PAR LOGO] EXHIBIT 99.1
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Contacts:
Stephen J. Mock
Cecelia C. Heer
Par Pharmaceutical Companies, Inc.
(201) 802-4000
PAR PHARMACEUTICAL REPORTS
SALES AND EARNINGS FOR 2004
TOTAL REVENUES INCREASE 4 PERCENT IN 2004 TO A RECORD $690.0 MILLION;
BASE BUSINESS GROWS 23 PERCENT TO $338.1 MILLION FOR THE YEAR
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PAR ACHIEVES ADJUSTED NET INCOME OF $78.8 MILLION AND,
ADJUSTED DILUTED EPS OF $2.26 IN 2004, EXCLUDING CERTAIN ITEMS
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R&D MORE THAN DOUBLES TO A RECORD $50.5 MILLION IN 2004
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COMPANY REPORTS FOURTH-QUARTER TOTAL REVENUES OF $114.2 MILLION,
NET INCOME OF $4.3 MILLION AND DILUTED EPS OF $.12
SPRING VALLEY, NEW YORK, FEBRUARY 24, 2005 - Par Pharmaceutical Companies, Inc.
(NYSE:PRX) today reported that total revenues increased 4 percent to a record
$690.0 million for the year ended December 31, 2004. For the year, reported net
income was $29.2 million and diluted earnings per share were $.84. Results for
2004 include a third-quarter, non-cash charge of $84.0 million, or $51.2 million
after tax, for the write-off of in-process research and development in
connection with the purchase of Kali Laboratories, Inc., and a first-quarter,
after-tax gain of $1.7 million associated with the sale of a company facility.
Excluding these items, net income was $78.8 million and diluted earnings per
share were $2.26 for 2004. This is compared with revenues of $661.7 million,
reported net income of $122.5 million and reported diluted earnings per share of
$3.54 in 2003.
For the fourth quarter, Par reported total revenues of $114.2 million, net
income of $4.3 million and diluted earnings per share of $.12. This is compared
with revenues of $222.8 million, net income of $38.2 million and diluted
earnings per share of $1.08 for the same period a year ago.
"Although 2004 was a challenging year for Par, our company has never been
stronger or better positioned for sustainable growth," said Scott Tarriff,
president and chief executive officer. "In 2004, Par more than tripled the scale
of its research and development (R&D) organization through the acquisition of
Kali Laboratories. Between Par and its partners, we filed 32 Abbreviated New
Drug Applications (ANDAs) and now have more than 50 products awaiting regulatory
approval - - a record for our company. Importantly, Par also filed its first New
Drug Application (NDA). We look forward to introducing the advanced formulation
of Megace(R), our first branded pharmaceutical product, as soon as June or July.
In 2005, Par expects to introduce 20 or more new products. Assuming timely
regulatory approvals, we are comfortable with the current consensus earnings
estimate for 2005.
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"In 2004, Par felt the impact of additional entrants into key product categories
and the corresponding effect on product pricing and market share. Certain
expected new product introductions, like clonidine TDS, were delayed and the
ribavirin launch proved disappointing. All of these factors, along with a
doubling of our investment in R&D, contributed to financial results that did not
meet our expectations for the year," Mr. Tarriff said.
Following discussions with the U.S. Food and Drug Administration (FDA), Par also
announced today its intention to submit an Investigational New Drug (IND)
application for a new megestrol acetate NanoCrystal(R) Dispersion (NCD) product.
Par will submit the IND next quarter and expects to initiate the proposed
clinical trials of the new product by mid summer. If successful, the indication
sought will be for appetite stimulation in cancer-related anorexia.
In June 2004, Par submitted an NDA to the FDA for megestrol acetate NCD and the
corresponding user fee goal date is April 29, 2005. If cleared for marketing,
megestrol acetate NCD is expected to be indicated for the treatment of anorexia,
cachexia, or any unexplained, significant weight loss in patients with a
diagnosis of acquired immunodeficiency syndrome (AIDS). If approved, Par expects
to market megestrol acetate NCD under the Megace(R) brand name. Par licensed the
Megace(R) name from Bristol-Myers Squibb Company. NanoCrystal(R) Dispersion is a
registered trademark of Elan Pharmaceutical International, Ltd.
