EXHIBIT 99
KV PHARMACEUTICAL COMPANY
CONTACT:
CATHERINE M. BIFFIGNANI
VICE PRESIDENT, INVESTOR RELATIONS
314-645-6600
[KV PHARMACEUTICAL logo]
FOR IMMEDIATE RELEASE
KV PHARMACEUTICAL COMPANY REPORTS
FISCAL 2009 FIRST QUARTER RESULTS
FIRST QUARTER REVENUES INCREASED 30%; DILUTED EPS UP 92%
ETHEX CORPORATION SUBSIDIARY REVENUES UP 53%
FDA PDUFA DATE OF OCTOBER 24, 2008 FOR GESTIVA(TM)
St. Louis, MO - August 11, 2008 - KV Pharmaceutical Company (NYSE: KVa/KVb)
today reported results for the first quarter of fiscal 2009 ended June 30,
2008.
FISCAL 2009 FIRST QUARTER FINANCIAL HIGHLIGHTS (UNAUDITED)
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USD IN MILLIONS THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 2008 JUNE 30, 2007 CHANGE
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NET REVENUES $148.9 $114.4 +30.2%
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NET INCOME $12.5 $6.2 +102.2%
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EARNINGS PER DILUTED CLASS A SHARE $0.23 $0.12 +91.7%
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Marc S. Hermelin, Chairman of the Board and Chief Executive Officer, stated,
"During the first quarter, KV delivered sharply improved profits and nearly
$16.0 million in cash flow from operating activities. Performance was led by
strong growth at ETHEX Corporation and continued competitiveness of our
category-leading branded products at Ther-Rx. Both of these businesses are
poised for further growth over the balance of fiscal 2009 helped by recent
introductions like metoprolol succinate extended-release tablets and our
branded transdermal spray Evamist(TM). The Company's pipeline remains strong
as well, with expectations of receiving one NDA approval and at least six ANDA
approvals during the current fiscal year."
FIRST QUARTER REVIEW
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Revenues Increased 30% and Gross Profits Rose 39%
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Net revenues for the first quarter increased 30.2%, or $34.5 million, to
$148.9 million, compared with $114.4 million in the first quarter of fiscal
2008. Gross profits increased 38.6%, or $28.9 million, to $103.6 million
compared to $74.8 million in the first quarter of fiscal 2008. Revenue growth
during the quarter was impacted by:
o The later-than-expected approval and launch of the 50 mg strength of
generic metoprolol succinate extended-release tablets in May 2008;
and
o A net sales gain of 52.6% over the prior year period at the Company's
ETHEX generic/non-branded marketing subsidiary, contributed to by
sales of 25 mg, 50 mg, 100 mg, and 200 mg strengths of metoprolol
succinate extended-release tablets.
At the close of the first quarter of fiscal 2009, due to higher-than-expected
demand from our customers for certain of our generic products, the Company had
an unusually large volume of unshipped open orders for generic products,
representing approximately $10 million of net revenues. Net revenues were also
affected by a $5.9 million reduction related to the execution of a price
increase on our generic potassium chloride capsules and the impact of the
previously disclosed discontinuation of cough/cold products which generated
revenue of $0.5 million in the current quarter compared with $9.3 million in
the first quarter of last year.
Operating Expenses
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Operating expenses were $83.1 million, an increase of $17.0 million over the
prior year period. The increases included $18.6 million of higher selling and
administrative expenses, a $4.2 million increase in R&D spending and a $2.2
million increase in amortization expenses related primarily to the acquisition
of Evamist(TM). These increases were partially offset by an $8.0 million
reduction in purchased in-process R&D charges.
