On May 9, 2023 Eagle Pharmaceuticals, Inc. (Nasdaq: EGRX) ("Eagle" or the "Company") reported financial results for the three months ended March 31, 2023 (Press release, Eagle Pharmaceuticals, MAY 9, 2023, View Source [SID1234631239]).
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Business and Recent Highlights:
· Net product sales of PEMFEXY totaled $22.9 million in the first quarter 2023. Based on internal data and customer feedback, the Company estimates that as of the second quarter to date, its U.S. share of commercial (non-340B) pemetrexed usage has grown to 15% up from 6% exiting the fourth quarter of 2022.
1 Adjusted non-GAAP net income, adjusted non-GAAP earnings per share, adjusted non-GAAP EBITDA, adjusted non-GAAP R&D expense and adjusted non-GAAP SG&A expense are non-GAAP financial measures. For descriptions and reconciliations of these non-GAAP financial measures to their most comparable GAAP financial measures, please see below and the tables at the end of this press release.
2 Based on IQVIA SMART-US weekly volume data and internal data.
5 IQVIA SMART-US weekly volume data for the first quarter of 2023 and 2022 historic IQVIA data.
· Centers for Medicare & Medicaid Services ("CMS") established a unique, product-specific billing code for Byfavo (remimazolam for injection)6, a short-acting sedative for procedures lasting 30 minutes or less. This new Healthcare Common Procedure Coding System (HCPCS) Level II code ("J-code") is J2249 "Injection, remimazolam, 1 mg." The J-code will be effective on July 1, 2023.
· Reached a settlement agreement with Dr. Reddy’s Laboratories, Ltd. and Dr. Reddy’s Laboratories, Inc. (collectively, "Dr. Reddy’s"). Eagle had asserted its Orange Book-listed patents against Dr. Reddy’s related to its new drug application referencing BENDEKA. Under the settlement agreement, Dr. Reddy’s has the right to market its product beginning November 17, 2027, or earlier based on certain circumstances. The settlement with Dr. Reddy’s follows Eagle’s previously announced settlements with Hospira, Inc. ("Hospira") and Accord Healthcare, Inc. ("Accord") related to their new drug applications referencing BENDEKA.
o With the Dr. Reddy’s settlement, all the existing challenges, except for one, which is for a proposed powder, not liquid, formulation have been settled. The Company expects bendamustine to be a significant contributor for several more years.
· Reaffirms full-year Company guidance.
· The Company is also currently working with lenders to secure financing to support a potential accretive acquisition.
Financial Highlights
First Quarter 2023
· Total revenue for Q1 2023 was $66.3 million, compared to $115.9 million in Q1 2022.
· Q1 2023 net income was $5.8 million, or $0.44 per basic and diluted share, compared to net income of $44.1 million, or $3.47 per basic and $3.41 per diluted share, in Q1 2022.
· Q1 2023 adjusted non-GAAP net income was $16.5 million, or $1.27 per basic and $1.26 per diluted share, compared to adjusted non-GAAP net income of $52.2 million, or $4.10 per basic and $4.04 per diluted share, in Q1 2022.
· Cash and cash equivalents were $21.9 million, net accounts receivable was $115.0 million, and total debt was $77.5 million, as of March 31, 2023.
"Following on from our outstanding performance in 2022, we believe Eagle remains well positioned for another strong year, and therefore we are reiterating our 2023 guidance. Our products continue to track well, and we are on pace to surpass our 2022 net product sales for the full year 2023 for PEMFEXY, which continues to gain share in commercial (non-340B) pemetrexed usage in the U.S.," stated Scott Tarriff, President and Chief Executive Officer of Eagle Pharmaceuticals.
"To be clear, the investments we are making for the future account for much of the expected difference of our earnings in 2023 versus 2022. We are investing to support our products and advance our pipeline, notably CAL02, which bridges much of the year-over-year gap. We believe the expansion of our commercial team will enable us to capture synergies with an acquisition target and are currently working with lenders to secure financing to support a potentially accretive transaction," concluded Tarriff.
