Endo Pharmaceuticals Solutions (IDEV) Inactive
Filed: 27 Feb 09, 12:00am
Exhibit (a)(5)(T)
 | News Release | |
For Immediate Release | CONTACT: | |
| Blaine Davis | ||
| (610) 459-7158 | ||
ENDO PHARMACEUTICALS REPORTS FOURTH QUARTER
AND FULL-YEAR FINANCIAL RESULTS
| • | 16% Growth in Annual Net Sales Driven by Demand for Branded Products |
| • | Adjusted Diluted EPS of $2.40 from Operations, up 25% from 2007 |
| • | Provides 2009 Adjusted EPS Guidance Range of $2.59 – $2.67 |
CHADDS FORD, Pa., Feb. 27, 2009 — Endo Pharmaceuticals (Nasdaq: ENDP) today reported double-digit percentage growth in net sales and adjusted diluted earnings per share for the fourth quarter and full year ended December 31, 2008.
Net sales for the three months ended December 31, 2008 increased 14% to $347.3 million compared with $304.6 million in the fourth quarter of 2007. Net income for the three months ended December 31, 2008 was $74.9 million compared with $50.6 million in the comparable 2007 period.
Diluted earnings per share for the three months ended December 31, 2008 were $0.64 compared with $0.38 in the comparable 2007 period. As detailed in the Supplemental Financial Information below, adjusted diluted earnings per share for the three months ended December 31, 2008 increased 37% to $0.71 compared with $0.52 in the same period in 2007.
Full-Year Results
Net sales for the year ended December 31, 2008 were $1.261 billion compared with $1.086 billion for the year ended December 31, 2007, an increase of 16%. Net income for the year ended December 31, 2008 was $261.7 million versus $227.4 million in the comparable 2007 period.
Diluted earnings per share for the year ended December 31, 2008 were $2.12 compared with $1.69 in the comparable 2007 period. As detailed in the Supplemental Financial Information below, adjusted diluted earnings per share for the full year 2008 increased 25% to $2.40 compared with $1.92 in 2007.
Selected Product Review
LIDODERM®: For the quarter ended December 31, 2008, net sales of LIDODERM decreased 2% to $205.4 million compared with $208.7 million in the same period a year ago. Prescription volume for LIDODERM increased 1% in the fourth quarter of 2008 versus the comparable 2007 period. For the year ended December 31, 2008, net sales of LIDODERM increased 8% to $765.1 million compared with $705.6 million in the same period a year ago. Prescription volume for LIDODERM increased 6% in the twelve months of 2008 versus the comparable 2007 period.
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OPANA® ER and OPANA®:Combined net sales for the OPANA franchise increased 81% to $52.3 million for the fourth quarter 2008 compared with $28.9 million in the same period a year ago. Prescription volume for OPANA ER and OPANA increased 64% in the fourth quarter 2008 versus the comparable 2007 period. For the year ended December 31, 2008, net sales for the OPANA franchise increased 68% to $180.4 million compared with $107.1 million in the same period a year ago. The 2007 annual results include the recognition of $13.8 million in deferred revenue for commercial shipments of OPANA ER and OPANA made to customers in 2006.
PERCOCET®: Net sales of PERCOCET were $33.4 million for the three months ended December 31, 2008 compared with $30.6 million in the same period in 2007. Net sales of PERCOCET were $130.0 million for the year ended December 31, 2008 compared with $121.7 million in the same period in 2007.
FROVA®:Net sales of FROVA were $16.8 million for the three months ended December 31, 2008 compared with $14.1 million for the same period in 2007. Prescription volume increased 9% for the twelve months of 2008 versus the comparable 2007 period. For the year ended December 31, 2008, net sales of FROVA were $58.0 million compared with $52.4 million in the same period in 2007.
VOLTAREN® GEL: Net sales of VOLTAREN GEL were $23.8 million for the year ended December 31, 2008.
Generic Products: For the fourth quarter of 2008, net sales from the company’s generic products were $24.1 million compared with $19.2 million in the same period in 2007. For the twelve months ended December 31, 2008, net sales of the company’s generic products were $92.3 million compared with $87.6 million in the same period in 2007.
R&D Update
Endo recently announced three new research collaborations to develop novel treatments for pain and discover potential cancer treatments. The first collaboration, with Harvard University, is focused on a new pain-drug delivery technique which targets pain-sensing neurons without affecting motor neurons. Under the terms of this agreement, Endo has received exclusive world-wide rights to the technology and will be responsible for development and commercialization of any drug candidates discovered under this agreement.
