AMRI reports $47.7 million total revenue for the third quarter of 2009

AMRI (NASDAQ: AMRI) today reported financial and operating results for the third quarter ended September 30, 2009.

Financial highlights for the quarter and other significant events include:

  • Recurring royalties of $7.9 million, an increase of 39% from the third quarter of 2008
  • Quarter over quarter increases in contract revenue from Discovery and Development/Small Scale business segments
  • The nomination of a third compound for preclinical development from AMRI’s collaboration with Bristol-Myers Squibb Company which will result in a milestone payment of $0.75 million in the fourth quarter of 2009

Third Quarter 2009 Results

Total revenue for the third quarter of 2009 was $47.7 million, a decrease of 22% compared to total revenue of $61.4 million reported in the third quarter of 2008.

Total contract revenue for the third quarter of 2009 was $39.7 million, a decrease of 27% compared to total contract revenue of $54.1 million reported in 2008. Total contract revenue encompasses revenue from AMRI’s Discovery Services, Development and Small Scale Manufacturing, and Large Scale Manufacturing business components.

  • Discovery Services contract revenue for the third quarter was $11.9 million, a decrease of 27% from $16.4 million in 2008.
  • Development/Small Scale Manufacturing contract revenue for the third quarter was $9.7 million, a decrease of 33% from $14.5 million in 2008.
  • Large Scale Manufacturing contract revenue for the third quarter was $18.2 million, a decrease of 22% from $23.2 million in 2008.

Recurring royalties in the third quarter of 2009 were $7.9 million, an increase of 39% compared to recurring royalties of $5.7 million reported in 2008. AMRI earns royalties from worldwide sales of the non-sedating antihistamine Allegra® (Telfast® outside the United States), as well as certain generic forms of Allegra®, for patents relating to the active ingredient in Allegra®.

Total revenue for the third quarter of 2008 also included milestone revenue resulting from the company's 2005 licensing agreement with Bristol-Myers Squibb Company (BMS) of $1.5 million.

Net income under U.S. Generally Accepted Accounting Principles (U.S. GAAP) in the third quarter of 2009 was $0.4 million or $0.01 per basic and diluted share, compared to net income of $7.0 million or $0.22 per basic and diluted share in the third quarter of 2008. Net income in the third quarter of 2009 includes a $0.8 million, or $0.03 per diluted share, adjustment to decrease income tax expense due to the reassessment of previously uncertain tax positions. Excluding this benefit, net loss on an adjusted basis in the third quarter of 2009 was $0.5 million, or $0.02 per diluted share.

Year-to-Date

Total revenue for the nine-month period ended September 30, 2009 was $153.0 million, a decrease of $19.9 million or 12% compared to $172.9 million for the same period in 2008.

Total contract revenue for the first nine months of 2009 of $121.8 million represented a decrease of $24.0 million or 17% over the same period in 2008.

  • Contract revenue for Discovery Services in the nine-month period ended September 30, 2009 was $34.9 million, a decrease of 22% from $44.6 million in 2008.
  • Contract revenue for Development/Small Scale Manufacturing in the nine-month period ended September 30, 2009 was $28.8 million, a decrease of 33% from $43.0 million in 2008.
  • Contract revenue for Large Scale Manufacturing in the nine-month period ended September 30, 2009 was $58.1 million, compared to $58.2 million in the nine-month period ended September 30, 2008.

Milestone revenue resulting from the company's 2005 licensing agreement with BMS for the first nine months of 2009 was $4.0 million, compared to total milestone revenue of $5.5 million in the first nine months of 2008.

Recurring royalties from Allegra® for the first nine months of 2009 were $27.2 million, an increase of 27% compared to royalty revenue of $21.5 million in 2008.

Net income under U.S. GAAP in the first nine months of 2009 was $2.5 million or $0.08 per basic and diluted share, compared to net income of $17.4 million or $0.55 per basic and diluted share in the first nine months of 2008. Net income in the first nine months of 2009 includes a $0.8 million, or $0.03 per diluted share, adjustment to decrease income tax expense due to the reassessment of previously uncertain tax positions.

For a reconciliation of net income and earnings per diluted share as reported to adjusted net income and earnings per diluted share for the 2009 and 2008 reporting period, please see Table 1 at the end of this press release.

