Eagle Pharmaceuticals, Inc. Reports First Quarter 2019 Results

Eagle Pharmaceuticals, Inc. Reports First Quarter 2019 Results

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May 7, 2019 Off By BusinessWire

— Q1 2019 net income of $0.64 per basic and $0.62 per diluted share and
adjusted non-GAAP net income of $1.05 per basic and $1.01 per diluted
share —

— Revised licensing agreement for BENDEKA^® extends term of
contract and increases royalty rate to 32% in 2021 —

— CMS issues unique J-code for BELRAPZO™ (500mL infusion bendamustine
solution) –

— Announced statistically significant neuroprotective effects of
RYANODEX^® in a well-established nerve agent model —

WOODCLIFF LAKE, N.J.–(BUSINESS WIRE)–Eagle Pharmaceuticals, Inc. (“Eagle” or the “Company”) (Nasdaq: EGRX)
today announced its financial results for the three months ended March
31, 2019. Highlights of, and subsequent to, the first quarter of 2019
include:

Business and Recent Highlights:

Completed a successful study to evaluate the neuroprotective effects
of RYANODEX^® (dantrolene sodium) for the treatment of nerve
agent exposure:
- Conducted in collaboration with the United States Army Medical
  Research Institute of Chemical Defense (USAMRICD), the nation’s
  leading science and technology laboratory in the area of medical
  chemical countermeasures research and development;
- The Company plans to meet with the U.S. Food and Drug
  Administration (FDA) as soon as possible;
Announced a revised licensing agreement for BENDEKA that extends the
term of the agreement until the product is no longer sold and
increases Eagle’s royalty rate from 25% to 30% in October 2019 and by
1% annually until it reaches 32%;
The FDA issued a decision in favor of Eagle regarding the scope of
BENDEKA’s Orphan Drug Exclusivity (ODE), further protecting the
longevity of the BENDEKA franchise; and
The Centers for Medicare and Medicaid Services (CMS) established a
unique, product specific, billing code (J-code: J9036) effective July
1, 2019, for BELRAPZO, the brand name under which Eagle’s currently
marketed 500mL infusion bendamustine solution will be sold beginning
June 3, 2019.

Financial Highlights:

Total revenue for the first quarter of 2019 was $49.8 million,
compared to $46.6 million in the first quarter of 2018;
Q1 2019 bendamustine hydrochloride 500ml solution (“Big Bag” or
“BELRAPZO”) product sales were $3.2 million;
Q1 2019 RYANODEX product sales were $4.0 million, compared to $4.4
million in Q1 2018;
Q1 2019 net income was $9.0 million, or $0.64 per basic and $0.62 per
diluted share, compared to net income of $2.6 million, or $0.18 per
basic and $0.17 per diluted share in Q1 2018;
Q1 2019 adjusted non-GAAP net income was $14.6 million, or $1.05 per
basic and $1.01 per diluted share, compared to adjusted non-GAAP net
income of $8.2 million, or $0.55 per basic and $0.53 per diluted share
in Q1 2018; and
Cash and cash equivalents were $102.1 million, net accounts receivable
was $63.9 million, and debt was $42.5 million as of March 31, 2019.

“This is an exciting time at Eagle as we continue to position the
Company for growth. We have solidified our bendamustine franchise by
securing marketing exclusivity for BENDEKA and effectively preventing
generic competition through the end of 2022, revising our licensing
agreement for BENDEKA to extend the term of the agreement well beyond
2025 and increase our royalty rate, and launching BELRAPZO, our 500mL
infusion bendamustine product, which will have its own unique J-code
effective July 1^st of this year. Combined, these efforts now
give us the most certitude for our bendamustine portfolio since launch
and should provide a very strong base of earnings upon which we can
continue to build to further grow the Company,” stated Scott Tarriff,
Chief Executive Officer of Eagle Pharmaceuticals.

“With bendamustine as a solid base for many years to come, we are
excited about our pipeline. Today’s news about RYANODEX for nerve agent
exposure is an important step in diversifying our product line and
building growth,” concluded Tarriff.

First Quarter 2019 Financial Results

Total revenue for the three months ended March 31, 2019 was $49.8
million, as compared to $46.6 million for the three months ended March
31, 2018. We recorded $9.0 million in revenue during the first quarter
of 2019 upon execution of an agreement to terminate Teva’s obligation to
pay future milestones and royalties on BENDEKA sales outside of the U.S.

Royalty revenue was $26.3 million in the first quarter of 2019, compared
to $35.8 million in the first quarter of 2018. BENDEKA royalties were
$26.0 million in the first quarter of 2019, compared to $34.0 million in
the first quarter of 2018. A summary of total revenue is outlined below:


	Three Months Ended March 31,
	2019	2018
	(unaudited)	(unaudited)
Revenue (in thousands):
Product sales	14,472	10,838
Royalty revenue	26,313	35,788
License and other income	9,000	—
Total revenue	49,785	46,626

Gross Margin was 74% during the first quarter of 2019, as compared to
75% in the first quarter of 2018.

