down 66% over 2Q16
• Continued volume growth of Emverm
Specialty Business Second Quarter Highlights
8
Pre-2017 Announced Initiatives
Achieved Initiatives Completed
Closure of Middlesex manufacturing site Mid-2017
Closure of Philadelphia packaging facility 2016
Restructure Technical Operations and R&D 2015
Delivering on plan designed to improve efficiencies and profitability;
provide resources to support growth initiatives
Consolidation and Improvement Plan
~$45M Run-Rate Savings Expected in 2018
2016
Realized ~$20M of total
run-rate savings
2017
~$12M of savings by year-end
2018
Full run-rate savings of ~$45M
9
2017 Announced Initiatives
Ongoing Initiatives Completion Timing
Consolidation of all generic R&D to Hayward, CA Completed mid-2017
Closure of Middlesex packaging site Completion by 1Q18
Rationalizing generic portfolio to eliminate low-value products Completion by 1Q18
Strategic alternatives for Taiwan manufacturing site TBD
Reorganizing certain functions including quality, engineering and
supply chain operations
TBD
Efforts designed to improve efficiencies are well underway…strong
momentum toward achieving targeted efficiencies
Consolidation and Improvement Plan
Additional ~$85M Run-Rate Savings Expected by Year-End 2019**
2017
Limited savings impact
End of 2018
Approximately half of total
run-rate savings
End of 2019
Full run-rate savings of ~$85M
** Total run-rate savings and timing dependent on Taiwan strategic alternatives
10
Continuing to Expand Pipeline Opportunities
Generic R&D Specialty Pharma R&D
IPX203 Carbidopa-Levodopa
Phase 2b study
Multiple dose study in patients with
advanced Parkinson’s disease
Readout of Phase 2b expected during
the third quarter of 2017
Evaluating additional internal and
external pipeline opportunities
Advancing pipeline lays the foundation for growth
Source of sales data: IMS NSP June 2017; *U.S. Brand/Generic market sales; Pipeline data as of August 2, 2017
6 4
13
14
Pending
at FDA
$16B
Under
Development
$4B
19 18
Portfolio of 37 Products
Current U.S. Brand/Generic Market of $20B
10 15
# of Potential
Products FTF or FTM
Solid Oral Dose
Alternative Dose
2017 ANDAs Approved
Aspirin/Dipyridamole ER Cap
(Aggrenox®)
Naftifine Cream 2%
Olopatadine Nasal Spray
(Patanase®)
Dexmethylphenidate
Hydrochloride ER Capsules
(Focalin XR®) 25 mg and 35 mg
Ezetimibe/Simvastatin Tablet
(Vytorin®)
Methylphenidate Hydrochloride
ER Tablet (Concerta®)
11
Bryan Reasons
Chief Financial Officer
12
Generic Division 2Q 2017 Results
Refer to the GAAP to non-GAAP reconciliation tables in the appendix for a reconciliation of non-GAAP results
$ millions 2Q 2017 1Q 2017
Change
2Q/1Q
2Q 2016
Change
2Q/2Q
GENERIC DIVISION
Total Revenues $150.9 $134.1 12% $121.7 24%
GAAP Gross Margin 28% (6%) -- 31% --
Adjusted Gross Margin 43% 39% -- 40% --
GAAP Operating Income (Loss) $12.6 ($38.8) 132% $18.5 (32%)
Adjusted Operating Income $39.5 $28.4 39% $31.1 27%
• 1Q17 GAAP results primarily impacted by non-cash intangible asset impairment charges
13
Specialty Pharma Division 2Q 2017 Results
Refer to the GAAP to non-GAAP reconciliation tables in the appendix for a reconciliation of non-GAAP results
$ millions 2Q 2017 1Q 2017
Change
2Q/1Q
2Q 2016
Change
2Q/2Q
SPECIALTY PHARMA DIVISION
Total Revenues $51.2 $50.3 2% $50.9 1%
GAAP Gross Margin 59% 66% -- 70% --
Adjusted Gross Margin 71% 74% -- 85% --
GAAP Operating Income $6.9 $11.2 (38%) $13.1 (47%)
Adjusted Operating Income $12.7 $15.1 (16%) $20.5 (38%)
14
