On November 2, 2020 Eagle Pharmaceuticals, Inc. (Nasdaq: EGRX) ("Eagle" or the "Company") reported financial results for the three and nine months ended September 30, 2020 (Press release, Eagle Pharmaceuticals, NOV 2, 2020, View Source [SID1234569669]).
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Business and Recent Highlights:
Received formal notification from FDA granting Priority Review for the Company’s abbreviated new drug application ("ANDA") filed for vasopressin. A trial date of January 11, 2021 has been set;
Added four experienced pharmaceutical industry executives to clinical, formulations and commercial leadership teams as follows: Judith ("Judi") Ng-Cashin, M.D., is EVP and Chief Medical Officer; John Kimmet, is EVP, Oncology and Acute Care Marketing; Valentin R. Curt, M.D., is SVP, Clinical Drug Development; and Gaozhong Zhu, Ph.D., is SVP, Pharmaceutical Development;
Promoted Brian Cahill as the Company’s new Chief Financial Officer. Mr. Cahill has served as Eagle’s VP, Finance for the last four years and brings more than 20 years of public company and public accounting experience to the Company;
Received Board approval for a $25.0 million accelerated share repurchase transaction with JPMorgan as part of the Company’s existing $160.0 million share repurchase program. To date, Eagle has purchased $205.0 million, or approximately 22% of the Company’s issued shares, at approximately $55.00 per share;
Announced the publication of preclinical research on dantrolene sodium in the peer-reviewed Journal of Alzheimer’s Disease. The academic-based study, conducted by Eagle’s collaboration partner, the University of Pennsylvania, demonstrated dantrolene sodium improved memory and cognition in a mouse model of Alzheimer’s disease;
Initiating dose ranging studies in another animal model using intravenous administration of RYANODEX for the treatment of brain damage secondary to nerve agent exposure and will include an arm using an intramuscular formulation of EA-111. Eagle believes that the preliminary results will allow the Company to update its Special Protocol Assessment with the FDA; and
Despite the ongoing COVID-19 pandemic, the Company has not experienced significant disruptions to its supply chain to date, and believes it has sufficient supply chain inventory to continue manufacturing and to provide product without interruption consistent with its current business plans and projections; the Company has experienced variable financial impacts and has also experienced delays in the timing of certain of its pre-clinical programs and delays in its ongoing litigation matters due to the COVID-19 pandemic; the Company continues to monitor the ongoing pandemic and evaluate and evolve its business plans and response strategy thereto.
Oncology Highlights:
Held a positive Type C meeting with FDA on fulvestrant and is in the process of gaining agreement on the details of the formal protocol for the clinical study;
Japanese licensing partner, SymBio, received regulatory approval for TREAKISYM ready-to-dilute ("RTD") (250 ml) liquid formulation from the Pharmaceuticals and Medical Devices Agency in Japan. The approval covers all currently approved TREAKISYM indications (low-grade non-Hodgkin’s lymphoma, mantle cell lymphoma, and chronic lymphocytic leukemia) and triggered a $5.0 million milestone payment to Eagle. SymBio’s conversion of its current lyophilized formulation of TREAKISYM to Eagle’s RTD liquid formulation and commercial launch are expected in January 2021;
Centers for Medicare & Medicaid Services established unique Healthcare Common Procedure Coding System code, or J-code, for PEMFEXY (Pemetrexed for Injection, 10 mg), a branded alternative to ALIMTA effective October 1, 2020;
Granted a supplement approval by FDA for 500mg multiple-dose vial of PEMFEXY. The Company has initial market entry (equivalent to approximately a three-week supply of current ALIMTA utilization) on February 1, 2022, and a subsequent uncapped entry on April 1, 2022; and
The Company’s strategic collaboration partner, Tyme Technologies, Inc. ("Tyme"), announced that FDA granted Orphan Drug Designation for its lead product candidate, SM-88, a treatment for patients with pancreatic cancer.
Third Quarter 2020 Financial Highlights
Total revenue for Q3 2020 was $49.9 million, compared to $41.1 million in Q3 2019, primarily reflecting increased product sales of BELRAPZO and RYANODEX, as well as the $5.0 million milestone from SymBio, partially offset by lower product sales of BENDEKA.
Net income for Q3 2020 was $7.1 million, or $0.52 per basic and $0.51 per diluted share, compared to net loss for Q3 2019 of $2.4 million, or ($0.17) per basic and diluted share.
