EXHIBIT 99
FOR IMMEDIATE RELEASE
James Hawley, CFO or Ehren Lister, Account Executive
CIMA LABS INC. Sharon Merrill Associates, Inc.
(952) 947-8700 (617) 542-5300
jim.hawley@cimalabs.com elister@investorrelations.com
CIMA LABS ANNOUNCES RECORD RESULTS
FOR FIRST QUARTER OF 2003
REVENUES NEARLY DOUBLE, OPERATING INCOME RISES MORE THAN 150% YEAR-OVER-YEAR
May 1, 2003--Eden Prairie, MN--CIMA LABS INC. (NASDAQ NMS: CIMA) today reported
record operating results for the first quarter of 2003 ended March 31. Revenues
nearly doubled and operating income was up more than 150% from the first quarter
of 2002, driven by strong sales of Alavert(TM) and Remeron(R) SolTabs(TM),
fast-dissolve medications that CIMA manufactures for its partners Wyeth and
Organon.
- Revenues totaled $16.7 million, an increase of 99% from the
year-earlier period and nearly 8% sequentially from $15.5 million in
the fourth quarter of 2002.
- Operating income was $3.9 million (23.2% of revenue), a 158% increase
from the first quarter of 2002 and essentially flat with $4.0 million
(25.9% of revenues) in the fourth quarter of 2002.
- Other income, principally investment income on cash reserves, declined
$673,000, or approximately 39%, from the first quarter of 2002 due to
lower reinvestment rates.
- Net income was $3.2 million, or $0.22 per share on a diluted basis,
compared with first-quarter 2002 net income of $3.4 million, or $0.23
per diluted share. The decline in net income reflects CIMA recording
income tax expense in the first quarter of 2003 compared to a small tax
benefit recorded in the first quarter of 2002. A detailed discussion of
CIMA's tax situation is included later in this release.
"CIMA continued to perform well during the first quarter of 2003," stated Steven
B. Ratoff, chairman and interim CEO. "In addition to generating record revenues
on strong sales of Alavert and Remeron SolTabs, our business continued to evolve
and mature. Operating income accounted for more than 78% of CIMA's first-quarter
2003 pre-tax income. This represents a significant improvement from the first
quarter of 2002, when more than half of CIMA's pre-tax income was generated by
our investment portfolio."
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CIMA FIRST-QUARTER FINANCIAL RESULTS / 2
"CIMA's shipments of Remeron SolTabs, our partner Organon's anti-depression
medication, reached an all-time high in the first quarter of 2003, reflecting
success in both the U.S. and international markets, where Organon continues to
make progress with CIMA's fast-dissolve formulation. Remeron SolTab sales
appeared not to have been affected by the introduction of a standard tablet
generic form of mirtazapine in the U.S. In addition, Organon's ongoing European
launch of Remeron SolTabs has been very successful. As a result, we now
anticipate that overall customer demand for Remeron SolTabs will peak later in
2003 than we originally expected."
"Sales of Alavert, our partner Wyeth's new over-the-counter fast-dissolve
antihistamine, grew rapidly in the first quarter," said Ratoff. "Alavert was
launched by Wyteth late in the fourth quarter of 2002 with a strong national
marketing and advertising campaign. Based on the market's response, we believe
Alavert will be a significant contributor to CIMA's growth in 2003 and well into
the future."
During the quarter, CIMA continued to make progress with its product development
pipeline. In March, Schwarz Pharma filed the second FDA submission related to
its seven-product agreement with the Company, and CIMA expects additional
submissions over the next two years. In addition, CIMA continued development of
an as-yet-undisclosed branded prescription product for Schering-Plough as well
as a fast-dissolve version of Allegra(R) for Aventis. The Company also moved
forward on the prescription product it is developing for Alamo Pharmaceuticals.
This product is expected to receive FDA approval later this year. In total, CIMA
believes its partners will launch one or two new branded prescription products
by the end of 2003.
"Turning to our proprietary development activities, during the first quarter we
made significant progress towards optimizing the OraVescent fentanyl formula,
and we are currently preparing to conduct additional clinical trials later this
year," said Ratoff.