Consolidated 2Q 2017 Results
Refer to the GAAP to non-GAAP reconciliation tables in the appendix for a reconciliation of non-GAAP results
$ millions, except per share
amounts
2Q 2017 1Q 2017
Change
2Q/1Q
2Q 2016
Change
2Q/2Q
EBITDA $16.6 ($30.2) 155% $23.4 (29%)
Adjusted EBITDA $39.2 $31.9 23% $40.7 (4%)
GAAP Loss Per Share ($0.28) ($1.37) 80% ($0.04) (600%)
Adjusted Diluted EPS $0.18 $0.11 64% $0.21 (14%)
GAAP Tax Rate 3% (46%) -- 32% --
Adjusted Tax Rate 31% 31% -- 34% --
• 1Q17 GAAP results primarily impacted by non-cash intangible asset impairment charges
15
Paul Bisaro
President & CEO
16
Reaffirmed 2017 EPS Guidance
**Excludes new cost savings initiatives as outlined on slide 9.
The Company’s full year 2017 estimates are based on management’s current expectations, including with respect to prescription trends,
pricing levels, inventory levels, and the anticipated timing of future product launches and events. These statements are forward-looking, and
actual results could differ materially depending on market conditions and the factors set forth under our “Safe Harbor” statement above.
Previous Guidance
May 10**
Updated Guidance
August 9**
Adjusted Gross Margin as a % of
Revenues
~ 47% to 49% No Change
Adjusted R&D & Patent Litigation
Expense
~ $90M to $95M $93M to $97M
Adjusted Selling, General &
Administrative Expense
~ $190M to $195M No Change
Adjusted Interest Expense ~ $28M No Change
Adjusted EPS ~ $0.55 to $0.70 No Change
Tax Rate ~ 33% to 34% ~33%
Capital Expenditures ~ $25M to $30M No Change
17
Path Forward
• Generics: Continuing internal R&D investment and external R&D license efforts
• Specialty: Continuing focus on Movement Disorders pipeline and opportunistically
in-license external opportunities
Invest in
Organic
Growth
• Maintain high level of Quality and Compliance
• Achieve superior service levels
• Deliver differentiated products to our customers
Maintain
Customer
Focus
• Achieve consolidation targets without business disruption
• Continue to explore additional cost savings opportunities
Achieve
“CIP” Target
• Strengthen Generic and Specialty franchises
Pursue
Creative
Business
Development
Position Impax for Sustainable Long-Term Growth
18
Second Quarter 2017 Results
and Business Update
Q&A Session
August 9, 2017
19
ANDA Pipeline Includes Several Potential High-Value
First-to-Market Opportunities
Source of sales data: IMS NPS June 2017; Pipeline data as of August 2, 2017
1 Launched authorized generic in April 2016
Disclosed Pending ANDAs
Generic Product Name Brand
IMS
Sales
Potential Launch
Timing
FTM
Opportunity
Apixaban IR tablet Eliquis® $4.0B Pending litigation
Dimethyl Fumarate DR Cap Tecfidera® $3.6B Pending litigation
Oxycodone ER tablet (new formulation) 1 OxyContin® $2.1B Settled, not disclosed
Sevelamer Carbonate IR tablet Renvela® $1.9B Approval
Teriflunomide IR tablet Aubagio® $1.2B Settled, not disclosed
Colesevelam IR tablet Welchol® $597M Approval
Oxymorphone ER tablet (new
formulation)
Opana ER® $274M Pending litigation
Carvedilol ER capsule Coreg CR® $217M Approval
Fentanyl Buccal IR tablet Fentora® $125M Settled, not disclosed
Risedronate Sodium DR tablet Atelvia® $23M Approval
20
GAAP to Adjusted Results Reconciliation
The following table reconciles total Company reported cost of revenues to adjusted cost of revenues, adjusted gross profit,
adjusted gross margin, adjusted research and development expenses, and adjusted selling, general and administrative expenses.
