BUENA, N.J., July 23, 2015 /PRNewswire/ -- IGI
Laboratories, Inc. (NYSE MKT: IG), a New
Jersey-based specialty generic pharmaceutical company,
announced its financial results for the second quarter ended
June 30, 2015.
Second Quarter 2015 Highlights
- Total revenues of $8.9 million in
the second quarter of 2015, an increase of 37% over the same
quarter in 2014
- Total net revenues generated from the sale of IGI label generic
topical pharmaceutical products for the three months ended
June 30, 2015 and 2014 of
$6.7 million and $3.4 million, respectively
- Gross profit for the three months ended June 30, 2015 equaled 41% as compared to 45% in
the same period in 2014
- IGI filed four Abbreviated New Drug Applications (ANDAs) in the
second quarter of 2015 with the U.S. Food and Drug Administration
(FDA)
- Operating loss was $1.9 million
in the second quarter of 2015 compared to $0.3 million in the same period in 2014,
primarily attributable to an increase in research and development
costs of $1.4 million over the same
period in 2014
- Adjusted EBITDA (as defined and reconciled to GAAP below) for
the three months ended June 30, 2015
and 2014 was $(1.2) million and
$0.1 million, respectively
- Adjusted net loss per fully diluted share (as defined and
reconciled to GAAP below) for the three months ended June 30, 2015 and 2014 was $0.04 and $0.00,
respectively
Full Year 2015 Financial Guidance
- The Company expects sequential improvement quarter over quarter
in total revenue for the remainder of the year, and therefore still
expects total revenue between $35.0 and
$40.0 million for the year ended December 31, 2015.
- The Company anticipates sequential improvement in gross margin
quarter over quarter for the remainder of the year, and therefore
expects gross margin of 45% to 50% for the year ended December 31, 2015.
- The Company intends to submit up to 20 ANDAs with the FDA by
the end of 2015. In order to complete all of the development
work required for the 2015 filings, the Company continues to expect
to spend between $13 and $14.5
million in research and development by the end of 2015.
- As a result of the expected sequential increase in total
revenue in the third and fourth quarters of 2015, the Company
intends to improve its operating margin to approach break even in
the fourth quarter of 2015, sequentially.
IGI's President and Chief Executive Officer, Jason Grenfell-Gardner, stated, "We are pleased
with our steady progress this quarter. On the regulatory
front, we received the FDA's final approval for our diclofenac
sodium 1.5% topical solution earlier this month. We also added
another six ANDA submissions during fiscal 2015, including the
submission filed today. While there have been some changes in
the econazole market earlier this quarter, we have regained market
share for that product again over the last two months." Mr.
Grenfell-Gardner continued, "Our long-term vision continues to
focus on the creation of a diversified product portfolio, built
around our topical, injectable, complex and ophthalmic, or TICO,
strategy. During the second quarter, we submitted a Prior
Approval Supplement to the FDA for our first injectable product,
and we are working hard to target the launch of that product before
the end of 2015."
Mr. Grenfell-Gardner concluded, "As of today, we have
twenty-eight ANDAs pending with the FDA. Based on
May 2015 IMS Health data, the
addressable market for our pipeline of such twenty-eight ANDAs is
estimated at $1.2 billion. We
continue to see positive momentum in our correspondence with the
FDA with regard to applications filed after October 1, 2014, or the third year after
implementation of the Generic Drug User Fee Amendments of
2012. We are committed to responding effectively to the FDA's
accelerated deadlines for applications currently under review, so
we plan to submit up to a further fourteen ANDAs with the FDA this
year, for a total of up to twenty new topical submissions in
2015."
The Company will hold a conference call today at 4:15 pm ET to discuss 2nd quarter 2015
results.
The Company invites you to listen to the call by dialing
1-888-346-3479. International participants should call
1-412-902-4260. Canadian participants should call
1-855-669-9657. Participants should ask to be joined into the
IGI Laboratories, Inc. call.
This call is being webcast by MultiVu (a PR Newswire Company)
and can be accessed in the Investor Relations Section of IGI's
website at www.igilabs.com.
About IGI Laboratories, Inc.
IGI Laboratories is a specialty generic pharmaceutical company.
Our mission is to be a leading player in the specialty generic
prescription drug market.