Selling and administrative expenses of $63.8 million were slightly higher than
the $61.2 million spent in the fourth quarter of fiscal 2008. We expect a
quarterly run rate of selling and administrative expenses of approximately $61
million during the rest of fiscal 2009, resulting in an approximate 18%
increase on an annual basis over the prior fiscal year. The 41.1% increase in
selling and administrative expenses for the first quarter compared to the year
ago quarter reflected the following:
o $4.6 million related to one-time launch related marketing expenses
for the initial launch and supply of the 25 mg and 50 mg strength of
metoprolol succinate extended-release tablets;
o $1.5 million increase in expense associated with foreign currency
transaction losses on investments denominated in the Indian Rupee;
o $3.8 million of launch-related marketing and promotion expenses
related to Evamist(TM);
o $2.6 million increase in personnel costs due to increases in
management, sales and other personnel, of which $1.4 million was
related to the expansion for our branded sales force initiated in the
third quarter of fiscal 2008;
o $1.8 million increase in branded marketing and promotions expense on
our existing brands;
o $1.5 million increase in costs associated with redistribution fees
paid to certain major wholesalers and chains for single point
shipping services; and
o $1.2 million increase in expenses for consulting and other
professional services.
Net Income
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Net income for the quarter increased $6.3 million, or 102.2%, to $12.5
million, or $0.23 per diluted Class A common share, compared to $6.2 million
or $0.12 per diluted Class A common share for the first quarter of fiscal
2008.
Financial Condition
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The Company's liquidity remains strong with cash and marketable securities of
$135.1 million at the end of the quarter and $15.7 million of cash flow
generated from operations in the first quarter. The Company also holds $79.9
million in auction-rate securities which are currently illiquid and classified
as long-term investments. The Company is encouraged by proposed and announced
settlements reached with regulatory authorities by several banks that show
signs that the liquidity problem with these types of securities is finally
being addressed. Capital expenditures increased to $5.3 million in the first
quarter of fiscal 2009 compared with $2.1 million reported in the first
quarter of fiscal 2008.
THER-RX CORPORATION
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Ther-Rx net revenues for the first quarter increased 1.7% to $50.9 million
compared to $50.1 million in the first quarter of fiscal 2008. The Company
anticipates accelerated revenue contribution during the second half of fiscal
2009 from the recent launch of Evamist(TM), as well as from the approval and
launch of Gestiva(TM), expected late in calendar 2008. The first quarter
increase in branded product sales was due primarily to continued sales growth
of our anti-infective brand, Clindesse(R), coupled with increased sales from
our hematinic product lines, offset in part by lower sales of Gynazole-1(R).
Evamist(TM)
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Having received approval for Evamist(TM) from the FDA in July, 2007, the
Company has had a successful launch of this patented estradiol transdermal
spray that offers a novel approach to the treatment of moderate-to-severe
vasomotor symptoms due to menopause. Since the launch in April 2008,
Evamist(TM) has continued to show increasing prescription trends and compares
favorably to prior analogous product launches in this therapeutic class by
other pharmaceutical companies. Based on recent weekly data, total Evamist(TM)
prescriptions are trending toward
more than 4,000 per month, double the total prescriptions of 2,000 per month
during the initial launch period.
By its third month of launch, Evamist(TM) has become the second most
prescribed product in the transdermal estrogen category in terms of new
patient starts or switches from other brands. Based on IMS weekly
`new-to-brand' prescriptions (NBRx), Evamist(TM) has surpassed all other
established branded transdermal patch and topical products with the exception
of the leader in this segment, as Evamist(TM) continues to receive positive
feedback from physicians and patients alike.
Dr. John Buster, Professor of Obstetrics and Gynecology at the Warren Alpert
Medical School of Brown University, is a well-known and respected researcher
in the arena of hormone therapy and a prolific author on the topic. Dr.
Buster's Phase III Study for Evamist(TM) was published in the prestigious
journal, Obstetrics & Gynecology, or "Green Journal" as it is commonly
referred to by OB/GYNs, in June of 2008, and highlighted the importance of
estrogen therapy available in Evamist(TM), featuring a convenient and
innovative spray delivery system. Furthermore, Dr. Buster and his co-authors
provided insight into why Evamist(TM) is an exciting option for women
experiencing moderate-to-severe vasomotor symptoms associated with menopause,
particularly with regard to focusing on the transdermal delivery of low-dose,
plant-based estradiol. Moreover, Evamist provides the flexibility of three
approved dosing regimens (1, 2 or 3 sprays per day), allowing prescribers to
tailor and individualize therapy at the lowest effective dose for each
specific woman, consistent with recommendations set forth by the American
College of Obstetricians (ACOG) and the North American Menopause Society
(NAMS).
