On November 8, 2017 Eagle Pharmaceuticals, Inc. ("Eagle" or "the Company") (Nasdaq: EGRX) reported its financial results for the three- and nine-months ended September 30, 2017 (Press release, Eagle Pharmaceuticals, NOV 8, 2017, View Source [SID1234521738]). Highlights of and subsequent to the third quarter of 2017 include:
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
Financial Highlights:
Total revenue for the third quarter of 2017 grew 67% to $63.0 million compared to $37.8 million in the third quarter of 2016;
Royalty revenue increased to $43.6 million compared to $26.2 million in Q3 2016;
Product sales decreased to $6.9 million compared to $7.8 million in Q3 2016;
Q3 2017 income before income tax provision was $24.5 million;
Q3 2017 net income was $15.4 million, or $1.03 per basic and $0.98 per diluted share, compared to a net income of $12.0 million, or $0.77 per basic and $0.73 per diluted share in Q3 2016;
Q3 2017 Adjusted Non-GAAP net income was $19.2 million, or $1.27 per basic and $1.22 per diluted share, compared to Adjusted Non-GAAP net income of $14.7 million, or $0.95 per basic and $0.89 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; and,
Cash and cash equivalents were $97.5 million and accounts receivable were $71.6 million as of September 30, 2017.
Business and Recent Highlights:
BENDEKA total market share of 97%, as of September 30, 2017;
Sales of RYANODEX grew 29% to $3.3 million during the third quarter of 2017 compared to $2.5 million in Q3 2016;
Received tentative U.S. Food and Drug Administration (FDA) approval for PEMFEXY (pemetrexed injection) ready-to-dilute formulation;
Granted a new patent related to RYANODEX formulation (dantrolene sodium) by the United States Patent and Trademark Office, expiring June 2022;
Licensed Japanese rights for bendamustine hydrochloride ready-to-dilute and rapid infusion injection products to SymBio Pharmaceuticals Limited and received a $12.5 million upfront payment;
Announced positive results of an initial study in over 50 rodents to evaluate the neuroprotective effects of RYANODEX in an established rodent model of Nerve Agent-induced seizures and seizure-related brain damage;
Filed for a second source drug product manufacturing site for BENDEKA;
2017 R&D and SG&A guidance updated:
We expect our full year 2017 R&D expense will be consistent with the upper end of the $31-$35 million range. This reflects ongoing expenses for the enrollment of the fulvestrant and RYANODEX for Ecstasy and methamphetamine intoxication clinical trials. Excluding stock based compensation, the R&D expense would be in the range of $27 – $31 million.
We expect our full year SG&A expense to be in the range of $67 – $70 million, slightly higher than previous guidance. Excluding stock based compensation and other non-cash items, SG&A expense would be in the range of $53 – $56 million.
"This was another strong quarter for Eagle with record revenue driven by BENDEKA, a growing cash position and significant movement in our pipeline," stated Scott Tarriff, Chief Executive Officer of Eagle Pharmaceuticals.
"During the quarter, we advanced multiple pipeline candidates. We plan to begin dosing patients in our fulvestrant study in a few weeks and expect to file an NDA in the fourth quarter of 2018. With one dose, our formulation will deliver a 5mL solution, using a smaller needle and in less time than the current commercially available product. In addition, we received tentative approval from the FDA for PEMFEXY, our ready-to-dilute pemetrexed IV formulation. As the first company to receive tentative approval for this product using the 505(b)2 pathway, we hope to find a way to market as soon as possible, once our litigation with Eli Lilly is resolved," added Tarriff.
"We remain confident in our RYANODEX portfolio. We are continuing our dialogue with the FDA regarding EHS, while advancing our clinical work for the Ecstasy and methamphetamine, and nerve agent programs. We have also made progress on an intramuscular delivery formulation for RYANODEX, which we believe will provide patients and healthcare professionals with a valuable delivery option," Tarriff added.
"Eagle continues to generate strong cash flow, which allows us to invest in our pipeline, evaluate additional strategic opportunities and return capital to shareholders when it maximizes value. We have completed the first $75 million share repurchase program and will continue purchasing up to an additional $100 million shares under our current share repurchase plan, reflecting our belief in the potential of our products and pipeline," concluded Tarriff.
Third Quarter 2017 Financial Results
Total revenue for the three months ended September 30, 2017 was $63.0 million, as compared to $37.8 million for the three months ended September 30, 2016. A summary of total revenue is outlined below:
Three Months Ended September 30,
2017 2016
Revenue ($ in 000’s):
Product sales $ 6,905 $ 7,837
Royalty revenue 43,616 26,246
License and other income 12,500 3,750
Total revenue 63,021 37,833
Product sales decreased to $6.9 million driven by lower net product sales of BENDEKA and Argatroban, partially offset by an increase in net product sales of RYANODEX. Royalty revenue increased to $43.6 million, as a result of the increased market share on Teva sales of BENDEKA, as well as an increase in the royalty rate from 20% to 25%.
Research and development expenses increased to $9.0 million in the three months ended September 30, 2017, compared to $3.2 million in the prior year quarter. The increase is due to continued spending on the Company’s pipeline, and in particular, our fulvestrant, RYANODEX for Ecstasy and methamphetamine intoxication, and pemetrexed projects.
SG&A expenses increased to $16.7 million in the third quarter of 2017 compared to $11.7 million in the three months ended September 30, 2016. Personnel-related expenses grew as a result of the expansion of our sales force in the second quarter of 2017. External legal expenses also increased, due to ongoing litigation.
An income tax provision of $9.0 million was recorded during the third quarter of 2017.
Net income for the third quarter of 2017 was $15.4 million, or $1.03 per basic share and $0.98 per diluted share, compared to net income of $12.0 million, or $0.77 per basic and $0.73 per diluted share in the three months ended September 30, 2016, due to the factors discussed above.
Adjusted Non-GAAP net income for the third quarter of 2017 was $19.2 million, or $1.27 per basic and $1.22 per diluted share, compared to Adjusted Non-GAAP net income of $14.7 million or $0.95 per basic and $0.89 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.
Liquidity
As of September 30, 2017, the Company had $48 million in net cash and cash equivalents and $72 million in net accounts receivable, $46 million of which was due from Teva. For the nine months ended September 30, 2017, net cash provided by operating activities, excluding the increase in net accounts receivable, was $62 million. The Company had $50 million in outstanding debt.
As part of our stock repurchase plan, we purchased $13.5 million worth of our shares during the quarter, completing our original $75 million share repurchase plan initiated in August 2016. We expanded the program by $100 million during the second quarter of 2017.
Conference Call
As previously announced, Eagle management will host its third quarter 2017 conference call as follows:
Date Wednesday, November 8, 2017
Time 8:30 A.M. EST
Toll free (U.S.) 866-518-6930
International 203-518-9797
Webcast (live and replay)
www.eagleus.com, under the "Investor Relations" section
A replay of the conference call will be available for one week after the call’s completion by dialing 800-839-8705 (US) or 402-220-6075 (International) and entering conference call ID EGRXQ317. The webcast will be archived for 30 days at the aforementioned URL.