Eagle Pharmaceuticals, Inc. Reports Second Quarter 2019 Results

August 8, 2019 Off By BusinessWire

— Q2 2019 net income of $0.49 per basic and $0.48 per diluted share and adjusted non-GAAP net income of $0.86 per basic and $0.84 per diluted share

— Announced clinical development plan for its innovative fulvestrant program intended to deliver maximum estrogen receptor inhibition in patients with estrogen receptor (ER)-positive breast cancer —

— Pipeline programs advancing on track; Eagle reiterating R&D expense guidance —

WOODCLIFF LAKE, N.J.–(BUSINESS WIRE)–Eagle Pharmaceuticals, Inc. (“Eagle” or the “Company”) (Nasdaq: EGRX) today announced its financial results for the three- and six-months ended June 30, 2019. Highlights of, and subsequent to, the second quarter of 2019 include:

Business and Financial Highlights:

  • On August 5, 2019, Eagle announced a clinical development plan, following guidance from the U.S. Food and Drug Administration (FDA), for its fulvestrant formulation, intended to deliver maximum estrogen receptor inhibition in patients with estrogen receptor (ER)-positive breast cancer:

    • Eagle plans to initiate a pilot study shortly
    • Once the pilot study results are reviewed, a clinical pivotal trial based upon the parameters determined with FDA will be conducted in a target patient population
    • The pivotal trial is expected to be completed within approximately 12 months of commencing enrollment
  • The Company’s mid- and late-stage pipeline programs are on track;
  • Total revenue for the second quarter of 2019 was $56.7 million, compared to $59.3 million in the second quarter of 2018;
  • Q2 2019 BELRAPZO product sales were $15.4 million, compared to $8.1 million in Q2 2018;
  • Q2 2019 RYANODEX® product sales were $2.9 million, compared to $7.2 million in Q2 2018;
  • Q2 2019 net income was $6.7 million, or $0.49 per basic and $0.48 per diluted share, compared to net income of $2.7 million, or $0.18 per basic and $0.17 per diluted share in Q2 2018;
  • Q2 2019 adjusted non-GAAP net income was $11.8 million, or $0.86 per basic and $0.84 per diluted share, compared to adjusted non-GAAP net income of $14.7 million, or $0.99 per basic and $0.95 per diluted share in Q2 2018;
  • During Q2 2019, Eagle purchased an additional $15.0 million of Eagle common stock as part of its share buyback program; since August 2016, Eagle has repurchased $168.9 million of Eagle common stock; and
  • Cash and cash equivalents were $108.1 million, net accounts receivable was $60.3 million, and debt was $41.3 million as of June 30, 2019.

“We had another strong quarter; earnings from our bendamustine portfolio have established a solid platform from which to advance our R&D programs and explore additional opportunities to add to our portfolio. Our fulvestrant program looks very promising and we believe our novel formulation has a unique profile that may lead to improved efficacy outcomes for breast cancer patients. With guidance from FDA, we plan to conduct a pilot study shortly followed by a pivotal trial to test our hypothesis,” stated Scott Tarriff, Chief Executive Officer of Eagle Pharmaceuticals.

“Moreover, we continue to advance the other assets in our portfolio. We are in discussions with the U.S. military regarding treatment of radiation syndrome, and we also plan to request a meeting with FDA shortly to discuss the regulatory path for our nerve agent indication. We continue to advance EA-111, our intramuscular version of dantrolene,” added Tarriff.

“With these initiatives underway, and our pemfexy and vasopressin litigations proceeding as anticipated, we believe we are closer than ever before to unlocking the significant value of the multiple assets in our pipeline. We intend to continue to invest in our research and development programs and align our resources to support the successful launch of our assets, once approved,” concluded Tarriff.

Second Quarter 2019 Financial Results

Total revenue for the three months ended June 30, 2019 was $56.7 million, as compared to $59.3 million for the three months ended June 30, 2018.

