Akorn, Inc. (NASDAQ: AKRX), a niche generic pharmaceutical company, today reported financial results for its first quarter ended March 31, 2013.
Raj Rai, Chief Executive Officer, commented, "We are pleased with our first quarter results although we were behind in the launches of certain products that were approved late last year due to capacity constraints with our contract manufacturing partners as well as market challenges. We expect resolution sometime in the second half of this year. We are also excited about the establishment of our new R&D center in Vernon Hills, Illinois. The new center, with its added capacities and capabilities, will make it possible for us to file 35 to 40 ANDAs with the USFDA from our US and India facilities starting next year, which is the cornerstone of our long term growth strategy."
First Quarter 2013 Highlights
Achieved record consolidated revenue of $73.9 million, up 43% over the prior year quarter.
Received FDA approval for 2 ANDAs, Naphazoline Hydrochloride 0.025% with Pheniramine Maleate 0.3% and Clindamycin Phosphate Injection in 5% Dextrose premix in three strengths, with a combined IMS addressable market size of $90 million.
Filed 4 ANDAs and completed the development on an additional 2 ANDAs with a combined annual IMS market size of approximately $640 million.
Completed modernization and the first phase of capacity expansion at the Company's Somerset, New Jersey ophthalmic manufacturing plant.
Opened a new, 19,000 square foot research and development center in Vernon Hills, Illinois; designed to accommodate 35 to 40 ANDA filings per year and expand into the development of specialty formulations such as carbapenems, hormones and oncolytics.
Financial Results for the Quarter Ended March 31, 2013
Consolidated revenue for the first quarter of 2013 was $73.9 million, up 43% over the prior year quarter's consolidated revenue of $51.7 million. The increase in consolidated revenue was driven by the sale of new products launched late in 2012, organic growth of established products and products re-launched in prior periods, and a full quarter's sales generated by Akorn India. Consolidated gross margin for the first quarter of 2013 was 53.0% compared to 59.8% in the comparable prior year period. The decrease in gross margin was primarily the result of lower margins from Akorn India, which began operations upon completion of the Kilitch acquisition on February 28, 2012, as well as the impact of various new products launched late in 2012 which generate lower gross margins as a result of being either partnered or manufactured through third parties, and also as a result of a shift in product mix on established products.
Selling, general and administrative expenses were $12.3 million in the first quarter of 2013 compared to $10.3 million in the first quarter of 2012, with a large part of the increase related to increasing our sales infrastructure to support a growing product portfolio. R&D expenses were $6.0 million in the first quarter of 2013, an increase of $3.1 million over the prior year quarter and consistent with 2013 guidance. Increased 2013 R&D spending is the result of three factors: the Generic Drug User Fee Act ("GDUFA") fees associated with the projected 25 abbreviated new drug application ("ANDA") filings for 2013; the cost of bio-equivalence ("BE") studies associated with high-value products; and the increased internal R&D costs due to the build out and staffing of the new R&D facility.
Non-GAAP adjusted net income for the first quarter of 2013 was $14.4 million, or $0.13 per diluted share, compared to non-GAAP adjusted net income of $10.6 million, or $0.10 per diluted share, in the prior year quarter.
The Company's 2013 outlook has been updated to include the impact of slower than expected sales of products launched late in 2012 and a slower than expected recovery of sales of products impacted by the unplanned shutdown of our Somerset, New Jersey plant as a result of Hurricane Sandy. The 2013 outlook excludes the impact of any new approvals after May 6, 2013 as well as the already approved Clindamycin Phosphate Injection in 5% Dextrose premix which the Company anticipates launching early in the third quarter.
Akorn's R&D Pipeline
The Company has 57 ANDAs filed with the FDA with a combined annual addressable IMS market size of approximately $5.6 billion. The Company has completed development work on 15 additional products with a combined annual addressable IMS market size of approximately $1.0 billion and expects to file these products with the FDA in the near future.
First Quarter 2013 Conference Call
The Company will host a conference call at 10:00 a.m. Eastern Time on Tuesday, May 7, 2013, to discuss first quarter 2013 results followed by a Q&A session. The domestic call-in number is 888-539-3678 and the international call-in number is 719-325-2455. The confirmation code for all callers is 3749013. The URL for the webcast is>
Source: Akorn, Inc.