The second agreement, with Aurigene Discovery Technologies Limited, is a three-year collaboration to discover novel drug candidates to treat cancer. Aurigene will be responsible for all discovery and preclinical research activities, while Endo will be responsible for all clinical development and commercialization of drug candidates that advance into human testing. Endo will also provide research funding and milestone payments and receive worldwide rights to all intellectual property that results from this collaboration.
The third agreement, announced today, is with Grünenthal GMBH for the exclusive rights to develop and market the investigational drug axomadol in the United States and Canada. Axomadol is a patented new chemical entity discovered by Grünenthal and currently in Phase II development for the treatment of moderate to moderately severe chronic pain and diabetic peripheral neuropathic pain. Under the license agreement, Endo will pay Grünenthal an upfront cash payment as well as additional potential payments that are linked to the achievement of future clinical, regulatory and commercial milestones. In addition, Grünenthal will receive payments based on a percentage of annual net sales of the product in the US and Canada. The product will be manufactured by Grünenthal. Endo will participate with Grünenthal in joint
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product development and commercialization committees and be responsible for all clinical development, product registration, marketing and sales activities in the Endo territories, while Grünenthal will be responsible outside the US and Canada.
As part of its continuing strategic review of projects and programs, Endo has decided to discontinue development of EN 3285 (NAC oral rinse) and EN 3270 (transdermal sufentanil patch). EN 3285, being studied for the treatment of oral mucositis, was on clinical hold, while EN 3270 was licensed from Durect Corporation and in Phase II development for the treatment of moderate-to-severe chronic pain. Endo will return to Durect all development rights to its transdermal sufentanil patch.
2009 Financial Guidance
Endo estimates 2009 net sales to be between $1.390 billion and $1.440 billion, GAAP earnings per share to be between $1.73 and $1.81 and adjusted diluted earnings per share to be between $2.59 and $2.67. A full reconciliation of the projected 2009 adjusted earnings per share is detailed below and is subject to certain assumptions as set forth below. As it has done in the past, in 2009, Endo will present both GAAP results and adjusted results. However, starting with the results of the first quarter of 2009, Endo’s adjusted results (including the above guidance) will exclude the impact of amortization of commercial intangible assets ($30.8 million for the year ended December 31, 2008 and included in cost of sales) in addition to the following items that Endo has excluded in prior periods, as applicable, the impact of any of the non-recurring costs of future business combinations, estimated upfront and milestone payments to partners, certain contract termination costs, the payment of certain separation benefits, asset impairment charges, changes in the fair value of certain of our financial instruments and changes in the fair value of certain business combination contingent liabilities.
Note to Investors
Endo will conduct a conference call with financial analysts to discuss this news release today at 10:30 a.m. ET. Investors and other interested parties may access the conference call by dialing (866) 543-6405 (domestic) or (617) 213-8897 (international). Please dial in 10 minutes prior to the scheduled start time and reference passcode 10990222.
A replay of the call will be available from February 27 at 1:30 p.m. ET by dialing (888) 286-8010 (domestic) or (617) 801-6888 (international), passcode 15067182, and will run until 12:00 a.m. ET on March 6, 2009. A simultaneous webcast of the call for interested investors and others may be accessed by visitingwww.endo.com. In addition, a replay of the webcast will be available until 12:00 a.m. ET on March 6, 2009. The replay can be accessed by clicking on “Events” in the Investor Relations section of the website.
