Eagle Pharmaceuticals Reports Third Quarter 2017 Results

WOODCLIFF LAKE, N.J.--(BUSINESS WIRE)--Eagle Pharmaceuticals (“Eagle” or “the Company”) (Nasdaq: EGRX) today announced its financial results for the three- and nine-months ended September 30, 2017. Highlights of and subsequent to the third quarter of 2017 include:

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:

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:

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.

About Eagle Pharmaceuticals, Inc.

Eagle is a specialty pharmaceutical company focused on developing and commercializing injectable products that address the shortcomings, as identified by physicians, pharmacists and other stakeholders, of existing commercially successful injectable products. Eagle’s strategy is to utilize the FDA’s 505(b)(2) regulatory pathway. Additional information is available on the Company’s website at www.eagleus.com.

Forward-Looking Statements

This press release contains forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, and other securities laws. Forward-looking statements are statements that are not historical facts. Words and phrases such as “anticipated,” “forward,” “will,” “may,” “remain,” “potential,” “prepare,” “expected,” “believe,” “plan,” “near future,” “belief,” and similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to, statements regarding future events including, but not limited to: the Company’s plans for gaining approval of the label expansion of RYANODEX to treat EHS patients and for the treatment of Ecstasy and methamphetamine intoxication, including the ongoing discussions with FDA relating thereto and the outcome of such discussions; the Company’s plans for the development of fulvestrant; the Company’s ability to continue to deliver value over the long term; and the Company’s timing and ability to repurchase additional shares of the Company’s common stock, if any, under its share repurchase program. All of such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond Eagle’s control, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Such risks include, but are not limited to: whether the Company will incur unforeseen expenses or liabilities or other market factors; whether the FDA will ultimately approve RYANODEX for the treatment of EHS and Ecstasy and methamphetamine intoxication; the ability of Eagle to manufacture and commercialize its PEMFEXY product upon final approval; the formation of a market for Eagle’s PEMFEXY product; whether the Company can continue to make progress with the development of fulvestrant; fluctuations in the trading volume and market price of shares of the Company’s common stock, general business and market conditions and management’s determination of alternative needs and uses of the Company’s cash resources all of which may affect the Company’s long-term performance and the share repurchase program; the success of our commercial relationship with Teva and the parties’ ability to work effectively together; whether Eagle and Teva will successfully perform their respective obligations under the license agreement; difficulties or delays in manufacturing; the availability and pricing of third party sourced products and materials; the outcome of litigation involving any of our products or that may have an impact on any of our products, successful compliance with FDA and other governmental regulations applicable to product approvals, manufacturing facilities, products and/or businesses; general economic conditions; the strength and enforceability of our intellectual property rights or the rights of third parties; competition from other pharmaceutical and biotechnology companies and the potential for competition from generic entrants into the market; the timing of product launches; the successful marketing of our products; the risks inherent in the early stages of drug development and in conducting clinical trials; and other factors that are discussed in Eagle’s Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the U.S. Securities and Exchange Commission (SEC) on March 15, 2017 and its other filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof, and we do not undertake any obligation to revise and disseminate forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of or non-occurrence of any events.

Non-GAAP Financial Performance Measures

In addition to financial information prepared in accordance with U.S. GAAP, this press release also contains adjusted net income and adjusted earnings per share from continuing operations attributable to Eagle Pharmaceuticals. The Company believes these measures provide investors and management with supplemental information relating to operating performance and trends that facilitate comparisons between periods and with respect to projected information.

Adjusted net income from continuing operations excludes share-based compensation expense, depreciation, amortization of acquired intangible assets, changes in contingent purchase price, non-cash interest expense and tax adjustments. The Company believes these non-GAAP financial measures help indicate underlying trends in the Company’s business and are important in comparing current results with prior period results and understanding projected operating performance. Non-GAAP financial measures provide the Company and its investors with an indication of the Company’s baseline performance before items that are considered by the Company not to be reflective of the Company’s ongoing results. See the attached Reconciliations of GAAP to Adjusted Net Income and Adjusted Earnings per Share for explanations of the amounts excluded and included to arrive at adjusted net income and adjusted earnings per share amounts for the three and nine month periods ended September 30, 2017 and 2016.

These adjusted measures are non-GAAP and should be considered in addition to, but not as a substitute for, the information prepared in accordance with U.S. GAAP. The Company strongly encourages investors to review its consolidated financial statements and publicly-filed reports in their entirety and cautions investors that the non-GAAP measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures.

-- Financial tables follow –

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