Par Pharmaceutical second-quarter total net revenues decrease 37% to $255.5 million

Par Pharmaceutical Companies, Inc. (NYSE: PRX) today reported results for the second quarter ended June 30, 2010.

For the second quarter ended June 30, 2010, the Company reported total revenues of $255.5 million and income from continuing operations of $18.0 million, or $0.51 per diluted share.  These results included payments to new development partners of $17 million, income from a litigation settlement of $4.1 million, the resolution of tax contingencies of $3.7 million, and non-cash interest expense of $0.5 million.  After these items, adjusted income from continuing operations (non-GAAP measure) was $22.7 million.  On an adjusted cash basis (non-GAAP measure), which excludes amortization expenses, income from continuing operations was $25.1 million, or $0.71 per diluted share for the second quarter 2010.  This is compared to reported revenues of $404.0 million and income from continuing operations of $24.0 million, or $0.71 per diluted share, for the same period in 2009, which included a one-time item.  On an adjusted cash basis, income from continuing operations for the second quarter 2009 was $27.2 million, or $0.80 per diluted share.

For the six months ended June 30, 2010, the Company reported total revenues of $547.4 million and income from continuing operations of $44.5 million, or $1.26 per diluted share. On an adjusted cash basis (non-GAAP measure), which excludes amortization expenses and certain items as detailed in the attached reconciliation, income from continuing operations was $51.4 million, or $1.46 per diluted share.  This compares to reported revenues of $608.0 million and income from continuing operations of $40.2 million, or $1.19 per diluted share, for the same period in 2009.  On an adjusted cash basis, income from continuing operations for the first six months of 2009 was $47.0 million, or $1.39 per diluted share.

Second Quarter Highlights

Key Product Sales

• Metoprolol:  For the second quarter 2010, net sales of metoprolol succinate were $119.6 million, a decrease of 35% from the first quarter 2010.  The decrease was driven by a decline in volume and price due to competition on the 100mg and 200mg strengths.  Par Pharmaceutical, the Company's generic drug division, is the authorized generic for all strengths of AstraZeneca's Toprol® XL.
• Clonidine:  Net sales for the second quarter 2010 were $26.3 million, compared to $18.5 million for the first quarter.  The increase was due to the availability of additional supply.
• Sumatriptan: Net sales of sumatriptan succinate were $17.5 million for the second quarter 2010, compared to $17.3 million for the first quarter 2010.  Par Pharmaceutical 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 second quarter 2010.
• Meclizine: Net sales for the second quarter 2010 were $9.4 million, compared to $10.2 million for the first quarter 2010.  The decrease was driven by a decline in volume and price due to competition in the second quarter.
• Tramadol ER:  Net sales for the second quarter 2010 were $5.7 million, compared to $5.3 million for the first quarter.  Par Pharmaceutical launched tramadol ER in November 2009.
• Other generic products:  For the second quarter 2010, net sales from all other generic products were $53.5 million, compared to $37.6 million for the first quarter. The increase was due primarily to the impact of quarter over quarter in-transit revenue recognition, as well as the release of backlogs on certain products. (The first quarter other generic products revenue was negatively impacted due primarily to the deferral of revenue related to shipments at quarter-end without the recognition of revenues related to shipments from the fourth quarter due to the Company's annual year-end shut down.)
• Megace® ES:  Net sales were $15.5 million for the second quarter 2010, compared to $13.8 million for the first quarter.  The increase was due to the return to normal buying patterns of the wholesalers.
• Nascobal® B12 Nasal Spray:  Net sales were $4.4 million for the second quarter 2010, compared to $3.6 million for the first quarter.  The increase was due primarily to an increase in prescription volume.

Total net revenues for the second quarter 2010 were $255.5 million, down $148.5 million, or 37%, from the second quarter 2009.  The decline was principally driven by additional competition in metoprolol, which was partially offset by 2009 product launches such as clonidine, tramadol ER, and Nascobal.

Gross margin for the second quarter 2010 increased due primarily to the launches of clonidine, tramadol ER, and nateglinide in second half of 2009, and increases in other generic products.  These gains were partially offset by lower metroprolol sales and the impact on price resulting from the recently enacted U.S. healthcare reform.

Research and development (R&D) expenses in the second quarter 2010 were $22.7 million, compared to $5.9 million in the second quarter 2009.  The increase was due to two third-party generic product agreements entered into during the second quarter 2010, totaling $17 million.

Selling, general and administrative (SG&A) expenses for the second quarter 2010 increased to $48.9 million, compared to $44.1 million in the second quarter 2009.  This increase reflects expenses associated with pre-commercialization marketing activities related to the anticipated third quarter 2010 launches of Oravig™ and Zuplenz®, as well as one-time severance charges.

Cash and cash equivalents and marketable securities aggregate balance as of June 30, 2010, was $226 million.

Product and Pipeline Update

In April 2010, Par Pharmaceutical and its development partner MN Pharmaceuticals of Turkey announced that they had 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 $636 million for the twelve months ended March 31, 2010, according to IMS Health.

In April 2010, Strativa Pharmaceuticals, the Company's branded drugs division, 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.

In May 2010, Par Pharmaceutical announced that its partner Glenmark Generics entered into a settlement agreement with an affiliate of Merck & Co. that resolves patent litigation related to Glenmark's submission of an abbreviated new drug application for a generic version of Zetia®.  Under the terms of the settlement agreement, Par will be able to launch the product on December 12, 2016, or earlier under certain circumstances, ahead of the April 25, 2017 expiration of Merck's patent exclusivity for Zetia.

In July 2010, Par Pharmaceutical successfully launched omeprazole and sodium bicarbonate capsules, which are a generic form of Santarus' Zegerid®.  Annual U.S. sales of Zegerid capsules are approximately $195 million, according to IMS Health.

In July 2010, Strativa Pharmaceuticals received FDA approval for Zuplenz® (ondansetron) oral soluble film.  Strativa intends to launch Zuplenz in the fourth quarter of 2010.

Par Pharmaceutical currently has approximately 28 ANDAs pending with the FDA, 12 of which Par believes to be first-to-file opportunities with a brand value of approximately $7.6 billion.

SOURCE Par Pharmaceutical Companies, Inc.