(Unaudited, In thousands)
Refer to the Second Quarter 2017 Earnings Release for an explanation of adjusted items. The sum of the individual amounts may not equal due to rounding.
(a) Adjusted gross profit is calculated as total revenues less adjusted cost of revenues. Adjusted gross margin is calculated as adjusted gross profit divided by
total revenues.
June 30, March 31, June 30,
2017 2017 2016
Cost of revenues 129,676$ 120,232$ 98,061$
Cost of revenues impairment charges - 39,280 1,545
Adjusted to deduct:
Amortization 17,219 17,232 12,469
Intangible asset impairment charges - 39,280 1,545
Business development 49 8 -
Restructuring and severance charges 7,402 6,139 4,991
Middlesex plant closure 3,344 1,636 -
Adjusted cost of revenues 101,662$ 95,217$ 80,601$
Adjusted gross profit (a) 100,420$ 89,186$ 91,989$
Adjusted gross margin (a) 49.7% 48.4% 53.3%
Research and development expenses 26,847$ 22,489$ 20,800$
In-process research and development impairment charges - 6,079 946
Adjusted to deduct:
Intangible asset impairment charges - 6,079 946
Restructuring and severance charges 2,926 - -
Other 1,825 650 -
Adjusted research and development expenses 22,096$ 21,839$ 20,800$
Selling, general and administrative expenses 51,615$ 47,055$ 44,908$
Adjusted to deduct:
Business development expenses 50 42 1,448
Turi g legal expenses 89 (495) -
CEO transition costs 267 - -
Taiwan accelerated depreciation 4 - -
Philadelphia packaging and distribution restructuring - 31
Restructuring and severance charges 271 - 31
Adjusted selling, general and administrative expenses 51,205$ 47,508$ 43,429$
Three Months Ended
21
GAAP to Adjusted Net Income Reconciliation
The following table reconciles reported net loss to adjusted net income.
(Unaudited, In thousands, except per share and per share data)
June 30, March 31, June 30,
2017 2017 2016
Net loss (20,417)$ (98,431)$ (2,701)$
Adjusted to add (deduct):
Amortization 17,219 17,232 12,469
Non-cash interest expense 6,430 6,312 5,409
Business development expenses 99 50 1,448
Intangible asset impairment charges - 45,359 2,491
Reserve for Turing receivable 2,353 317 -
Turing legal expenses 89 (495) -
Restructuring and severance charges 10,599 6,139 5,022
Fixed asset impairment charges 1,894 - -
Gain on sale of intangible assets (11,850) - -
Gain on sale of PP&E (350) - -
Loss on debt extinguishment - 1,215 -
Middlesex plant closure 3,344 1,636 -
Legal settlements 7,900 - -
Other 2,286 931 -
Income tax effect (6,456) 27,463 (9,130)
Adjusted net income 13,140$ 7,728$ 15,008$
Adjusted net income per diluted share 0.18$ 0.11$ 0.21$
Net loss per diluted share (0.28)$ (1.37)$ (0.04)$
Diluted weighted-average common shares outstanding 71,804,585 71,600,337 71,908,623
Refer to the Second Quarter 2017 Earnings Release for an explanation of adjusted items. The sum of the individual amounts may not equal due to rounding.
22
GAAP to Adjusted EBITDA Reconciliation
Refer to the Second Quarter 2017 Earnings Release for an explanation of adjusted items. The sum of the individual amounts may not equal due to rounding.
The following table reconciles reported net loss to adjusted EBITDA.