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Supplemental Financial Information
The following tables provide a reconciliation of our GAAP statements of operations to our adjusted statements of operations for each of the three months ended December 31, 2008 and December 31, 2007 (Certain prior period amounts have been reclassified to conform to the current period presentation) (in thousands, except per share data):
| Three Months Ended December 31, 2008 (unaudited) | Actual (GAAP) | Adjustments | Adjusted | |||||||||
Net sales | $ | 347,336 | $ | — | $ | 347,336 | ||||||
Costs and expenses: | ||||||||||||
Cost of sales | 76,681 | — | 76,681 | |||||||||
Selling, general and administrative | 130,288 | (2,850 | )(1) | 127,438 | ||||||||
Research and development | 27,967 | (7,281 | )(2) | 20,686 | ||||||||
Purchased in-process research and development | (530 | ) | 530 | (3) | — | |||||||
Operating income | 112,930 | 9,601 | 122,531 | |||||||||
Interest expense | 2,805 | — | 2,805 | |||||||||
Interest and other income, net | (1,785 | ) | (3,320 | )(4) | (5,105 | ) | ||||||
Income before income taxes | 111,910 | 12,921 | 124,831 | |||||||||
Income taxes | 36,968 | 5,185 | (5) | 42,153 | ||||||||
Net income | $ | 74,942 | $ | 7,736 | $ | 82,678 | ||||||
Diluted earnings per share | $ | 0.64 | $ | 0.71 | ||||||||
Diluted weighted average shares | 116,894 | 116,799 | ||||||||||
Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:
| (1) | To exclude stock-based compensation. |
| (2) | To exclude stock-based compensation ($371) and upfront and milestone payments to partners ($6,910). |
| (3) | To exclude purchased in-process research and development. |
| (4) | To exclude changes in fair value of financial instruments, net. |
| (5) | To reflect the tax effect of the pre-tax adjustments above at the applicable tax rates. |
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| Three Months Ended December 31, 2007 (unaudited) | Actual (GAAP) | Adjustments | Adjusted | |||||||||
Net sales | $ | 304,582 | $ | — | $ | 304,582 | ||||||
Costs and expenses: | ||||||||||||
Cost of sales | 62,045 | — | 62,045 | |||||||||
Selling, general and administrative | 119,450 | (2,703 | )(1) | 116,747 | ||||||||
Research and development | 54,592 | (27,075 | )(2) | 27,517 | ||||||||
Impairment of other intangible assets | 889 | (889 | )(3) | — | ||||||||
Operating income | 67,606 | 30,667 | 98,273 | |||||||||
Interest expense | 27 | — | 27 | |||||||||
Interest and other income, net | (11,036 | ) | — | (11,036 | ) | |||||||
Income before income taxes | 78,615 | 30,667 | 109,282 | |||||||||
Income taxes | 28,017 | 11,640 | (4) | 39,657 | ||||||||
Net income | $ | 50,598 | $ | 19,027 | $ | 69,625 | ||||||
Diluted earnings per share | $ | 0.38 | $ | 0.52 | ||||||||
Diluted weighted average shares | 134,632 | 134,558 | ||||||||||
Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:
| (1) | To exclude stock-based compensation. |
| (2) | To exclude stock-based compensation ($285) and upfront and milestone payments to partners ($26,790). |
| (3) | To exclude impairment of other intangible assets. |
| (4) | To reflect the tax effect of the pre-tax adjustments above at the applicable tax rates. |
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The following tables provide a reconciliation of our GAAP statements of operations to our adjusted statements of operations for each of the twelve months ended December 31, 2008 and December 31, 2007 (Certain prior period amounts have been reclassified to conform to the current period presentation) (in thousands, except per share data):
| Year Ended December 31, 2008 (unaudited) | Actual (GAAP) | Adjustments | Adjusted | |||||||||
Net sales | $ | 1,260,536 | $ | — | $ | 1,260,536 | ||||||
Costs and expenses: | ||||||||||||
Cost of sales | 267,235 | — | 267,235 | |||||||||
Selling, general and administrative | 488,063 | (27,973 | )(1) | 460,090 | ||||||||
Research and development | 110,211 | (18,843 | )(2) | 91,368 | ||||||||
Impairment of other intangible assets | 8,083 | (8,083 | )(3) | — | ||||||||
Purchased in-process research and development | (530 | ) | 530 | (4) | — | |||||||
Operating income | 387,474 | 54,369 | 441,843 | |||||||||
Interest expense | 8,354 | — | 8,354 | |||||||||
Interest and other income, net | (23,080 | ) | (3,320 | )(5) | (26,400 | ) | ||||||
Income before income taxes | 402,200 | 57,689 | 459,889 | |||||||||
Income taxes | 140,459 | 22,265 | (6) | 162,724 | ||||||||
Net income | $ | 261,741 | $ | 35,424 | $ | 297,165 | ||||||
Diluted earnings per share | $ | 2.12 | $ | 2.40 | ||||||||
Diluted weighted average shares | 123,720 | 123,602 | ||||||||||
Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:
| (1) | To exclude stock-based compensation ($15,492), separation benefits ($10,459), contract termination costs ($540) and asset impairment charges ($1,482). |
| (2) | To exclude stock-based compensation ($1,442), upfront and milestone payments to partners ($8,910), separation benefits ($825), contract termination costs ($4,551) and asset impairment charges ($3,115). |
| (3) | To exclude impairment of other intangible assets. |
| (4) | To exclude purchased in-process research and development. |
| (5) | To exclude changes in fair value of financial instruments, net. |
| (6) | To reflect the tax effect of the pre-tax adjustments above at the applicable tax rates. |
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| Year Ended December 31, 2007 (unaudited) | Actual (GAAP) | Adjustments | Adjusted | |||||||||
Net sales | $ | 1,085,608 | — | $ | 1,085,608 | |||||||
Costs and expenses: | ||||||||||||
Cost of sales | 217,369 | — | 217,369 | |||||||||
Selling, general and administrative | 411,869 | (12,397 | )(1) | 399,472 | ||||||||
Research and development | 138,255 | (36,391 | )(2) | 101,864 | ||||||||
Impairment of other intangible assets | 889 | (889 | )(3) | — | ||||||||