R&D expenses were $6.4 million for the quarter, compared to $17.3
million in the same quarter in the prior year. The first quarter year
over year decrease reflects a substantial reduction in fulvestrant
expense, partially offset by the cost to bring vasopressin to market.
Excluding stock-based compensation and other non-cash and non-recurring
items, R&D expense during the first quarter was $5.2 million.

SG&A expenses in the first quarter of 2019 increased to $18.1 million
compared to $15.2 million in the first quarter of 2018. External legal
expenses associated with litigation on PEMFEXY, vasopressin and
bendamustine and higher stock compensation expense account for the year
over year increase. Excluding stock-based compensation and other
non-cash and non-recurring items, first quarter 2019 SG&A expense was
$12.9 million.

Net income for the first quarter of 2019 was $9.0 million, or $0.64 per
basic and $0.62 per diluted share, compared to net income of $2.6
million, or $0.18 per basic and $0.17 per diluted share in the three
months ended March 31, 2018, due to the factors discussed above.

Adjusted non-GAAP net income for the first quarter of 2019 was $14.6
million, or $1.05 per basic and $1.01 per diluted share, compared to
Adjusted non-GAAP net income of $8.2 million or $0.55 per basic and
$0.53 per diluted share in the prior year quarter. For a full
reconciliation of adjusted non-GAAP net income to the most comparable
GAAP financial measures, please see the tables at the end of this press
release.

2019 Expense Guidance

R&D spend in 2019, on a non-GAAP basis, is expected to be $32.0-$36.0
million, as compared to $38.0 million in 2018.
SG&A spend in 2019, on a non-GAAP basis, is expected to be $51.0-$54.0
million, as compared to $43.0 million in 2018.

The guidance provided in this section represents forward-looking
information, and actual results may vary. Please see the risks and
assumptions referred to in the Forward-Looking Statements section of
this press release.

Liquidity

As of March 31, 2019, the Company had $102.1 million in cash and cash
equivalents and $63.9 million in net accounts receivable, $46.6 million
of which was due from Teva Pharmaceutical Industries Ltd. The Company
had $42.5 million in outstanding debt. Therefore, at March 31, 2019, the
Company had net cash and receivables of $123.6 million.

Conference Call

As previously announced, Eagle management will host its first quarter
2019 conference call as follows:

A replay of the conference call will be available for one week after the
call’s completion by dialing 800-839-5493 (US) or 402-220-2552
(International) and entering conference call ID EGRXQ119. The webcast
will be archived for 30 days at the aforementioned URL.

About Eagle Pharmaceuticals, Inc.

Eagle is a specialty pharmaceutical company focused on developing and
commercializing injectable products that address the shortcomings, as
identified by physicians, pharmacists and other stakeholders, of
existing commercially successful injectable products. Eagle’s main
strategy is to utilize the FDA’s 505(b)(2) regulatory pathway.
Additional information is available on the Company’s website at www.eagleus.com.

Forward-Looking Statements

This press release contains forward-looking information within the
meaning of the Private Securities Litigation Reform Act of 1995, as
amended, and other securities laws. Forward-looking statements are
statements that are not historical facts. Words and phrases such as
“anticipated,” “forward,” “will,” “would,” “may,” “remain,” “potential,”
“prepare,” “expected,” “believe,” “plan,” “near future,” “belief,”
“guidance,” and similar expressions are intended to identify
forward-looking statements. These statements include, but are not
limited to, statements regarding future events including, but not
limited to: the Company’s expense guidance for fiscal year 2019, the
Company’s confidence in the remaining products in its pipeline; the
Company’s ability to deliver value in 2019 and over the long term; the
Company’s timing and ability to repurchase additional shares of the
Company’s common stock, if any, under its share repurchase program; and
the Company’s plans and ability to advance the products in its pipeline.
All of such statements are subject to certain risks and uncertainties,
many of which are difficult to predict and generally beyond Eagle’s
control, that could cause actual results to differ materially from those
expressed in, or implied or projected by, the forward-looking
information and statements. Such risks include, but are not limited to:
whether the Company will incur unforeseen expenses or liabilities or
other market factors; whether the FDA will ultimately approve the
products in its pipeline for any indications; whether the Company can
successfully market and commercialize its product candidates, including
RYANODEX, BENDEKA and BELRAPZO, in the treatment of any indications;
fluctuations in the trading volume and market price of shares of the
Company’s common stock, general business and market conditions and
management’s determination of alternative needs and uses of the
Company’s cash resources, all of which may affect the Company’s
long-term performance and the share repurchase program; the success of
our commercial relationship with Teva and the parties’ ability to work
effectively together; whether Eagle and its commercial partners will
successfully perform their respective obligations under their respective
agreements; difficulties or delays in manufacturing; the availability
and pricing of third party sourced products and materials; the outcome
of litigation involving any of our products or that may have an impact
on any of our products; successful compliance with the FDA and other
governmental regulations applicable to product approvals, manufacturing
facilities, products and/or businesses; general economic conditions; the
strength and enforceability of our intellectual property rights or the
rights of third parties; competition from other pharmaceutical and
biotechnology companies and the potential for competition from generic
entrants into the market; the timing of product launches; the successful
marketing of our products; the risks inherent in the early stages of
drug development and in conducting clinical trials; that Eagle’s
redirection of resources to other products in its pipeline may not be
successful; and other factors that are discussed in Eagle’s filings with
the SEC. Readers are cautioned not to place undue reliance on these
forward-looking statements that speak only as of the date hereof, and
the Company does not undertake any obligation to revise and disseminate
forward-looking statements to reflect events or circumstances after the
date hereof, or to reflect the occurrence of or non-occurrence of any
events.

