On November 7, 2022 Eagle Pharmaceuticals, Inc. (Nasdaq: EGRX) ("Eagle" or the "Company") reported financial results for the three and nine months ended September 30, 2022 (Press release, Eagle Pharmaceuticals, NOV 7, 2022, View Source [SID1234623190]).
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Business and Recent Highlights:
Submitted an IND application to FDA for CAL02, a novel first-in-class broad-spectrum anti-virulence agent for the treatment of severe community-acquired bacterial pneumonia ("SCABP"). The IND filing includes a protocol for an adequately powered global Phase 2 study to evaluate the efficacy and safety of CAL02 when added to standard of care therapy in patients with SCABP.
Acquired an equity stake in, with an option to purchase, Enalare Therapeutics Inc. ("Enalare"), adding a portfolio of novel NCEs with strong intellectual property protection, from the mid-2030s into the 2040s, including composition of matter patents. Enalare’s lead compound, ENA-001 is an investigational, one-of-a-kind NCE being developed as an agnostic respiratory stimulant for multiple patient populations experiencing acute respiratory depression. The initial targeted indications include post-operative respiratory depression; community drug overdose; and Apnea of Prematurity, a common condition in preterm infants. The Company believes this investment strengthens Eagle’s position as a diversified pharmaceutical company and a leader in hospital/anesthesia.
Enalare secured a contract for up to $50.3 million from the Biomedical Advanced Research and Development Authority ("BARDA"), part of the Administration for Strategic Preparedness and Response in the U.S. Department of Health and Human Services (contract number 75A50122C00072). In partnership with BARDA, ENA-001 is being developed in an intramuscular ("IM") formulation for potential use in patients experiencing community drug overdose and as a potential medical countermeasure for mass casualty events.
FDA granted Orphan Drug Designation ("ODD") to ENA-001 for the treatment of Apnea of Prematurity ("AoP"). AoP is a development disorder attributed to immaturity of the pulmonary system characterized by either cessation of breathing for more than 20 seconds or cessation of breathing that lasts less than 20 seconds but is accompanied by either bradycardia or hypoxemia.
Received favorable ruling in vasopressin litigation. The U.S. Court of Appeals for the Federal Circuit affirmed the U.S. District Court for the District of Delaware’s decision that Eagle’s vasopressin product does not infringe on any of the patents asserted by Par Pharmaceutical, Inc.
Appointed pharmaceutical industry veteran, Debra M. Hussain, as Senior Vice President, Head of Commercial, with responsibility for FDA-approved new chemical entities, BARHEMSYS and BYFAVO, acquired as part of the acquisition of Acacia Pharma Group plc ("Acacia").
Amended and restated its credit agreement providing for a three-year $100 million revolving credit facility and $50 million term loan facility and repaid all other debt.
Financial Highlights
Third Quarter 2022
Total revenue for Q3 2022 was $65.9 million, compared to $39.9 million in Q3 2021.
Q3 2022 net loss was $(3.5) million, or $(0.27) per basic and diluted share, compared to net loss of $(5.6) million, or $(0.43) per basic and diluted share, in Q3 2021.
Q3 2022 adjusted non-GAAP net income was $14.9 million, or $1.13 per basic and $1.12 per diluted share, compared to adjusted non-GAAP net income of $7.5 million, or $0.57 per basic and $0.56 per diluted share, in Q3 2021.
Cash and cash equivalents were $15.4 million, net accounts receivable was $96.9 million, and debt was $59.3 million, as of September 30, 2022.
Recorded a $3.8 million milestone payment from SymBio on TREAKISYM in Q3 2022, $1.2 million ($0.07 per basic and diluted share) less than anticipated due to currency declines of the Japanese Yen.
"It was another strong quarter for Eagle, and we are pleased that the earnings growth has continued. We are posting record earnings this year, as evidenced by the fact that in the first nine months of the year, we have already earned $6.69 per share, topping our previous best full year ever," stated Scott Tarriff, President and Chief Executive Officer of Eagle Pharmaceuticals.
"We expect another strong year in 2023 and anticipate deploying the cash from our earnings and strong balance sheet not only to fund our key clinical initiatives but also to potentially make an accretive acquisition to round out our portfolio. Between business development activities and our own R&D engine, we believe Eagle can grow significantly larger as it transitions into a branded pharmaceutical company with a diversified portfolio of assets," concluded Tarriff.