Forward Looking Statements
This press release includes certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements include, but are not
limited to, plans, objectives, expectations and intentions, and
other statements contained in this press release that are not
historical facts and statements identified by words such as "
will," "believe," "target," "estimated," "continue" or words of
similar meaning. These statements are based on our current beliefs
or expectations and are inherently subject to various risks and
uncertainties, including those included from time to time in the
"Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" sections in our most
recent Annual Report on Form 10-K, as updated by Quarterly Reports
on Form 10-Q and other reports we file with the Securities and
Exchange Commission. Actual results may differ materially from
these expectations. Factors that could cause actual results to
differ materially from these expectations include, but are not
limited to: our inability to meet current or future regulatory
requirements in connection with existing or future ANDAs; our
inability to achieve profitability; our failure to obtain FDA
approvals as anticipated; our inability to execute and implement
our business plan and strategy; the potential lack of market
acceptance of our products; our inability to protect our
intellectual property rights; changes in and the impact of global
political, economic, business, competitive, market, regulatory and
other factors; and our inability to complete successfully future
product acquisitions. We assume no obligation to update any
forward-looking statements or information, which speak as of their
respective dates.
Non-GAAP Financial Measures
In addition to reporting financial information required in
accordance with U.S. generally accepted accounting principles
(GAAP), IGI is also presenting EBITDA and Adjusted EBITDA, which
are non-GAAP financial measures. Since EBITDA and Adjusted EBITDA
are non-GAAP financial measures, they should not be used in
isolation or as a substitute for consolidated statements of
operations and cash flow data prepared in accordance with GAAP. In
addition, IGI's definition of Adjusted EBITDA may not be comparable
to similarly titled non-GAAP financial measures reported by other
companies.
Adjusted EBITDA, as defined by the Company, is calculated as
follows:
Net income, plus:
Depreciation and amortization
Interest expense, net
Provision for income taxes
Amortization of acquisition costs related to Econazole purchase
Non-cash expenses, such as share-based compensation expense
Less change in the fair value of derivative liability
Adjusted Net Income, as defined by the Company, is calculated
as follows:
Net income, plus:
Non-cash interest expense, net
Provision for income taxes
Amortization of acquisition costs related to Econazole purchase
Non-cash expenses, such as share-based compensation expense
Less change in the fair value of derivative liability
Adjusted Net Income Per Fully Diluted Share is equal to
Adjusted Net Income divided by the actual or anticipated diluted
share count for the applicable period.
The Company believes that EBITDA is a meaningful indicator, to
both Company management and investors, of the past and expected
ongoing operating performance of the Company. EBITDA is a commonly
used and widely accepted measure of financial performance. Adjusted
EBITDA is deemed by the Company to be a useful performance
indicator because it includes an add back of non-cash and
non-recurring operating expenses and change in the fair value of
derivative liability which have little to no bearing on cash flows
and may be subject to uncontrollable factors not reflective of the
Company's true operational performance (i.e., fair value
adjustments to the derivative liability).
While the Company uses Adjusted Net Income, EBITDA and Adjusted
EBITDA in managing and analyzing its business and financial
condition and believes these non-GAAP financial measures to be
useful to investors in evaluating the Company's performance, it is
open to certain shortcomings. Adjusted Net Income, EBITDA and
Adjusted EBITDA do not take into account the impact of capital
expenditures on either the liquidity or the financial performance
of the Company and likewise omit share-based compensation expenses,
which may vary over time and may represent a material portion of
overall compensation expense. Due to the inherent limitations
of Adjusted Net Income, EBITDA and Adjusted EBITDA, the Company's
management utilizes comparable GAAP financial measures to evaluate
the business in conjunction with Adjusted Net Income, EBITDA and
Adjusted EBITDA and encourages investors to do likewise.
