Par Pharmaceutical Companies, Inc. (NYSE: PRX) today reported results for the first quarter ended March 31, 2010.
For the first quarter ended March 31, 2010, Par reported total revenues of $291.9 million and net income of $26.3 million, or $0.75 per diluted share, which includes a one-time milestone payment of $5 million from Optimer Pharmaceuticals. On an adjusted cash basis, which excludes amortization expenses, net income was $26.2 million, or $0.75 per diluted share for the first quarter 2010. This is compared to reported revenues of $204.0 million and net income of $16.1 million, or $0.48 per diluted share for the same period in 2009, which included several one-time items. On an adjusted cash basis, net income for the first quarter 2009 was $20.3 million, or $0.60 per diluted share.
First Quarter Highlights
Key Product Sales
- Metoprolol: For the first quarter 2010, net sales of metoprolol succinate were $183.3 million, an increase of 12% from the fourth quarter 2009. Par remained the exclusive supplier of the 100mg and 200mg strengths of metoprolol succinate throughout the first quarter 2010. Par is the authorized generic for all strengths of AstraZeneca's Toprol® XL.
- Clonidine: Net sales for the first quarter 2010 were $18.5 million compared to $13.4 million for the fourth quarter 2009 due to the availability of more supply.
- Sumatriptan: Net sales of sumatriptan succinate were $17.3 million for the first quarter 2010 compared to $17.8 million for the fourth quarter 2009. The slight decrease is due to volume driven by customer buying patterns. Par remained the exclusive supplier of generic Imitrex® 4mg and 6mg starter kits and 4mg prefilled cartridges and had one competitor in the 6mg prefilled cartridges throughout the first quarter 2010.
- Meclizine: Net sales for the first quarter 2010 were $10.2 million compared to $9.4 million for the fourth quarter 2009. The increase was due primarily to customer mix. Par was the exclusive supplier of meclizine throughout the first quarter 2010.
- Tramadol ER: Net sales for the first quarter 2010 were $5.3 million compared to $5.5 million for the fourth quarter 2009. Par launched tramadol ER in November 2009.
- Other generic products: For the first quarter 2010, net sales from all other generic products were $37.6 million compared to $55.5 million for the fourth quarter 2009. The decrease was due primarily to the deferral of revenue related to shipments at quarter-end without the recognition of revenues related to shipments from the prior quarter due to the Company's annual year-end shut down, as well as backlogs on certain products. Adjusting for the revenue deferral and backlog, the Company experienced no significant erosion to the base business in the first quarter.
- Megace® ES: Net sales were $13.8 million for the first quarter 2010 compared to $19.0 million for the fourth quarter 2009. The decrease was due primarily to year-end buying patterns of the wholesalers.
- Nascobal® B12 Nasal Spray: Net sales were $3.6 million for the first quarter 2010, compared to $4.2 million for the fourth quarter 2009. The decrease is due primarily to year-end buying patterns of the wholesalers.
Total net revenues for the first quarter 2010, were $291.9 million, up $87.9 million, or 43.1%, from the first quarter 2009, principally driven by limited competition in metoprolol, sumatriptan and meclizine, as well as the launches of nateglinide and clonidine in the third quarter 2009, and tramadol ER in the fourth quarter 2009.
Gross margin for the first quarter 2010 increased due primarily to higher sales of metoprolol coupled with the new product launches in 2009, including clonidine and tramadol ER, and improving sumatriptan margin. These gains were slightly tempered by the initial negative impact on price resulting from the recently enacted U.S. healthcare reform, worth approximately $0.9 million.
Research and development (R&D) expenses decreased to $4.7 million in the first quarter 2010 compared to $7.2 million in the first quarter 2009 due to lower outside development costs and the non-recurrence of milestone payments to MonoSol Rx.
Selling, general and administrative (SG&A) expenses for the first quarter 2010 increased to $41.2 million compared to $33.0 million in the first quarter 2009. This increase primarily reflects on-going expenditures supporting Strativa sales and marketing, driven chiefly by an increase in the field force and other activities related to the re-launch of Nascobal B12 Nasal Spray, as well as pre-commercialization costs for Zuplenz™ and Oravig™ in 2009.
Cash and cash equivalents and marketable securities aggregate balance as of March 31, 2010, was $196.8 million.
Product and Pipeline Update
In February 2010, Strativa Pharmaceuticals announced that due to a FDA foreign travel restriction to India, the FDA had been unable to perform an inspection of the clinical and analytical sites for the bioequivalence study related to Zuplenz™. No issues related to the study data or film product were identified. The FDA restriction on foreign travel in India has been subsequently lifted and the inspection of the clinical and analytical sites for the bioequivalence study related to Zuplenz has been completed. Strativa expects to respond to the FDA's Complete Response Letter shortly.
In April 2010, Par Pharmaceutical and its development partner MN Pharmaceuticals of Turkey announced that they entered into a settlement agreement with sanofi-aventis that resolves patent litigation related to their generic version Eloxatin® (oxaliplatin injection) product. Under the terms of the settlement, Par would begin selling the generic version of Eloxatin in August 2012, or earlier under certain circumstances. Eloxatin had combined U.S. sales of approximately $993 million for the twelve months ended December 31, 2009, according to IMS Health.
In April 2010, Par Pharmaceutical announced that the U.S. District Court for the District of Delaware has ruled in favor of Par in its challenge of the University of Missouri's patents relating to omeprazole/sodium bicarbonate capsules (20 mg/1.1 g and 40 mg/1.1 g) and powders for oral suspension (20 mg/1.68 g and 40 mg/1.68 g), which are listed in the Orange Book for Santarus's Zegerid® product. Par has been awarded 180 days of marketing exclusivity, commencing at launch, for being the first to file an ANDA containing a paragraph IV certification for the product. Par currently has tentative approval on both strengths of the generic Zegerid capsule product. Par anticipates that plaintiffs will appeal the court's decision, and therefore Par intends to review its options with respect to its omeprazole/sodium bicarbonate ANDA.
In April 2010, Strativa Pharmaceuticals announced that it received FDA approval for Oravig™ (miconazole) buccal tablets for the treatment of oropharyngeal candidiasis (OPC). Strativa intends to launch Oravig in the third quarter of 2010.
Yesterday, Par Pharmaceutical announced that it has entered into an exclusive licensing agreement with Glenmark Generics to market the generic version of Merck's Zetia®, a cholesterol modifying agent with annual U.S. sales of approximately $1.4 billion, according to IMS Health data. Under the terms of the licensing and supply agreement, Par has made a payment to Glenmark for exclusive rights to market, sell and distribute ezetimibe in the U.S. The companies will share in profits from the sales of the product. Glenmark believes it is the first to file an ANDA containing a paragraph IV certification for the product, which would potentially provide 180 days of marketing exclusivity. On April 24, 2009, Glenmark was granted tentative approval for its product by the U.S. FDA.
Par currently has approximately 26 ANDAs pending with the FDA, 13 of which Par believes to be first-to-file opportunities with a brand value of approximately $7.7 billion.
Par Pharmaceutical Companies