Royalty revenue was $27.3 million in the second quarter of 2019, compared to $36.3 million in the second quarter of 2018. BENDEKA® royalties were $26.5 million in the second quarter of 2019, compared to $34.7 million in the second quarter of 2018. A summary of total revenue is outlined below:

 

Three Months Ended June 30,

 

2019

 

2018

 

(unaudited)

 

(unaudited)

Revenue (in thousands):

 

 

 

Product sales

29,437

 

23,041

Royalty revenue

27,265

 

36,255

Total revenue

56,703

 

59,296

Gross Margin was 62% during the second quarter of 2019, as compared to 69% in the second quarter of 2018. The compression in gross margin in the second quarter of 2019 was primarily driven by an increase in BENDEKA product sales to our marketing partner, on which Eagle earns no profit.

R&D expense was $9.0 million for the quarter, compared to $15.3 million in the same quarter in the prior year. The second 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 second quarter was $7.8 million.

SG&A expense in the second quarter of 2019 increased to $17.2 million compared to $16.0 million in the second quarter of 2018. External legal spend 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, second quarter 2019 SG&A expense was $12.4 million.

Net income for the second quarter of 2019 was $6.7 million, or $0.49 per basic and $0.48 per diluted share, compared to net income of $2.7 million, or $0.18 per basic and $0.17 per diluted share in the second quarter of 2018, due to the factors discussed above.

Adjusted non-GAAP net income for the second quarter of 2019 was $11.8 million, or $0.86 per basic and $0.84 per diluted share, compared to Adjusted non-GAAP net income of $14.7 million or $0.99 per basic and $0.95 per diluted share in the second quarter of 2018. 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 June 30, 2019, the Company had $108.1 million in cash and cash equivalents and $60.3 million in net accounts receivable, $37.6 million of which was due from Teva Pharmaceutical Industries Ltd. The Company had $41.3 million in outstanding debt. Therefore, at June 30, 2019, the Company had net cash and receivables of $127.2 million.

In the second quarter of 2019, we purchased $15.0 million of Eagle’s common stock as part of our share buyback program. Since August 2016, we have repurchased $168.9 million of our common stock.

Conference Call

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

Date

 

 

 

 

Thursday, August 8, 2019

Time

 

 

 

 

8:30 A.M. EDT

Toll free (U.S.)

 

 

 

 

877-876-9173

International 785-424-1667
Webcast (live and replay) www.eagleus.com, under the “Investor + News” section

A replay of the conference call will be available for one week after the call’s completion by dialing 800-839-5685 (US) or 402-220-2567 (International) and entering conference call ID EGRXQ219. 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 clinical development plan for its fulvestrant formulation, as well as the development efforts for the other product candidates in its portfolio; the Company’s expense guidance for fiscal year 2019; the Company’s ability to deliver value in 2019 and over the long term;; 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 Eagle will successfully implement its development plan for its fulvestrant formulation or other product candidates; 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, asset impairment charge, restructuring charge 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 June 30, 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 (UNAUDITED)
(In thousands, except share amounts)
 
 
June 30, 2019 December 31, 2018
 
ASSETS
Current assets:
Cash and cash equivalents

$

108,128

 

$

78,791

 

Accounts receivable, net

 

60,339

 

 

66,486

 

Inventories

 

11,594

 

 

8,304

 

Prepaid expenses and other current assets

 

5,598

 

 

10,263

 

Total current assets

 

185,659

 

 

163,844

 

Property and equipment, net

 

2,258

 

 

2,397

 

Intangible assets, net

 

16,843

 

 

18,103

 

Goodwill

 

39,743

 

 

39,743

 

Deferred tax asset, net

 

13,949

 

 

13,822

 

Other assets

 

3,178

 

 

694

 

Total assets

$

261,630

 

$

238,603

 

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable

$

17,296

 

$

9,917

 

Accrued expenses and other liabilities

 

29,450

 

 

23,519

 

Current portion of long-term debt

 

5,000

 

 

6,250

 

Total current liabilities

 

51,746

 

 

39,686

 

Other long-term liabilities

 

1,560

 

Long-term debt, less current portion

 

35,843

 

 

38,155

 

Commitments and Contingencies
Stockholders’ equity:
Preferred stock, 1,500,000 shares authorized and no shares issued or outstanding as of June 30, 2019 and December 31, 2018
Common stock, $0.001 par value; 50,000,000 shares authorized; 16,522,196 and 16,504,283 shares issued as of June 30, 2019 and December 31, 2018, respectively

 

17

 

 

17

 

Additional paid in capital

 

267,479

 

 

256,458

 

Retained earnings

 

73,885

 

 

58,187

 

