On May 7, 2019 Eagle Pharmaceuticals, Inc. ("Eagle" or the "Company") (Nasdaq: EGRX) reported its financial results for the three months ended March 31, 2019 (Press release, Eagle Pharmaceuticals, MAY 7, 2019, View Source [SID1234535799]). Highlights of, and subsequent to, the first quarter of 2019 include:
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Business and Recent Highlights:
·Completed a successful study to evaluate the neuroprotective effects of RYANODEX (dantrolene sodium) for the treatment of nerve agent exposure:
· Conducted in collaboration with the United States Army Medical Research Institute of Chemical Defense (USAMRICD), the nation’s leading science and technology laboratory in the area of medical chemical countermeasures research and development;
· The Company plans to meet with the U.S. Food and Drug Administration (FDA) as soon as possible;
·Announced a revised licensing agreement for BENDEKA that extends the term of the agreement until the product is no longer sold and increases Eagle’s royalty rate from 25% to 30% in October 2019 and by 1% annually until it reaches 32%;
· The FDA issued a decision in favor of Eagle regarding the scope of BENDEKA’s Orphan Drug Exclusivity (ODE), further protecting the longevity of the BENDEKA franchise; and
·The Centers for Medicare and Medicaid Services (CMS) established a unique, product specific, billing code (J-code: J9036) effective July 1, 2019, for BELRAPZO, the brand name under which Eagle’s currently marketed 500mL infusion bendamustine solution will be sold beginning June 3, 2019.
Financial Highlights:
· Total revenue for the first quarter of 2019 was $49.8 million, compared to $46.6 million in the first quarter of 2018;
·Q1 2019 bendamustine hydrochloride 500ml solution ("Big Bag" or "BELRAPZO") product sales were $3.2 million;
·Q1 2019 RYANODEX product sales were $4.0 million, compared to $4.4 million in Q1 2018;
Eagle Pharmaceuticals Reports First Quarter 2019 Results
·Q1 2019 net income was $9.0 million, or $0.64 per basic and $0.62 per diluted share, compared to net income of $2.6 million, or $0.18 per basic and $0.17 per diluted share in Q1 2018;
Q1 2019 adjusted non-GAAP net income was $14.6 million, or $1.05 per basic and $1.01 per diluted share, compared to adjusted non-GAAP net income of $8.2 million, or $0.55 per basic and $0.53 per diluted share in Q1 2018; and
·Cash and cash equivalents were $102.1 million, net accounts receivable was $63.9 million, and debt was $42.5 million as of March 31, 2019.
"This is an exciting time at Eagle as we continue to position the Company for growth. We have solidified our bendamustine franchise by securing marketing exclusivity for BENDEKA and effectively preventing generic competition through the end of 2022, revising our licensing agreement for BENDEKA to extend the term of the agreement well beyond 2025 and increase our royalty rate, and launching BELRAPZO, our 500mL infusion bendamustine product, which will have its own unique J-code effective July 1st of this year. Combined, these efforts now give us the most certitude for our bendamustine portfolio since launch and should provide a very strong base of earnings upon which we can continue to build to further grow the Company," stated Scott Tarriff, Chief Executive Officer of Eagle Pharmaceuticals.
"With bendamustine as a solid base for many years to come, we are excited about our pipeline. Today’s news about RYANODEX for nerve agent exposure is an important step in diversifying our product line and building growth," concluded Tarriff.
First Quarter 2019 Financial Results
Total revenue for the three months ended March 31, 2019 was $49.8 million, as compared to $46.6 million for the three months ended March 31, 2018. We recorded $9.0 million in revenue during the first quarter of 2019 upon execution of an agreement to terminate Teva’s obligation to pay future milestones and royalties on BENDEKA sales outside of the U.S.
Royalty revenue was $26.3 million in the first quarter of 2019, compared to $35.8 million in the first quarter of 2018. BENDEKA royalties were $26.0 million in the first quarter of 2019, compared to $34.0 million in the first quarter of 2018. A summary of total revenue is outlined below:
Gross Margin was 74% during the first quarter of 2019, as compared to 75% in the first quarter of 2018.
R&D expenses were $6.4 million for the quarter, compared to $17.3 million in the same quarter in the prior year. The first quarter year over year decrease reflects a substantial reduction in fulvestrant expense, partially offset by the cost to bring vasopressin to market. Excluding stock-based compensation and other non-cash and non-recurring items, R&D expense during the first quarter was $5.2 million.
SG&A expenses in the first quarter of 2019 increased to $18.1 million compared to $15.2 million in the first quarter of 2018. External legal expenses associated with litigation on PEMFEXY, vasopressin and bendamustine and higher stock compensation expense account for the year over year increase. Excluding stock-based compensation and other non-cash and non-recurring items, first quarter 2019 SG&A expense was $12.9 million.
Net income for the first quarter of 2019 was $9.0 million, or $0.64 per basic and $0.62 per diluted share, compared to net income of $2.6 million, or $0.18 per basic and $0.17 per diluted share in the three months ended March 31, 2018, due to the factors discussed above.
Adjusted non-GAAP net income for the first quarter of 2019 was $14.6 million, or $1.05 per basic and $1.01 per diluted share, compared to Adjusted non-GAAP net income of $8.2 million or $0.55 per basic and $0.53 per diluted share in the prior year quarter. For a full reconciliation of adjusted non-GAAP net income to the most comparable GAAP financial measures, please see the tables at the end of this press release.
2019 Expense Guidance
· R&D spend in 2019, on a non-GAAP basis, is expected to be $32.0-$36.0 million, as compared to $38.0 million in 2018.
· SG&A spend in 2019, on a non-GAAP basis, is expected to be $51.0-$54.0 million, as compared to $43.0 million in 2018.
The guidance provided in this section represents forward-looking information, and actual results may vary. Please see the risks and assumptions referred to in the Forward-Looking Statements section of this press release.
Liquidity
As of March 31, 2019, the Company had $102.1 million in cash and cash equivalents and $63.9 million in net accounts receivable, $46.6 million of which was due from Teva Pharmaceutical Industries Ltd. The Company had $42.5 million in outstanding debt. Therefore, at March 31, 2019, the Company had net cash and receivables of $123.6 million.
Conference Call
As previously announced, Eagle management will host its first quarter 2019 conference call as follows:
Date
Tuesday, May 7, 2019
Time
8:30 A.M. EDT
3
Toll free (U.S.)
877-876-9176
International
785-424-1670
Webcast (live and replay)
www.eagleus.com, under the "Investor + News" section
A replay of the conference call will be available for one week after the call’s completion by dialing 800-839-5493 (US) or 402-220-2552 (International) and entering conference call ID EGRXQ119. The webcast will be archived for 30 days at the aforementioned URL.