Stated chief operating officer John Hontz, Ph.D., "Planning for the expansion of
our manufacturing capacity has been a major focus for CIMA. The goal for these
expansion efforts is to meet our partners' anticipated requirements for 2004.
These plans include the installation of a bottling production line at our
Brooklyn Park, Minnesota, facility by the end of 2003. In addition, we also are
planning the addition of a third production line at our Eden Prairie, Minnesota
facility by the end of the year. This expansion would double our annual capacity
for blister-packaged tablets."
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CIMA FIRST-QUARTER FINANCIAL RESULTS / 3
FINANCIAL REVIEW
First-quarter 2003 sales of branded prescription and over-the-counter
fast-dissolve products that CIMA manufactures for its partners increased 138%
year-over-year and nearly 20% sequentially. "First-quarter sales benefited from
the strength of Remeron SolTabs, both domestically and internationally, as well
as solid performance from Zomig and the continued growth of Alavert," said James
Hawley, CIMA's chief financial officer.
CIMA receives product development fees and licensing revenues from its
collaborative partners. In the first quarter of 2003, this revenue category
decreased by 31% from the year-earlier period and by 44% sequentially. "Product
development and licensing revenue reflects the timing of milestone payments and
development work on certain projects, and can vary from quarter to quarter. This
was the primary reason for the decline in product development fees and licensing
revenues for the first quarter," said Hawley.
CIMA's collaborative partners pay royalties based on their sales of the
fast-dissolve products manufactured by the Company. Royalties on our partners'
sales of the Company's fast-dissolve products increased by 172% in the first
quarter of 2003 from first-quarter 2002 and by 19% from the sequential fourth
quarter. The sequential growth in royalty payments is primarily attributable to
an increase in royalty payments from Wyeth for Alavert.
Other income, principally investment income on cash reserves, declined to $1.1
million in this year's first quarter from $1.7 million in the year-earlier
period due primarily to lower reinvestment interest rates on cash reserves.
CIMA has approximately $2 million of tax benefits remaining to be recognized,
which it expects to record in future quarters in 2003. A normalized tax rate of
approximately 40% is expected to apply to CIMA's earnings subsequent to
recognizing the remaining $2 million of tax benefits. Excluding tax benefits
of $200,000, earnings per diluted share at the fully taxed rate of 40% would be
$0.20 for the first quarter of 2003 compared with $0.13 for the first quarter of
2002. CIMA's fully taxed earnings per share are a non-GAAP financial measure
that the Company is using to provide a comparison to prior quarters.
Cash and available-for-sale securities totaled $133 million at the end of the
first quarter, compared with $131.7 million at the end of 2002. "CIMA's solid
balance sheet and our expectation of continued strong cash flow from operating
activities provide us with ample resources to fund our capital expansion
projects and our investment in proprietary product development," said Hawley.
(more)
CIMA FIRST-QUARTER FINANCIAL RESULTS / 4
OUTLOOK
"We believe that for the year 2003 our partners may sell as much as $500 million
of products incorporating CIMA's technology," said Ratoff. "This would be more
than double the $236 million sold in 2002. In addition, our anticipated growth
in manufacturing and royalty revenues will continue to improve our ratio of
operating income to other income, demonstrating the increasing maturity of our
business as we continue to gain momentum with our pharmaceutical partners. Given
this outlook, we continue to have confidence in our full-year revenue and
earnings guidance."
SECOND-QUARTER AND FULL-YEAR 2003 GUIDANCE
For the second quarter of 2003, CIMA expects revenues to be in the range of
$17.5 million to $19.0 million. Earnings per diluted share, based on an
anticipated tax rate of 32% to 34%, are expected to be in the range of $0.22 to
$0.25.
For the full year 2003, the Company continues to expect revenue to be in the
range of $70 million to $75 million. Earnings per share, based on a full-year
tax rate of 31% to 33%, are expected to be in the range of $1.07 to $1.17 per
diluted share.
FIRST QUARTER CONFERENCE CALL AND REPLAY
CIMA will review its first-quarter operating results in a conference call at
4:30 p.m. ET today. A replay of the conference call will be available for one
week by dialing 719-457-0820 and providing the 248242 confirmation code.