Treasury stock, at cost, 2,855,316 and 2,590,258 shares as of June 30, 2019 and December 31, 2018, respectively

 

(168,900

)

 

(153,900

)

Total stockholders’ equity

 

172,481

 

 

160,762

 

Total liabilities and stockholders’ equity

$

261,630

 

$

238,603

 

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

Three Months Ended June 30,

 

Six Months Ended June 30,

2019

 

2018

 

2019

 

2018

 
Revenue:
Product sales

$

29,437

 

$

23,041

 

$

43,909

 

$

33,879

 

Royalty revenue

 

27,265

 

 

36,255

 

 

53,578

 

 

72,043

 

License and other revenue

 

9,000

 

Total revenue

 

56,702

 

 

59,296

 

 

106,487

 

 

105,922

 

Operating expenses:
Cost of product sales

 

18,175

 

 

14,074

 

 

27,729

 

 

21,298

 

Cost of royalty revenue

 

3,109

 

 

4,485

 

 

6,655

 

 

9,070

 

Research and development

 

8,957

 

 

15,265

 

 

15,332

 

 

32,585

 

Selling, general and administrative

 

17,228

 

 

15,987

 

 

35,369

 

 

31,153

 

Restructuring charge

 

7,388

 

 

7,388

 

Asset impairment charge

 

2,704

 

 

2,704

 

Change in fair value of contingent consideration

 

(790

)

 

(763

)

Total operating expenses

 

47,469

 

 

59,113

 

 

85,085

 

 

103,435

 

Income from operations

 

9,233

 

 

183

 

 

21,402

 

 

2,487

 

Interest income

 

637

 

 

1

 

 

1,131

 

 

27

 

Interest expense

 

(665

)

 

(701

)

 

(1,351

)

 

(1,376

)

Total other expense, net

 

(28

)

 

(700

)

 

(220

)

 

(1,349

)

Income (loss) before income tax (provision) benefit

 

9,205

 

 

(517

)

 

21,182

 

 

1,138

 

Income tax (provision) benefit

 

(2,480

)

 

3,176

 

 

(5,484

)

 

4,137

 

Net income

$

6,725

 

$

2,659

 

$

15,698

 

$

5,275

 

Earnings per share attributable to common stockholders:
Basic

$

0.49

 

$

0.18

 

$

1.13

 

$

0.36

 

Diluted

$

0.48

 

$

0.17

 

$

1.11

 

$

0.34

 

Weighted average number of common shares outstanding:
Basic

 

13,782,720

 

 

14,879,040

 

 

13,853,580

 

 

14,849,449

 

Diluted

 

14,156,627

 

 

15,446,827

 

 

14,176,297

 

 

15,473,727

 

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

Six Months Ended June 30,

2019

 

2018

Cash flows from operating activities:

 

 

 

Net income

$

15,698

 

$

5,275

 

Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes

 

(127

)

 

1,537

 

Depreciation expense

 

1,005

 

 

683

 

Amortization expense

 

1,260

 

 

1,316

 

Stock-based compensation expense

 

11,164

 

 

10,040

 

Change in fair value of contingent consideration

 

(763

)

Amortization of debt issuance costs

 

188

 

 

188

 

Asset impairment charge

 

2,704

 

Non-cash restructuring charge

 

5,788

 

Changes in operating assets and liabilities which provided (used) cash:
Accounts receivable

 

6,147

 

 

(15,582

)

Inventories

 

(3,290

)

 

(3,427

)

Prepaid expenses and other current assets

 

4,665

 

 

(10,705

)

Accounts payable

 

7,379

 

 

6,285

 

Accrued expenses and other liabilities

 

4,880

 

 

7,831

 

Other assets and other long-term liabilities, net

 

(396

)

 

(582

)

Net cash provided by operating activities

 

48,573

 

 

10,588

 

Cash flows from investing activities:
Purchase of property and equipment

 

(343

)

 

(19

)

Net cash used in investing activities

 

(343

)

 

(19

)

Cash flows from financing activities:
Proceeds from common stock option exercises

 

55

 

 

6,668

 

Payments related to employee net option exercises

 

(4,877

)

Employee withholding taxes related to stock-based awards

 

(198

)

Payment of contingent consideration

 

(15,001

)

Payment of debt

 

(3,750

)

 

(1,250

)