Operating income | 317,226 | 49,677 | 366,903 | |||||||||
Interest expense | 117 | — | 117 | |||||||||
Interest and other income, net | (36,141 | ) | — | (36,141 | ) | |||||||
Income before income taxes | 353,250 | 49,677 | 402,927 | |||||||||
Income taxes | 125,810 | 19,001 | (4) | 144,811 | ||||||||
Net income | $ | 227,440 | $ | 30,676 | $ | 258,116 | ||||||
Diluted earnings per share | $ | 1.69 | $ | 1.92 | ||||||||
Diluted weighted average shares | 134,525 | 134,548 | ||||||||||
Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:
| (1) | To exclude stock-based compensation. |
| (2) | To exclude stock-based compensation ($1,531) and upfront and milestone payments to partners ($34,860). |
| (3) | To exclude impairment of other intangible assets. |
| (4) | To reflect the tax effect of the pre-tax adjustments above at the applicable tax rates. |
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Reconciliation of Projected GAAP Diluted Earnings Per Share to Adjusted Diluted
Earnings Per Share Guidance
2009 Outlook (unaudited)
| Year Ended December 31, 2009 | ||||||||||
Projected GAAP diluted income per common share | $ | 1.73 | to | $ | 1.81 | |||||
Upfront and milestone payments to partners | $ | 0.26 | $ | 0.26 | ||||||
Amortization of commercial intangible assets | $ | 0.48 | $ | 0.48 | ||||||
Indevus transaction and separation costs | $ | 0.23 | $ | 0.23 | ||||||
Interest expense adjustment for APB 14-1 | $ | 0.12 | $ | 0.12 | ||||||
Tax effect of pre-tax adjustments at the applicable tax rates and certain other expected cash tax savings as a result of the Indevus acquisition | $ | (0.23 | ) | $ | (0.23 | ) | ||||
Diluted adjusted income per common share guidance | $ | 2.59 | to | $ | 2.67 | |||||
The company’s guidance is being issued based on certain assumptions including:
| • | Adjusted effective tax rate of approximately 33.6% in 2009; |
| • | Weighted average number of common shares outstanding of 117.1 million shares for the year ended December 31, 2009; |
| • | The February 23, 2009 acquisition date of Indevus Pharmaceuticals, Inc.; and |
| • | Certain of the above amounts are based on preliminary estimates and there can be no assurance that Endo will achieve these results. |
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For an explanation of Endo’s reasons for using non-GAAP measures, see Endo’s Current Report on Form 8-K filed today with the Securities and Exchange Commission.
About Endo
Endo Pharmaceuticals is a specialty pharmaceutical company engaged in the research, development, sale and marketing of branded and generic prescription pharmaceuticals used primarily to treat and manage pain. Its products include LIDODERM(R), a topical patch to relieve the pain of postherpetic neuralgia; PERCOCET(R) and PERCODAN(R) tablets for the relief of moderate-to-moderately severe pain; FROVA(R) tablets for the acute treatment of migraine attacks with or without aura in adults; OPANA(R) tablets for the relief of moderate-to-severe acute pain where the use of an opioid is appropriate; OPANA(R) ER tablets for the relief of moderate-to-severe pain in patients requiring continuous, around-the-clock opioid treatment for an extended period of time; and VOLTAREN(R) gel, a nonsteroidal anti-inflammatory drug indicated for the relief of the pain of osteoarthritis of joints amenable to topical treatment. The company markets its branded pharmaceutical products to physicians in pain management, neurology, surgery, oncology, and primary care. More information, including this and past press releases of Endo Pharmaceuticals, is available atwww.endo.com.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements including words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plan,” “will,” “may,” “intend,” “guidance” or similar expressions are forward-looking statements. Because these statements reflect our current views, expectations and beliefs concerning future events, these forward-looking statements involve risks and uncertainties. Investors should note that many factors could affect our future financial results and could cause our actual results to differ materially from those expressed in forward-looking statements contained in this press release. Risks and uncertainties include the satisfaction of closing conditions for the acquisition, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act; the tender of a majority of the outstanding shares of common stock of Indevus; the possibility that the transaction will not be completed, or if completed, not completed on a timely basis; the possibility that the acquisition of Indevus is not complementary to Endo; the potential that market segment growth will not follow historical patterns; general industry conditions and competition; business and economic conditions, such as interest rate and currency exchange rate fluctuations; technological advances and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approvals; domestic and foreign health care reforms and governmental laws and regulations; and trends toward health care cost containment; and other risks and uncertainties, including those detailed from time to time in our periodic reports filed with the Securities and Exchange Commission, including our current reports on Form 8-K, quarterly reports on Form 10-Q and annual reports on Form 10-K, particularly the discussion under the caption “Item 1A, RISK FACTORS” in our annual report on Form 10-K/A for the year ended December 31, 2007, which was filed with the Securities and Exchange Commission on April 29, 2008. The forward-looking statements in this press release and on the related conference call are qualified by these risk factors. These are factors that, individually or in the aggregate, we think could cause our actual results to differ materially from expected and historical results. We assume no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.