IGI LABORATORIES,
INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(in thousands,
except share and per share information)
|
|
|
|
|
|
|
|
|
|
June 30,
2015
(Unaudited)
|
|
December
31,
|
|
2014*
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
150,221
|
|
$
158,883
|
Accounts receivable,
net
|
17,285
|
|
14,366
|
Inventories
|
4,096
|
|
2,784
|
Prepaid expenses and other
receivables
|
1,530
|
|
1,185
|
Total current assets
|
173,132
|
|
177,218
|
Property, plant and
equipment, net
|
4,300
|
|
3,262
|
Product acquisition
costs, net
|
12,061
|
|
10,604
|
Debt issuance costs,
net
|
4,762
|
|
5,132
|
Other
|
460
|
|
862
|
Total assets
|
$
194,715
|
|
$
197,078
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
2,589
|
|
$
1,643
|
Accrued expenses
|
4,440
|
|
5,141
|
Payable for product
acquisition costs
|
6,000
|
|
6,000
|
Other current
liabilities
|
180
|
|
218
|
Total current liabilities
|
13,209
|
|
13,002
|
|
|
|
|
Convertible 3.75%
senior notes, net of debt discount (face of $143,750)
|
103,544
|
|
100,311
|
Fair value of
derivative liability - convertible 3.75% senior notes
|
-
|
|
41,400
|
Note payable,
bank
|
3,160
|
|
3,160
|
Other long term
liabilities
|
210
|
|
71
|
Total liabilities
|
120,123
|
|
157,944
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
Series A Convertible Preferred stock, $0.01 par value, 100 shares
authorized; 0 shares issued and outstanding as of June 30, 2015 and
December 31, 2014, respectively
|
-
|
|
-
|
Series C Convertible Preferred stock, $0.01 par value, 1,550 shares
authorized; 0 shares issued and outstanding as of June 30, 2015 and
December 31, 2014, respectively
|
-
|
|
-
|
Common stock, $0.01 par
value, 100,000,000 and 60,000,000 shares
authorized; 52,862,453 and
52,819,787 shares issued and outstanding as of June 30, 2015 and
December 31, 2014, respectively
|
548
|
|
548
|
Additional paid-in
capital
|
97,699
|
|
78,172
|
Accumulated
deficit
|
(23,655)
|
|
(39,586)
|
Total stockholders' equity
|
74,592
|
|
39,134
|
Total liabilities and stockholders' equity
|
$
194,715
|
|
$
197,078
|
|
|
|
|
*Derived from the
audited December 31, 2014 financial statements
|
IGI LABORATORIES,
INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(in thousands,
except share and per share information)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Revenues:
|
|
|
|
|
|
|
|
Product sales,
net
|
$ 8,647
|
|
$ 6,021
|
|
$ 19,157
|
|
$ 12,520
|
Research and development
income
|
187
|
|
437
|
|
238
|
|
750
|
Licensing, royalty and other
revenue
|
59
|
|
25
|
|
169
|
|
66
|
Total revenues
|
8,893
|
|
6,483
|
|
19,564
|
|
13,336
|
|
|
|
|
|
|
|
|
Costs and
Expenses:
|
|
|
|
|
|
|
|
Cost of
revenues
|
5,227
|
|
3,580
|
|
10,270
|
|
7,567
|
Selling, general and
administrative expenses
|
2,141
|
|
1,156
|
|
4,041
|
|
2,438
|
Product development and
research expenses
|
3,436
|
|
2,028
|
|
6,066
|
|
3,393
|
Total costs and expenses
|
10,804
|
|
6,764
|
|
20,377
|
|
13,398
|
Operating income
(loss)
|
(1,911)
|
|
(281)
|
|
(813)
|
|
(62)
|
|
|
|
|
|
|
|
|
Other Income
(Expense):
|
|
|
|
|
|
|
|
Change in the fair value of
derivative liability
|
14,519
|
|
-
|
|
23,144
|
|
-
|
Interest and other expense,
net
|
(3,232)
|
|
(52)
|
|
(6,400)
|
|
(104)
|
Income (loss) before
income tax expense
|
9,376
|
|
(333)
|
|
15,931
|
|
(166)
|
|
|
|
|
|
|
|
|
Income tax
expense
|
-
|
|
12
|
|
-
|
|
12
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$ 9,376
|
|
$
(345)
|
|
$ 15,931
|
|
$
(178)
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
$0.18
|
|
($0.01)
|
|
$0.30
|
|
$0.00
|
Diluted
earnings (loss) per share
|
($0.03)
|
|
($0.01)