Investors also can listen to the conference call at www.cimalabs.com. Listeners
should go to the Web site at least 15 minutes before the scheduled start time to
download and install any necessary audio software.
ABOUT CIMA LABS
CIMA develops and manufactures prescription and over-the-counter products based
upon its proprietary, fast-dissolve drug delivery technologies, OraSolv(R) and
DuraSolv(R). Based on its technologies, an active drug ingredient, which the
Company frequently taste-masks, is formulated into a new, orally disintegrating
dosage form that dissolves quickly in the mouth without chewing or the need for
water. CIMA's business involves a dual operating strategy. The Company develops
and manufactures fast-dissolve versions of drugs for pharmaceutical company
partners for whom CIMA currently produces three branded prescription
pharmaceuticals and three over-the-counter brands. CIMA also is developing
proprietary products utilizing its fast-dissolve technologies, as well as its
new OraVescent(R) enhanced absorption, transmucosal drug delivery system.
(more)
CIMA FIRST-QUARTER FINANCIAL RESULTS / 5
SAFE HARBOR STATEMENT
This press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements include, but
are not limited to those relating to CIMA's financial expectations for earnings
and revenues for the second quarter and full year 2003, income tax benefits, new
product introductions, marketing efforts of third parties, total sales of CIMA
manufactured products, manufacturing capacity, and category leadership. A number
of factors could cause actual results to differ materially from CIMA's
assumptions and expectations. These factors include the successful completion of
feasibility projects, consumer acceptance of CIMA's products, the receipt of
firm orders for CIMA's products, the success of pharmaceutical companies in
marketing CIMA's products, production costs, production yields, agreeing to
commercial terms with pharmaceutical companies for new collaborative development
and license agreements, capacity utilization of product development and
manufacturing resources, the outcome of tests in humans of proposed products,
returns on investments, and recognition of income tax benefits. Additional
factors that may cause actual results to differ from CIMA's assumptions and
expectations include those set forth under the heading "Factors That Could
Affect Future Results" included in CIMA's most recent filings with the
Securities and Exchange Commission. All forward-looking statements are qualified
by, and should be considered in conjunction with, such cautionary statements.
Financial Statements Follow . . .
CIMA FIRST-QUARTER FINANCIAL RESULTS / 6
CONDENSED STATEMENT OF OPERATIONS
(in thousands, except per share)
Unaudited
Three Months Ended
March 31
----------------------------
2003 2002
-------- --------
Operating Revenues:
Net sales $ 10,068 $ 4,238
Product development fees and licensing 1,603 2,307
Royalties 5,002 1,838
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Total operating revenues 16,673 8,383
Operating expenses:
Cost of goods sold 7,768 3,285
Research and product development 2,507 2,010
Selling, general and administrative 2,534 1,590
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Total operating expenses 12,809 6,885
Operating income 3,864 1,498
Other income 1,066 1,739
-------- --------
Income before provision for taxes 4,930 3,237
Income tax expense (benefit) 1,772 (168)
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Net income $ 3,158 $ 3,405
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Net income per basic share $ 0.22 $ 0.24
Net income per diluted share $ 0.22 $ 0.23
Weighted average of number of shares:
Basic 14,282 14,159
Diluted 14,636 14,655
Pro forma: assumes income before tax is subject to
tax at a normalized rate of 40% (unaudited):
Net income as reported $ 3,158 $ 3,405
add back: Tax expense (benefit) as reported 1,772 (168)
less: tax expense at 40% (1,972) (1,295)
-------- --------
Pro forma net income $ 2,958 $ 1,942
Pro forma net income per diluted share $ 0.20 $ 0.13
CIMA FIRST-QUARTER FINANCIAL RESULTS / 7
SELECTED BALANCE SHEET DATA
(in thousands)
March 31, 2003 December 31, 2002
(unaudited) (audited)
Cash, cash equivalents and available-for-sale
securities - current & non-current $ 132,956 $ 131,681
Trade accounts receivable, net 13,427 14,621
Inventories, net 4,764 4,082
Property, plant & equipment, net 67,497 61,074
Deferred tax assets, net 9,910 11,414
Total assets 231,135 225,353
Current liabilities 14,193 12,052
Stockholder's equity 216,942 213,301
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