(Tables Attached)
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The following tables present Endo’s unaudited net sales for the three months and year ended December 31, 2008 and December 31, 2007:
Endo Pharmaceuticals Holdings Inc.
Net Sales (unaudited)
(in thousands)
| Three Months Ended December 31, | ||||||
| 2008 | 2007 | |||||
LIDODERM® | $ | 205,385 | $ | 208,661 | ||
OPANA® ER AND OPANA® | 52,258 | 28,869 | ||||
PERCOCET® | 33,413 | 30,559 | ||||
FROVA® | 16,770 | 14,072 | ||||
VOLTAREN® GEL | 12,495 | — | ||||
Other Brands | 2,873 | 3,228 | ||||
Total Brands | $ | 323,194 | $ | 285,389 | ||
Total Generics | $ | 24,142 | $ | 19,193 | ||
Total Net Sales | $ | 347,336 | $ | 304,582 | ||
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Endo Pharmaceuticals Holdings Inc.
Net Sales (unaudited)
(in thousands)
| Year Ended December 31, | ||||||
| 2008 | 2007 | |||||
LIDODERM® | $ | 765,097 | $ | 705,587 | ||
OPANA® ER AND OPANA® | 180,429 | 107,143 | ||||
PERCOCET® | 129,966 | 121,742 | ||||
FROVA® | 58,017 | 52,437 | ||||
VOLTAREN® GEL | 23,791 | — | ||||
Other Brands | 10,904 | 11,065 | ||||
Total Brands | $ | 1,168,204 | $ | 997,974 | ||
Total Generics | $ | 92,332 | $ | 87,634 | ||
Total Net Sales | $ | 1,260,536 | $ | 1,085,608 | ||
The following table presents condensed consolidated cash flow data for the year ended December 31, 2008 and December 31, 2007:
Endo Pharmaceuticals Holdings Inc.
Condensed Consolidated Cash Flow Data (unaudited)
(in thousands)
| Year Ended December 31, | ||||||||
| 2008 | 2007 | |||||||
Net cash provided by operating activities | $ | 356,602 | $ | 365,742 | ||||
Net cash provided by (used in) investing activities | 178,832 | (614,528 | ) | |||||
Net cash used in financing activities | (110,066 | ) | (28,974 | ) | ||||
Net increase (decrease) in cash and cash equivalents | $ | 425,368 | $ | (277,760 | ) | |||
Cash and cash equivalents, beginning of period | $ | 350,325 | $ | 628,085 | ||||
Cash and cash equivalents, end of period | $ | 775,693 | $ | 350,325 | ||||
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IMPORTANT INFORMATION
This communication is neither an offer to purchase nor a solicitation of an offer to sell securities. Endo Pharmaceuticals Holdings Inc. (“Endo”) has filed a tender offer statement on Schedule TO with the Securities and Exchange Commission, and Indevus Pharmaceuticals, Inc. (“Indevus”) has filed a solicitation/recommendation statement with respect to the tender offer. Investors and Indevus shareholders are strongly advised to read the tender offer statement (including the offer to purchase, letter of transmittal and other offer documents) and the related solicitation/recommendation statement because they contain important information. The offer to purchase, the related letter of transmittal and certain other offer documents, as well as the solicitation/recommendation statement, are available at no charge on the Securities and Exchange Commission’s website at www.sec.gov. In addition, copies of these documents and other filings containing information about Indevus and the transaction can be obtained by all Indevus stockholders, without charge, by directing a request to Indevus Pharmaceuticals, Inc., Attention: General Counsel, 33 Hayden Avenue, Lexington, Massachusetts 02421-7966, by telephone at (781) 861-8444 or on Indevus’ website, www.indevus.com.