|
|
($0.02)
|
|
$0.00
|
|
|
|
|
|
|
|
|
Weighted average
shares of common stock outstanding:
|
|
|
|
|
|
|
|
Basic
|
52,861,167
|
|
47,107,094
|
|
52,851,587
|
|
46,967,688
|
Diluted
|
67,125,905
|
|
47,107,094
|
|
67,174,546
|
|
46,967,688
|
IGI LABORATORIES,
INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
For the six months
ended June 30, 2015 and 2014
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
June
30,
|
|
2015
|
|
2014
|
Cash flows from
operating activities:
|
|
|
|
Net income (loss)
|
$
15,931
|
|
$
(178)
|
Non-cash (income) expenses
|
(18,208)
|
|
944
|
Changes in operating assets and liabilities
|
(3,445)
|
|
(1,236)
|
|
|
|
|
Net cash used in
operating activities
|
(5,722)
|
|
(470)
|
|
|
|
|
Net cash used in
investing activities
|
(2,795)
|
|
(312)
|
|
|
|
|
Net cash (used in)
provided by financing activities
|
(145)
|
|
443
|
|
|
|
|
Net decrease in cash
and cash equivalents
|
(8,662)
|
|
(339)
|
Cash and cash
equivalents at beginning of period
|
158,883
|
|
2,101
|
|
|
|
|
Cash and cash
equivalents at end of period
|
$
150,221
|
|
$ 1,762
|
IGI LABORATORIES,
INC. AND SUBSIDIARIES
|
RECONCILIATION OF
NON-GAAP MEASURES
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$ 9,376
|
|
$ (345)
|
|
$ 15,931
|
|
$ (178)
|
|
|
|
|
|
|
|
|
Depreciation and
amortization expense
|
148
|
|
117
|
|
290
|
|
235
|
Interest expense,
net
|
1,386
|
|
44
|
|
2,770
|
|
89
|
Non-cash interest
expense
|
1,845
|
|
8
|
|
3,630
|
|
16
|
Provision for income
taxes
|
-
|
|
12
|
|
-
|
|
12
|
EBITDA
|
12,755
|
|
(164)
|
|
22,621
|
|
174
|
|
|
|
|
|
|
|
|
Amortization of
product acquisition costs
|
30
|
|
30
|
|
60
|
|
60
|
Stock-based
compensation expense
|
528
|
|
260
|
|
906
|
|
519
|
Change in the fair
value of derivative liability
|
(14,519)
|
|
-
|
|
(23,144)
|
|
-
|
Adjusted
EBITDA
|
$ (1,206)
|
|
$ 126
|
|
$
443
|
|
$
753
|
IGI LABORATORIES,
INC. AND SUBSIDIARIES
|
RECONCILIATION OF
NON-GAAP ADJUSTED NET INCOME
|
(in thousands,
except share and per share information)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$ 9,376
|
|
$
(345)
|
|
$ 15,931
|
|
$
(178)
|
|
|
|
|
|
|
|
|
Non-cash interest
expense
|
1,845
|
|
8
|
|
3,630
|
|
16
|
Provision for income
taxes
|
-
|
|
12
|
|
-
|
|
12
|
Amortization of
product acquisition costs
|
30
|
|
30
|
|
60
|
|
60
|
Non-cash stock-based
compensation expense
|
528
|
|
260
|
|
906
|
|
519
|
Change in the fair
value of derivative liability
|
(14,519)
|
|
-
|
|
(23,144)
|
|
-
|
Adjusted net
Income
|
$ (2,740)
|
|
$
(35)
|
|
$ (2,617)
|
|
$
429
|
|
|
|
|
|
|
|
Adjusted net income
(loss) per diluted share
|
$
(0.04)
|
|
$
(0.00)
|
|
$
(0.04)
|
|
$
0.01
|
|
|
|
|
|
|
|
|
Weighted average
shares of common stock outstanding:
|
|
|
|
|
|
|
|
Diluted
|
67,125,905
|
|
47,107,094
|
|
67,174,546
|
|
46,967,688
|
IGI LABORATORIES,
INC. AND SUBSIDIARIES
|
GROSS TO NET
CALCULATION
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Gross IGI product
sales
|
$ 27,861
|
|
$ 5,770
|
|
$ 50,180
|
|
$ 10,795
|
|
|
|
|
|
|
|
|
Reduction to gross
product sales:
|
|
|
|
|
|
|
|
Chargebacks and billbacks
|
15,576
|
|
1,884
|
|
28,088
|
|
3,468
|
Sales discounts and other allowances
|
5,612
|
|
504
|
|
7,322
|
|
1,001
|
Total reduction to
gross product sales
|
21,188
|
|
2,388
|
|
35,410
|
|
4,469
|
|
|
|
|
|
|
|
|
IGI product sales,
net
|
6,673
|
|
3,382
|
|
14,770
|
|
6,326
|
|
|
|
|
|
|
|
|
Contract
manufacturing product sales
|
1,974
|
|
2,639
|
|
4,387
|
|
6,194
|
|
|
|
|
|
|
|
|
Total product
sales
|
$ 8,647
|
|
$ 6,021
|
|
$ 19,157
|
|
$ 12,520
|
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SOURCE IGI Laboratories, Inc.