Exhibit 99.1
Contacts:
Stephen J. Mock
Cecelia C. Heer
Par Pharmaceutical Companies, Inc.
(201) 802-4000
PAR PHARMACEUTICAL REPORTS FIRST-QUARTER
SALES AND EARNINGS
COMPANY REPORTS FIRST-QUARTER TOTAL REVENUES OF $97.5 MILLION,
NET INCOME OF $1.9 MILLION AND DILUTED EPS OF $.06
SPRING VALLEY, NEW YORK, APRIL 28, 2005 - Par Pharmaceutical Companies, Inc.
(NYSE:PRX) today reported total revenues of $97.5 million for the first quarter
ended April 3, 2005. For the first quarter, reported net income was $1.9 million
and diluted earnings per share were $.06. This is compared with revenues of
$211.8 million, net income of $30.2 million, and diluted earnings per share of
$.85 in 2004. Excluding a gain associated with the sale of a company facility,
net income was $28.5 million and diluted earnings per share were $.80 for the
same period a year ago.
"Par's first-quarter performance reflects, in part, the considerable investment
necessary to build a new branded specialty pharmaceutical business," said Scott
Tarriff, president and chief executive officer. "The quarter was also impacted
by regulatory delays, and continued erosion of older generic products in advance
of our transition to new ones. Fortunately, that transition began last week with
the introduction of our generic version of Ultracet(R). We can now look forward
to acceleration in earnings beginning in the second quarter."
FIRST-QUARTER REVIEW
For the first quarter, sales of paroxetine hydrochloride (HCl) immediate release
tablets, the generic version of the antidepressant Paxil(R), were $11.6 million,
compared with $104.5 million in 2004. Sales of megestrol acetate oral
suspension, the generic form of Megace(R), were $8.6 million and sales of
fluoxetine, the generic version of Prozac(R), were $6.1 million in the quarter.
This is compared, respectively, with sales of $18.7 million and $14.9 million in
the same period a year ago. The lower sales of these three products reflect the
impact of increased generic competition and its corresponding effect on pricing
and market share.
Par's first-quarter gross margin was 40 percent, compared to 33 percent in 2004.
The increase in the company's gross margin partially reflects lower sales of
paroxetine and metformin HCl extended-release tablets. After profit splits with
partners, these products have significantly lower gross margins than most of
Par's other products. Par's gross margin also benefited from the increase in
other product-related revenues.
Selling, general and administrative (SG&A) expense increased 25 percent to $21.4
million. SG&A expense included $3.8 million associated with additional sales and
marketing personnel, and pre-launch activities in preparation for the expected
introduction of Megace(R) ES (megestrol acetate) oral suspension. If approved,
Megace(R) ES would be the first in Par's new line of branded specialty
pharmaceuticals. Increased legal fees and additional personnel costs across
various administrative functions also contributed to the increase in SG&A
expense during the quarter.
As planned, investment in research and development (R&D) increased 147 percent
to $16.0 million in the first quarter of 2005. Par's substantial increase in R&D
partially reflects payments to its partner, Advancis Pharmaceutical Corporation,
to fund the development of a novel formulation of the antibiotic amoxicillin.
Advancis expects to publicly report summary results of its initial Phase III
clinical trial of Amoxicillin PULSYS(TM) in mid-June 2005. Also contributing to
the rise in R&D expense were increased personnel costs, and last year's
acquisition of Kali Laboratories, Inc. The significant investment in R&D
underscores Par's commitment to identify and develop a continuing stream of new
products. Par currently has 51 regulatory filings awaiting approval from the
U.S. Food and Drug Administration (FDA). This includes 49 Abbreviated New Drug
Applications (ANDAs) targeting branded pharmaceutical products with U.S. sales
of approximately $30 billion.
First-quarter other income includes a $1.4 million gain on the sale of shares of
common stock of New River Pharmaceuticals, Inc. Par purchased shares of New
River in an initial public offering on August 5, 2004. Par's current investment
represents an ownership position of approximately 4.5 percent of the outstanding
common stock of New River.
SINCE THE END OF THE FOURTH QUARTER OF 2004:
o Par received final approval from the FDA and began shipping tramadol HCl and
acetaminophen tablets, the generic version of Ortho-McNeil's Ultracet(R). Par
was awarded 180 days of marketing exclusivity for being the first to file an
ANDA containing a paragraph IV certification for the product. Following Par's
launch, a competitor entered the market with a generic version of Ultracet(R)
authorized by Ortho-McNeil Pharmaceutical, Inc.;
o Par was notified that the FDA has extended the original 10-month Prescription
Drug User Fee Act (PDUFA) goal date for the completion of its review of Par's
New Drug Application for Megace(R) ES. The new PDUFA goal date has been
extended three months to July 29, 2005, following the FDA's request, and
Par's submission, of existing supplemental data on Megace(R) ES;
o Par entered into an agreement to market a product representing annual U.S.
branded sales of approximately $350 million. The timing of the product's
availability remains uncertain; and
o Par began shipping verapamil HCl extended release tablets, minocycline HCl
tablets and quinapril HCl tablets.
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 closing of the Kali acquisition,
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.
# # # # #
PAR PHARMACEUTICAL COMPANIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
THREE MONTHS ENDED
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APRIL 3, APRIL 4,
2005 2004
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Revenues:
Net product sales $91,088 $211,039
Other product-related revenues 6,413 728
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Total revenues 97,501 211,767
Cost of goods sold 58,349 141,215
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Gross margin 39,152 70,552
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Operating expenses (income):
Research and development 15,989 6,478
Selling, general and administrative 21,352 17,067
Gain on sale of facility - (2,812)
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Total operating expenses 37,341 20,733
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Operating income 1,811 49,819
Other income (expense), net 1,323 (22)
Interest expense, net (146) (279)
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Income before provision for income taxes 2,988 49,518
Provision for income taxes 1,011 19,312
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NET INCOME $1,977 $30,206
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NET INCOME PER SHARE OF COMMON STOCK:
BASIC $0.06 $0.88
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DILUTED $0.06 $0.85
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WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING:
BASIC 34,137 34,498
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DILUTED 34,646 35,555
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COMPARATIVE ADJUSTED FOR GAIN ON SALE OF FACILITY
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Net income as reported above $1,977 $30,206
Gain of sale of facility, net of tax - (1,715)
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NET INCOME $1,977 $28,491
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NET INCOME PER SHARE OF COMMON STOCK:
BASIC $0.06 $0.83
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DILUTED $0.06 $0.80
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