Non-GAAP Financial Performance Measures

In addition to financial information prepared in accordance with U.S.
GAAP, this press release also contains adjusted non-GAAP net income and
adjusted non-GAAP earnings per share attributable to Eagle. The Company
believes these measures provide investors and management with
supplemental information relating to operating performance and trends
that facilitate comparisons between periods and with respect to
projected information.

Adjusted non-GAAP net income excludes share-based compensation
expense, depreciation, amortization of acquired intangible assets,
changes in fair value of contingent consideration, severance, non-cash
interest expense, expense of acquired in-process research and
development, and tax adjustments. The Company believes these non-GAAP
financial measures help indicate underlying trends in the Company’s
business and are important in comparing current results with prior
period results and understanding projected operating performance.
Non-GAAP financial measures provide the Company and its investors with
an indication of the Company’s baseline performance before items that
are considered by the Company not to be reflective of the Company’s
ongoing results. See the attached Reconciliation of GAAP to Adjusted
Non-GAAP Net Income and Adjusted Non-GAAP Earnings per Share and
Reconciliation of GAAP to Adjusted Non-GAAP EBITDA for explanations of
the amounts excluded and included to arrive at adjusted non-GAAP net
income, adjusted non-GAAP earnings per share amounts, and adjusted
non-GAAP EBITDA amounts, respectively, for the three-months ended March
31, 2019.

These adjusted measures are non-GAAP and should be considered in
addition to, but not as a substitute for, the information prepared in
accordance with U.S. GAAP. The Company strongly encourages investors to
review its consolidated financial statements and publicly-filed reports
in their entirety and cautions investors that the non-GAAP measures used
by the Company may differ from similar measures used by other companies,
even when similar terms are used to identify such measures.

— Financial tables follow –


EAGLE PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)


	March 31, 2019			December 31, 2018
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	102,139		$	78,791
Accounts receivable, net		63,930			66,486
Inventories		10,265			8,304
Prepaid expenses and other current assets		5,895			10,263
Total current assets		182,229			163,844
Property and equipment, net		2,333			2,397
Intangible assets, net		17,473			18,103
Goodwill		39,743			39,743
Deferred tax asset, net		14,109			13,822
Other assets		3,565			694
Total assets	$	259,452		$	238,603
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	16,786		$	9,917
Accrued expenses		22,436			23,519
Current portion of long-term debt		5,000			6,250
Total current liabilities		44,222			39,686
Other long-term liabilities		2,870			—
Long-term debt, less current portion		36,999			38,155
Commitments and Contingencies
Stockholders’ equity:
Preferred stock, 1,500,000 shares authorized and no shares issued or outstanding as of March 31, 2019 and December 31, 2018		—			—
Common stock, $0.001 par value; 50,000,000 shares authorized; 16,519,728 and 16,504,283 shares issued as of March 31, 2019 and December 31, 2018, respectively		17			17
Additional paid in capital		262,084			256,458
Retained earnings		67,160			58,187
Treasury stock, at cost, 2,590,258 and 2,590,258 shares as of March 31, 2019 and December 31, 2018, respectively		(153,900	)		(153,900	)
Total stockholders’ equity		175,361			160,762
Total liabilities and stockholders’ equity	$	259,452		$	238,603

EAGLE PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share amounts)
(unaudited)