Repurchases of common stock

 

(15,000

)

 

(10,519

)

Net cash used in financing activities

 

(18,893

)

 

(24,979

)

Net increase (decrease) in cash and cash equivalents

 

29,337

 

 

(14,410

)

Cash and cash equivalents at beginning of period

 

78,791

 

 

114,657

 

Cash and cash equivalents at end of period

$

108,128

 

$

100,247

 

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes, net

$

2,874

 

$

1,831

 

Interest

 

1,221

 

 

529

 

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

Three Months Ended June 30,

 

Six Months Ended June 30,

2019

 

2018

 

2019

 

2018

 
Net income – GAAP

$

6,725

 

$

2,659

 

$

15,698

 

$

5,275

 

 
Adjustments:
Cost of product revenues:
Amortization expense

 

225

 

 

241

 

 

450

 

 

506

 

Research and development:
Stock-based compensation expense

 

1,096

 

 

1,003

 

 

2,239

 

 

2,263

 

Depreciation expense

 

70

 

 

170

 

 

139

 

 

339

 

Expense of acquired in-process research & development

 

 

 

600

 

 

 

 

1,200

 

Severance

 

 

 

143

 

 

 

 

398

 

Selling, general and administrative:
Stock-based compensation expense

 

4,286

 

 

3,732

 

 

8,925

 

 

7,777

 

Amortization expense

 

405

 

 

405

 

 

810

 

 

810

 

Depreciation expense

 

172

 

 

171

 

 

344

 

 

344

 

Other:
Non-cash interest expense

 

94

 

 

94

 

 

188

 

 

188

 

Change in fair value of contingent consideration

 

 

 

(790

)

 

 

 

(763

)

Asset impairment charge

 

 

 

2,704

 

 

 

 

2,704

 

Restructuring charge

 

 

 

7,388

 

 

 

 

7,388

 

Tax effect of the non-GAAP adjustments

 

(1,228

)

 

(3,807

)

 

(2,319

)

 

(5,534

)

 
Adjusted non-GAAP net income

$

11,845

 

$

14,713

 

$

26,474

 

$

22,895

 

 
Adjusted non-GAAP earnings per share:
Basic

$

0.86

 

$

0.99

 

$

1.91

 

$

1.54

 

Diluted

$

0.84

 

$

0.95

 

$

1.87

 

$

1.48

 

Weighted number of common shares outstanding:
Basic

 

13,782,720

 

 

14,879,040

 

 

13,853,580

 

 

14,849,449

 

Diluted

 

14,156,627

 

 

15,446,827

 

 

14,176,297

 

 

15,473,727

 

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

Twelve

Months Ended

June 30,

Twelve

Months Ended

December 31,

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2019

 

2018

 

2019

 

2018

 

2019

 

2018

 
Net income – GAAP

$

6,725

$

2,659

 

$

15,698

$

5,275

 

$

42,326

$

31,903

 

 
Add back:
Interest expense, net of interest income

 

28

 

700

 

 

220

 

1,349

 

 

1,450

 

2,579

 

Income tax provision (benefit)

 

2,480

 

(3,176

)

 

5,484

 

(4,137

)

 

11,756

 

2,135

 

Depreciation and amortization expense

 

872

 

987

 

 

1,743

 

1,999

 

 

3,414

 

3,670

 

 
Add back:
Stock-based compensation expense

 

5,382

 

4,735

 

 

11,164

 

10,040

 

 

20,206

 

19,082

 

Change in fair value of contingent consideration

 

 

(790

)

 

 

(763

)

 

 

(763

)

Asset impairment charge

 

 

2,704

 

 

 

2,704

 

 

 

2,704

 

Expense of acquired in-process research & development

 

 

600

 

 

 

1,200

 

 

500

 

1,700

 

Severance

 

 

143

 

 

 

398

 

 

68

 

466

 

Restructuring charge

 

 

7,388

 

 

 

7,388

 

 

523

 

7,911

 

Adjusted Non-GAAP EBITDA

$

15,487

$

15,950

 

$

34,309

$

25,453

 

$

80,243

$

71,387

 

 

Contacts

Investor Relations for Eagle Pharmaceuticals, Inc.:

Lisa M. Wilson

In-Site Communications, Inc.

T: 212-452-2793

E: [email protected]