(Unaudited, In thousands)
June 30, March 31, June 30,
2017 2017 2016
Net loss (20,417)$ (98,431)$ (2,701)$
Adjusted to add (deduct):
Interest expense 13,369 13,380 8,454
Interest income (155) (154) (340)
Income taxes (520) 30,901 (1,249)
Depreciation and amortization 24,355 24,098 19,195
EBITDA 16,632 (30,206) 23,359
Adjusted to add (deduct):
Share-based compensation expense 6,225 6,957 8,384
Business development expenses 99 50 1,448
Intangible asset impairment charges - 45,359 2,491
Reserve for Turing receivable 2,353 317 -
Turing legal expenses 89 (495) -
Restructuring and severance charges 10,599 6,139 5,022
Fixed asset impairment charges 1,894 - -
Gain on sale of intangible assets (11,850) - -
Gain on sale of PP&E (350) - -
Loss on debt extinguishment - 1,215 -
Middlesex plant closure 3,344 1,636 -
Legal settlements 7,900 - -
Other 2,286 931 -
Adjusted EBITDA 39,221$ 31,903$ 40,704$
Three Months Ended
23
Generic Division GAAP to Adjusted
Results Reconciliation
The following tables reconcile the Impax Generics Division reported cost of revenues and income (loss) from operations to adjusted cost
of revenues, adjusted gross profit, adjusted gross margin and adjusted operating income.
(Unaudited, In thousands)
June 30, March 31, June 30,
2017 2017 2016
Cost of revenues 108,901$ 103,335$ 82,794$
Cost of revenues impairment charges - 39,280 1,545
Adjusted to deduct:
Amortization 13,385 13,398 5,053
Intangible asset impairment charges - 39,280 1,545
Restruct ri g and severance charges 5,396 6,139 4,991
Middlesex plant closure 3,344 1,636 -
Adjusted cost of revenues 86,776$ 82,162$ 72,750$
Adjusted gross profit (a) 64,113$ 51,985$ 48,945$
Adjusted gross margin (a) 42.5% 38.8% 40.2%
Three Months Ended
June 30, March 31, June 30,
2017 2017 2016
GAAP income (loss) from operations 12,640$ (38,779)$ 18,547$
to add (deduct):
Amortization 13,385 13,398 5,053
Intangible asset impairment charges - 45,359 2,491
Restructuring and severance charges 8,322 6,139 4,991
Payments for licensing agreements 1,825 650 -
Middlesex plant closure 3,344 1,636 -
Adjusted income from operations 39,516$ 28,403$ 31,082$
Refer to the Second Quarter 2017 Earnings Release for an explanation of adjusted items. The sum of the individual amounts may not equal due to rounding.
(a) Adjusted gross profit is calculated as total revenues less adjusted cost of revenues. Adjusted gross margin is calculated as adjusted gross profit divided by
total revenues.
24
Specialty Pharma Division GAAP to
Adjusted Results Reconciliation
The following tables reconcile the Impax Specialty Pharma Division reported cost of revenues and income from operations to
adjusted cost of revenues, adjusted gross profit, adjusted gross margin and adjusted income from operations.
(Unaudited, In thousands)
Refer to the Second Quarter 2017 Earnings Release for an explanation of adjusted items. The sum of the individual amounts may not equal due to rounding.
(a) Adjusted gross profit is calculated as total revenues less adjusted cost of revenues. Adjusted gross margin is calculated as adjusted gross profit divided by
total revenues.
June 30, March 31, June 30,
2017 2017 2016
Cost of revenues 20,775$ 16,897$ 15,267$
Cost of revenues impairment charges - - -
Adjusted to deduct:
A ortization 3,834 3,834 7,416
Restructuring and severance charges 2,006 - -
Adjusted cost of revenues 14,935$ 13,063$ 7,851$
Adjusted gross profit (a) 36,258$ 37,193$ 43,044$
Adjusted gross margin (a) 70.8% 74.0% 84.6%
Three Months Ended
June 30, March 31, June 30,
2017 2017 2016
GAAP income from operations 6,901$ 11,232$ 13,064$
Adjusted to add:
Amortization 3,834 3,834 7,416
Restructuring and severange charges 2,006 - -
Adjusted income from operations 12,741$ 15,066$ 20,480$
Three Months Ended