	Three Months Ended March 31,
		2019			2018

Revenue:
Product sales	$	14,472		$	10,838
Royalty revenue		26,313			35,788
License and other income		9,000			—
Total revenue		49,785			46,626
Operating expenses:
Cost of product sales		9,554			7,223
Cost of royalty revenue		3,546			4,585
Research and development		6,375			17,320
Selling, general and administrative		18,141			15,193
Total operating expenses		37,616			44,321
Income from operations		12,169			2,305
Interest income		494			27
Interest expense		(686	)		(675	)
Total other expense, net		(192	)		(648	)
Income before income tax (provision) benefit		11,977			1,657
Income tax (provision) benefit		(3,004	)		959
Net income	$	8,973		$	2,616
Earnings per share attributable to common stockholders:
Basic	$	0.64		$	0.18
Diluted	$	0.62		$	0.17
Weighted average number of common shares outstanding:
Basic		13,925,227			14,819,530
Diluted		14,418,211			15,478,335

EAGLE PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)

	Three Months Ended March 31,
		2019			2018
Cash flows from operating activities:
Net income	$	8,973		$	2,616
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes		(287	)		(123	)
Depreciation expense		503			341
Amortization expense		630			670
Stock-based compensation expense		5,782			5,305
Change in fair value of contingent consideration		—			27
Amortization of debt issuance costs		94			94
Changes in operating assets and liabilities which provided (used) cash:
Accounts receivable		2,556			395
Inventories		(1,961	)		(1,023	)
Prepaid expenses and other current assets		4,368			1,518
Accounts payable		6,869			(2,628	)
Accrued expenses and other liabilities		(1,083	)		(2,289	)
Other assets and other long-term liabilities, net		(263	)		18
Net cash provided by operating activities		26,181			4,921
Cash flows from investing activities:
Purchase of property and equipment		(177	)		(19	)
Net cash used in investing activities		(177	)		(19	)
Cash flows from financing activities:
Proceeds from common stock option exercises		42			1,166
Payments related to employee net option exercises		—			(3,051	)
Employee withholding taxes related to stock-based awards		(198	)		—
Payment of contingent consideration		—			(15,001	)
Payment of debt		(2,500	)		—
Repurchases of common stock		—			(7,003	)
Net cash used in financing activities		(2,656	)		(23,889	)
Net increase (decrease) in cash and cash equivalents		23,348			(18,987	)
Cash and cash equivalents at beginning of period		78,791			114,657
Cash and cash equivalents at end of period	$	102,139		$	95,670
Supplemental disclosures of cash flow information:
Cash (received) paid during the period for:
Income taxes	$	(6,490	)	$	96
Interest		625			368

EAGLE PHARMACEUTICALS, INC.
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP NET INCOME AND
ADJUSTED NON-GAAP EARNINGS PER SHARE
(In thousands, except share and per share amounts)
(unaudited)


		Three Months Ended March 31,
			2019			2018

Net income – GAAP		$	8,973		$	2,616

Adjustments:
Cost of product revenues:
	Amortization expense		225			265
Research and development:
	Stock-based compensation expense		1,143			1,260
	Depreciation expense		69			169
	Expense of acquired in-process research & development		–			600
	Severance		–			255
Selling, general and administrative:
	Stock-based compensation expense		4,639			4,045
	Amortization expense		405			405
	Depreciation expense		172			172
Other:
	Non-cash interest expense		94			94
	Change in fair value of contingent consideration		–			27
Tax effect of the non-GAAP adjustments			(1,091	)		(1,727	)

Adjusted non-GAAP net income		$	14,629		$	8,181

Adjusted non-GAAP earnings per share:
Basic		$	1.05		$	0.55
Diluted		$	1.01		$	0.53
Weighted number of common shares outstanding:
Basic			13,925,227			14,819,530
Diluted			14,418,211			15,478,335

EAGLE PHARMACEUTICALS, INC.
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP EBITDA
(In thousands)
(unaudited)

		Three Months Ended March 31,					Twelve Months Ended March 31,			Twelve Months Ended December 31,
		2019		2018			2019			2018

Net income – GAAP		$	8,973	$	2,616		$	38,260		$	31,903

Add back:
	Interest expense, net of interest income		192		648			2,123			2,579
	Income tax provision (benefit)		3,004		(959	)		6,098			2,135
	Depreciation and amortization expense		871		1,011			3,530			3,670

Add back:
	Stock-based compensation expense		5,782		5,305			19,559			19,082
	Change in fair value of contingent consideration		–		27			(790	)		(763	)
	Asset impairment charge		–		–			2,704			2,704
	Expense of acquired in-process research & development		–		600			1,100			1,700
	Severance		–		255			211			466
	Restructuring charge		–		–			7,911			7,911
Adjusted non-GAAP EBITDA		$	18,822	$	9,503		$	80,706		$	71,387

Contacts

Investor Relations for Eagle Pharmaceuticals, Inc.:
Lisa M.
Wilson
In-Site Communications, Inc.
T: 212-452-2793
E: [email protected]

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Tuesday, May 7, 2019

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