2004 REVIEW
Sales growth for the year was driven by paroxetine hydrochloride (HCl) immediate
release tablets, the generic version of the antidepressant Paxil(R), and the
company's base business. In 2004, paroxetine sales increased 15 percent to
$222.0 million, and base business sales grew 23 percent to $338.1 million. Base
business growth resulted, in part, from the second-quarter introduction of
glyburide and metformin HCl tablets, the generic version of Glucovance(R), and
the first-quarter introduction of mercaptopurine, the generic form of
Purinethol(R). Also contributing to the performance of the base business was
lovastatin, the generic equivalent of Mevacor(R). Increased sales of these base
business products were partially offset by lower sales of tizanidine, the
generic version of Zanaflex(R).
For the year, sales of fluoxetine, the generic version of Prozac(R), totaled
$46.6 million, compared with $91.1 million in 2003. Sales of megestrol acetate
oral suspension, the generic form of Megace(R), were $67.8 million, compared
with $88.2 million last year. Sales of both products reflect the impact of
increased generic competition and its corresponding effect on pricing and market
share.
In 2004, Par's gross margin was 36 percent, compared to 43 percent in 2003. The
company's fourth-quarter gross margin was 38 percent, compared to 37 percent in
the same period a year ago. The lower gross margin for the year primarily
reflects the effect of higher sales of paroxetine, which, after profit splits
with partners, has a lower gross margin than Par's other significant products.
Par's gross margin was also impacted by the decline in royalty revenue from
omeprazole, the generic version of Prilosec(R). Also contributing to the lower
gross margin in 2004, were glyburide and metformin HCl tablets and metformin HCl
extended-release tablets. After profit splits with partners, these products also
have a significantly lower gross margin than most of Par's other products.
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Selling, general and administrative (SG&A) expense increased 29 percent to $69.7
million, after adjusting prior year SG&A expense to exclude a charge associated
with a retirement agreement. The increase in SG&A expense reflects the
implementation of new information management systems; costs to meet compliance
requirements associated with Section 404 of Sarbanes-Oxley; increased legal fees
associated with ongoing patent litigation; and additional personnel costs across
various administrative functions. The megestrol acetate oral suspension product
sampling program, the addition of marketing personnel in preparation for the
expected launch of Par's advanced formulation of Megace(R), and other marketing
and promotional activities also contributed to the increase in SG&A expense in
2004.
In 2004, the company's investment in R&D more than doubled to a record $50.5
million, compared to $24.6 million last year. Par's substantial increase in R&D
reflects, in part, payments to its partner, Advancis Pharmaceutical Corporation,
to fund the development of a novel formulation of the antibiotic amoxicillin.
Advancis expects to publicly report results of its initial Phase III clinical
trial of Amoxicillin PULSYS(TM) late in the second quarter OF 2005. Also
contributing to the rise in R&D expense in 2004 were increased biostudy costs,
increased personnel costs, and the acquisition of Kali Labs. The significant
investment in R&D underscores Par's commitment to identify and develop a
continuing stream of new products.
Par repurchased 843,700 shares of its common stock at a total cost of $32.0
million in 2004. On April 29, 2004, Par announced that its Board of Directors
had authorized the purchase of up to $50 million worth of the company's common
stock.