First Quarter 2023 Financial Results
Total revenue for the three months ended March 31, 2023 was $66.3 million, as compared to $115.9 million for the three months ended March 31, 2022.
Q1 2023 RYANODEX net product sales were $8.8 million, compared to $6.6 million in the first quarter of 2022.
Q1 2023 BELRAPZO net product sales were $6.4 million, compared to $5.9 million in the first quarter of 2022.
Q1 2023 PEMFEXY net product sales were $22.9 million, compared to $37.2 million in the first quarter of 2022.
Q1 2023 vasopressin net product sales were $3.5 million, compared to $34.3 million in the first quarter of 2022. During the first quarter of 2023, the Company gave notice to customers and the FDA that it was withdrawing from the vasopressin market. Inventory on hand is expected to be depleted by the end of the second quarter of 2023.
Q1 2023 royalty revenue was $20.1 million, compared to $25.8 million in the prior year quarter.
A summary of total revenue is outlined below:
Three Months Ended March 31,
2023 2022
(unaudited) (unaudited)
Revenue (in thousands):
Product sales, net $ 46,221 $ 90,088
Royalty revenue 20,084 25,786
Total revenue $ 66,305 $ 115,874
Gross margin was 74% during the first quarter of 2023, compared to 76% in the first quarter of 2022. The decrease in gross margin was primarily the result of the inclusion of amortization of intangible assets related to the newly acquired products, which we expect to continue going forward.
R&D expense was $9.3 million for the first quarter of 2023, compared to $6.1 million for the first quarter of 2022. The increase was primarily due to higher spend of $2.0 million on CAL02 and $1.0 million on Byfavo and Barhemsys pediatric studies.
SG&A expenses in the first quarter of 2023 were $28.0 million compared to $22.2 million in the first quarter of 2022. This increase was driven by $3.3 million in salary and other personnel-related costs, $2.0 million in external sales and marketing spend, partially offset by $2.0 million in lower legal-related costs.
Net income for the first quarter of 2023 was $5.8 million, or $0.44 per basic and diluted share, compared to net income of $44.1 million, or $3.47 per basic and $3.41 per diluted share, in the first quarter of 2022, primarily as a result of the factors discussed above.
Adjusted non-GAAP net income for the first quarter of 2023 was $16.5 million, or $1.27 per basic and $1.26 per diluted share, compared to adjusted non-GAAP net income of $52.2 million, or $4.10 per basic and $4.04 per diluted share, in the first quarter of 2022.
Adjusted non-GAAP EBITDA for the first quarter of 2023 was $22.3 million, compared to adjusted non-GAAP EBITDA of $66.9 million in the first quarter of 2022.
2023 Full-Year Guidance
The Company continues to expect:
· Adjusted EBITDA of $74.0-$80.0 million
· Adjusted non-GAAP earnings per share of $4.20-$4.53
· Adjusted non-GAAP R&D expense of $41.0-$45.0 million
· Adjusted non-GAAP SG&A expense of $86.0-$90.0 million
Liquidity
As of March 31, 2023, Eagle had $21.9 million in cash and cash equivalents, $115.0 million in accounts receivable, net, and $77.5 million in outstanding debt on the Company’s $150 million credit facility with JPMorgan. As of March 31, 2023, Eagle had a working capital surplus of $94.7 million.
Conference Call
As previously announced, Eagle management will host its first quarter 2023 conference call as follows:
Date May 9, 2023
Time 8:30 A.M. ET
Toll free (U.S.) 800-274-8461
International 203-518-9814
Webcast (live and replay) www.eagleus.com, under the "Investor + News" section
A replay of the conference call will be available for two weeks after the call’s completion by dialing 888-566-0151 (U.S.) or 402-220-9181 (International) and entering conference call ID EGRXQ123. The webcast will be archived for 30 days at the aforementioned URL.