AMRI Chairman, President and CEO Thomas E. D'Ambra said, “Consistent with earlier guidance, AMRI’s contract services business continues to experience lower demand relative to 2008 as we work our way through the effects of the recession on our customer base. We are pleased that we were able to deliver quarter over quarter increases in our Discovery and Development/Small Scale business segments. We believe that lowered customer demand is bottoming out and we are predicting a return to growth in 2010. Our Large Scale segment continues to be impacted by project delays and a further order reduction from our largest customer due to their 2009 inventory reduction efforts. A recent NDA filing by one of our Large Scale customers and a return to historical order levels from our largest customer set the stage for stabilization in 2010 for our Large Scale segment. We remain confident in our ability to further grow our drug discovery and development outsourcing services. We look forward to providing more detail on our expectations for next year at the end of the fourth quarter.”

Dr. D'Ambra continued, “Regarding AMRI’s R&D efforts, as recently announced, Bristol-Myers Squibb Company (BMS) advanced a third candidate from our research collaboration into preclinical development. The milestone payment we will receive in the fourth quarter represents the fifth paid to AMRI under this agreement with BMS, totaling $12 million to date. Our other R&D investments continue to make forward progress. We look forward to being able to share more highlights with you in the future.”

Liquidity and Capital Resources

At September 30, 2009, AMRI had cash, cash equivalents and marketable securities of $103.1 million, compared to $87.5 million at December 31, 2008.

Total debt at September 30, 2009 was $13.5 million, down from $13.7 million at December 31, 2008. Cash, cash equivalents, and marketable securities, net of debt, were $89.7 million at September 30, 2009. Total common shares outstanding, net of treasury shares, were 31,644,364 at September 30, 2009.

During the third quarter of 2009, total cash, cash equivalents and marketable securities increased $2.7 million, representing operating cash flow of $4.4 million offset by $1.7 million in capital expenditures. The increase of $15.7 million in cash, cash equivalents and marketable securities in the first nine months of 2009 was due to operating cash flows of $29.2 million, driven primarily by the receipt of a $10 million sub-license fee from sanofi-aventis U.S. LLC and the collection of customer receivables. These increases in cash and equivalents were partially offset by capital expenditures of $13.6 million.

2009 Financial Guidance Update

AMRI Chief Financial Officer Mark T. Frost provided contract revenue and earnings per share (“EPS”) guidance for the fourth quarter and revised guidance for the full year 2009. “In the fourth quarter, we currently expect contract revenue to range from $32 million to $36 million, a decrease of up to 35% from the fourth quarter of 2008. For the full year 2009, we expect contract revenue to range from $154 million to $158 million, a decrease of up to 21% versus 2008.”

Mr. Frost continued, “With regard to our royalty revenues from worldwide sales of Allegra® and certain generic forms of Allegra®, we expect fourth quarter royalties of approximately $7 to $8 million and full year 2009 royalties of approximately $34 to $35 million. For the fourth quarter we expect a loss per share of between $0.06 and $0.10. For the full year we expect adjusted loss per share to range from $0.01 to $0.05, which includes the impact of the $1.9 million, or $0.04 per basic and diluted share, of non-cash inventory write-downs primarily related to a legacy generic API recorded in the second quarter of 2009. The revised full year guidance includes a lower tax benefit due to the mix of domestic and international pre-tax income/loss as well as a catch-up for 2008 income taxes. Forecasted operating results for the full year 2009 have not significantly changed from our previous guidance.”

Recent Highlights

Recent noteworthy announcements or milestones at AMRI include the following:

  • The advancement of a third compound into preclinical development by Bristol-Myers Squibb Company (BMS) as a result of the research collaboration between AMRI and BMS to develop improved treatments for diseases of the central nervous system (CNS). Under its license and research agreement with BMS, AMRI will receive a milestone payment of $0.75 million, marking the fifth milestone payment in this ongoing collaboration.
  • The filing of two new patent infringement lawsuits in U.S. District Court in New Jersey against Dr. Reddy’s Laboratories, Ltd., Dr. Reddy’s Laboratories, Inc. and Sandoz, Inc. (“the defendants”) for infringement of AMRI’s recently issued U.S. Patent Number 7,390,906 for the manufacturing process for the active ingredient in sanofi-aventis’s Allegra® and Allegra®D drug products.
  • The dedication and grand opening of a new AMRI research and development facility in Bothell, WA. AMRI leased 44,000 square feet of R&D space with an option to lease an additional 44,000 square feet to accommodate future anticipated expansion of the site. The company received over $400,000 in grant reimbursements from the State of Washington as well as local energy providers Puget Sound Energy and SnoPUD.
Source:

AMRI

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