SINCE THE END OF THE THIRD QUARTER OF 2004:
o Par acquired the product registration to Isoptin(R) SR and licensed
the rights to FSC Laboratories, Inc. to market the product. Par will
begin shipping the generic version, verapamil HCl extended release
tablets, in early 2005;
o Par named John A. MacPhee Senior Vice President, Branded Marketing and
Sales. Mr. MacPhee will be responsible for the introduction of Par's
first branded pharmaceutical product, an advanced formulation of
Megace(R);
o Par announced that its licensing partner, Amide Pharmaceutical, Inc.,
received final approval from the FDA for its ANDA for quinapril HCl
tablets. The product was developed by Par's wholly-owned subsidiary,
Kali Labs. Par began shipping quinapril HCl in late December;
o Par entered into a purchase agreement to acquire a 5 percent
partnership interest in Abrika Pharmaceuticals LLP, a privately held,
specialty generic pharmaceutical company. Par and Abrika also entered
into an agreement to collaborate in the marketing of five generic
products to be developed by Abrika. The first of these is expected to
be a transdermal fentanyl patch that is intended to be a generic
equivalent of Duragesic(R);
o Par won the 2004 DIANA Award for Best Overall Pharmaceutical Products
Manufacturer with Sales to Healthcare Distribution Management
Association (HDMA) Distributors Over $300 million. The award was
presented by the HDMA at their Annual Meeting; and
o Par announced that its partner, Paddock Laboratories, was granted
tentative approval by the FDA for its ANDA for testosterone gel 1%,
the generic version of AndroGel(R).
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Par Pharmaceutical Companies, Inc. develops, manufactures and markets generic
pharmaceuticals through its principal subsidiary, Par Pharmaceutical, Inc., and
its recently acquired subsidiary, Kali Laboratories, Inc. The company is also
developing an additional line of branded pharmaceutical products for specialty
markets and expects to introduce the first of these in 2005. Par currently
manufactures, markets or licenses more than 85 prescription drugs. For press
release and other company information, visit http://www.parpharm.com.
Certain statements in this press release constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. To
the extent any statements made in this news release contain information that is
not historical, these statements are essentially forward-looking and are subject
to risks and uncertainties, including the difficulty of predicting FDA filings
and approvals, acceptance and demand for new pharmaceutical products, the impact
of competitive products and pricing, new product development and launch,
reliance on key strategic alliances, uncertainty of patent litigation filed
against us, availability of raw materials, the regulatory environment,
fluctuations in operating results and other risks and uncertainties detailed
from time to time in the Company's filings with the Securities and Exchange
Commission, such as the Company's Form 10-K, Form 10-Q, and Form 8-K reports.
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PAR PHARMACEUTICAL COMPANIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
TWELVE MONTHS ENDED THREE MONTHS ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31,
2004 2003 2004 2003
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Revenues:
Net product sales $687,570 $646,023 $112,760 $221,605
Other product related revenues 2,446 15,665 1,392 1,175
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Total revenues 690,016 661,688 114,152 222,780
Cost of goods sold 443,958 378,513 70,497 140,804
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Gross margin 246,058 283,175 43,655 81,976
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Operating expenses (income):
Research and development 50,517 24,581 16,795 6,673
Acquired in-process research and development 84,000 - - -
Selling, general and administrative 69,735 57,575 20,059 13,329
Settlements, net (2,846) - - -
Gain of sale of facility (2,812) - - -
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Total operating expenses 198,594 82,156 36,854 20,002
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Operating income 47,464 201,019 6,801 61,974
Other (expense) income (313) (95) (183) 50
Interest expense, net (1,048) (281) (381) (755)
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Income before provision for income taxes 46,103 200,643 6,237 61,269
Provision for income taxes 16,857 78,110 1,972 23,057
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Net income $29,246 $122,533 $4,265 $38,212
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Net income per share of common stock:
BASIC $0.86 $3.66 $0.13 $1.12
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DILUTED $0.84 $3.54 $0.12 $1.08
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WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING:
BASIC 34,142 33,483 33,884 34,088
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DILUTED 34,873 34,638 34,419 35,370
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COMPARATIVE ADJUSTED FOR ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT, GAIN ON SALE OF FACILITY AND RETIREMENT CHARGES
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Net income (loss) as reported above $29,246 $122,533 $4,265 $38,212
In-process research and development, net of tax 51,240 - - -
Gain of sale of facility, net of tax (1,715) - - -
Retirement charges, net of tax - 2,246 - -
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NET INCOME $78,771 $124,779 $4,265 $38,212
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NET INCOME PER SHARE OF COMMON STOCK:
BASIC $2.31 $3.73 $0.13 $1.12
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DILUTED $2.26 $3.60 $0.12 $1.08
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