Third Quarter 2022 Financial Results
Total revenue for the three months ended September 30, 2022 was $65.9 million, as compared to $39.9 million for the three months ended September 30, 2021.
Q3 2022 RYANODEX net product sales were $7.6 million, compared to $4.5 million in the third quarter of 2021.
Q3 2022 BELRAPZO net product sales were $8.5 million, compared to $4.9 million in the third quarter of 2021.
Q3 2022 PEMFEXY net product sales were $1.7 million and vasopressin net product sales were $13.8 million.
Gross margin was 64% during the third quarter of 2022, as compared to 79% in the third quarter of 2021. The decrease in gross margin was driven by a change in the revenue mix, including the launch of PEMFEXY and vasopressin and amortization expense related to BARHEMSYS and BYFAVO.
R&D expense was $9.3 million for the third quarter of 2022, compared to $23.3 million for the third quarter of 2021. The decrease was primarily due to lower spend of $6.6 million on CAL02 and $4.8 million on landiolol due to the upfront license fees paid in Q3 2021 and non-recurrence of development costs of $2.1 million on vasopressin and $1.4 million on PEMFEXY. This was partially offset by an increase in spend on fulvestrant of $0.9 million compared to Q3 2021.
SG&A expenses in the third quarter of 2022 totaled $23.5 million compared to $18.5 million in the third quarter of 2021. This increase was primarily related to $1.1 million of external sales and marketing and $1.2 million of headcount costs for BARHEMSYS and BYFAVO re-launches, $1.1 million of financial and other professional fees, $0.6 million of severance related to the integration of Acacia, $0.5 million of external legal costs, and $0.2 million of sales and marketing costs for PEMFEXY, partially offset by lower general and administrative head count costs.
Net loss for the third quarter of 2022 was $(3.5) million, or $(0.27) per basic and diluted share, compared to net loss of $(5.6) million, or $(0.43) per basic and diluted share, in the third quarter of 2021, primarily as a result of the factors discussed above.
Adjusted non-GAAP net income for the third quarter of 2022 was $14.9 million, or $1.13 per basic and $1.12 per diluted share, compared to adjusted non-GAAP net income of $7.5 million, or $0.57 per basic and $0.56 per diluted share, in the third quarter of 2021.
2022 Full Year Expense Guidance
Adjusted non-GAAP R&D expense for the full year 2022 is expected to be less than $40 million, as compared to $32.5 million in 2021.
Adjusted non-GAAP SG&A expense for the full year 2022 is expected to be in the range of $64 million to $68 million, as compared to $54.9 million in 2021.
Liquidity
As of September 30, 2022, Eagle had $15.4 million in cash and cash equivalents and $96.9 million in net accounts receivable, and $59.3 million in outstanding debt. Therefore, as of September 30, 2022, Eagle had cash plus net receivables of $112.3 million.
In the third quarter of 2022, Eagle repurchased $10 million of its common stock as part of its current $160 million Share Repurchase Program. From August 2016 through September 30, 2022, Eagle has repurchased $246.1 million of its common stock.
Conference Call
As previously announced, Eagle management will host its third quarter 2022 conference call as follows:
A replay of the conference call will be available for two weeks after the call’s completion by dialing 800-934-4548 (U.S.) or 402-220-1175 (International) and entering conference call ID EGRXQ322. The webcast will be archived for 30 days at the aforementioned URL.
Investor Day Registration Information
Eagle will host an Investor Day on Tuesday, December 6, 2022, at the Lotte New York Palace Hotel, at 8:00am ET.
The program will provide an opportunity for an in-depth look at the Company’s hospital-based products and product candidates, including CAL02, BARHEMSYS and BYFAVO, landiolol, and Enalare’s ENA-001. Featured speakers include Scott Tarriff, President and Chief Executive Officer, senior members of Eagle’s clinical and commercial teams, and noteworthy Key Opinion Leaders, who will discuss the scientific rationale and potential unmet medical needs for each pipeline asset and commercial product.
Advance registration is required for this event. Institutional investors and analysts are kindly requested to RSVP through this link to attend.