Adjusted non-GAAP net income for Q3 2020 was $16.1 million, or $1.19 per basic and $1.17 per diluted share, compared to adjusted non-GAAP net income for Q3 2019 of $3.7 million, or $0.27 per basic and $0.26 per diluted share.
Cash and cash equivalents were $89.7 million, net accounts receivable was $52.2 million, and debt was $36.0 million as of September 30, 2020.
"Our strong third-quarter results demonstrate the efficiency of our business model as we continue to reinvest in our company. This momentum is further supported by multiple near-term product opportunities we are advancing, including vasopressin, fulvestrant, RYANODEX for several indications and PEMFEXY, along with our key partnerships with SymBio for bendamustine and Tyme for pancreatic cancer and other oncology indications. We are also excited to welcome a talented group of pharmaceutical executives to the Eagle team and look forward to their contributions in support of our promising lineup of products and anticipated upcoming launches. The next 12-18 months look to be an active period for Eagle, and I am optimistic about our prospects going forward," stated Scott Tarriff, Chief Executive Officer of Eagle Pharmaceuticals.
Third Quarter 2020 Financial Results
Total revenue for Q3 2020 was $49.9 million, as compared to $41.1 million for Q3 2019.
Q3 2020 BELRAPZO product sales were $8.7 million, compared to $3.4 million in Q3 2019.
Q3 2020 RYANODEX product sales were $4.2 million, compared to $2.6 million in Q3 2019.
Royalty revenue was $27.6 million in the third quarter of 2020, compared to $26.5 million in the third quarter of 2019. BENDEKA royalties were $27.6 million in the third quarter of 2020, compared to $26.2 million in the third quarter of 2019. A summary of total revenue is outlined below:
Gross Margin was 76% during the third quarter of 2020, as compared to 64% in the third quarter of 2019. The expansion in gross margin in the third quarter of 2020 was driven by an increase in RYANODEX sales, lower BENDEKA product sales in the period to our marketing partner, on which Eagle earns no profit, the increase in BENDEKA royalty revenue, and the $5.0 million milestone payment from SymBio.
R&D expense was $4.8 million for the third quarter of 2020, compared to $10.2 million in the third quarter of 2019. The decrease primarily resulted from lower spending on vasopressin and RYANODEX for the treatment of exertional heat stroke, as well as lower stock-based compensation expense. Excluding stock-based compensation and other non-cash and non-recurring items, R&D expense during the third quarter of 2020 was $5.3 million.
SG&A expense in the third quarter of 2020 decreased to $17.7 million compared to $18.5 million in the third quarter of 2019, primarily due to decreases in travel and entertainment expenses, trade show costs, and external legal expenses. Excluding stock-based compensation and other non-cash and non-recurring items, third quarter 2020 SG&A expense was $11.9 million.
Net income for the third quarter of 2020 was $7.1 million, or $0.52 per basic and $0.51 per diluted share, compared to net loss of $2.4 million, or ($0.17) per basic and diluted share, in the third quarter of 2019.
Adjusted non-GAAP net income for the third quarter of 2020 was $16.1 million, or $1.19 per basic and $1.17 per diluted share, compared to adjusted non-GAAP net income of $3.7 million or $0.27 per basic and $0.26 per diluted share in the third quarter of 2019. 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.
2020 Expense Guidance
R&D expense in 2020, on a non-GAAP basis, is expected to be $40-$44 million, as compared to $31 million in 2019.
SG&A spend in 2020, on a non-GAAP basis, is expected to be $61-$64 million, as compared to $56 million in 2019.
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 September 30, 2020, the Company had $89.7 million in cash and cash equivalents plus $52.2 million in net accounts receivable, $34.3 million of which was due from Teva. The Company had $36.0 million in outstanding debt. Therefore, as of September 30, 2020, the Company had net cash plus receivables of $105.9 million.
In the third quarter of 2020, the Company repurchased $28.0 million of its common stock as part of the Company’s $160.0 million share repurchase program. From August 2016 through September 30, 2020, the Company repurchased $205.0 million of its common stock.
Conference Call
As previously announced, Eagle management will host its Q3 2020 conference call as follows:
www.eagleus.com, under the "Investor + News" section
Participants should dial in 15 minutes prior to the start of the call to ensure timely access.
A replay of the conference call will be available for one week after the call’s completion by dialing 800-934-3336 (US) or 402-220-1148 (International) and entering conference call ID EGRXQ320. The webcast will be archived for 30 days at the aforementioned URL.