Evamist(TM) is a small, hand-held, simple-to-use transdermal spray that is
designed to provide an easy and convenient means to deliver a preset dose of
estradiol via the skin. The Evamist(TM) device is placed against the skin and
an actuator button is pushed, releasing a light transdermal spray containing a
proprietary estradiol-based formulation with a mean drying time of 67 seconds.
The first and only estradiol transdermal spray, Evamist(TM) delivers a low
dose of plant-based estradiol and provides convenient relief of
moderate-to-severe vasomotor symptoms.
Evamist(TM) targets an annual $1.3 billion estrogen therapy market (source:
IMS NSP Audit, January 2007-December 2007) where physicians and patients are
seeking an effective, low-dose estrogen product. An unprecedented number of
women may be experiencing vasomotor symptoms related to menopause: the Centers
for Disease Control (CDC) estimate that more than 37 million women in the
United States are at or near the age of menopause and 45.5 million women are
post-menopausal. About three-fourths of women transitioning into menopause
will experience some degree of symptoms associated with menopause, with 40-60%
of these women suffering from moderate-to-severe vasomotor symptoms.
The Company believes that Evamist(TM) will be a significant contributor to
Ther-Rx net revenues during the second half of fiscal 2009.
SEE SECTION BELOW ENTITLED "ABOUT EVAMIST(TM)", AND "ABOUT ESTROGEN THERAPY"
INCLUDING BLACK BOX INFORMATION, FOR IMPORTANT SAFETY INFORMATION RELATING TO
THE PRESCRIPTION AND USE OF EVAMIST(TM).
Anti-Infective Products
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Net sales of Clindesse(R) increased 9.5% to $5.0 million for the quarter,
compared to $4.6 million in the first quarter of fiscal 2008 due to improved
market share and the impact of price increases.
Clindesse(R), indicated for the treatment of bacterial vaginosis (BV) in
non-pregnant women, continues to experience growing prescription trends in the
anti-infective category. Currently, Clindesse(R) carries a 27.5% market share,
compared to 26.3% from the first quarter of the previous fiscal year, higher
than all other clindamycin-based intravaginal BV products combined.
Oral Iron Supplement Products
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The $1.3 million, or 16.5%, increase in net sales of our hematinic products to
$9.1 million for the quarter resulted primarily from sales volume growth of
Repliva 21/7(R) coupled with price increases on our other hematinic products.
Repliva 21/7(R) continues to be the fastest growing product in the oral
prescription iron supplements category. This product is uniquely formulated to
provide efficient absorption with clinically proven results. The benefits of
this product are driven by a proprietary formulation of elemental iron, two
absorption promoters and a scientifically designed dosing regimen all designed
to help promote maximum iron absorption.
Repliva 21/7(R) currently holds a 7.6% new prescription share, up from 5.9% in
the first quarter of the previous fiscal year, representing the highest new
prescription share of all branded oral iron products in the United States.
Advanced Prescription Nutritionals
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Net revenues for all of the products that comprise Ther-Rx's advanced
prescription nutritional line were $27.5 million, comparable with the first
quarter of fiscal 2008.
o Ther-Rx maintained its market leading position as the most prescribed
prenatal vitamin franchise in the United States with a 43.9% share of
the branded prescription prenatal market.
o Net sales from our advanced prescription nutritional product line
were comparable with the prior year quarter. The year-over-year
comparison of sales of this product line was negatively impacted by
$3.0 million in lower volume due to larger-than-normal customer
purchases made in the first quarter last year due to anticipated
price increases.
o The PrimaCare(R) line of products maintained a 47.1% share of the
Omega-3 (Essential Fatty Acid) segment of the branded prescription
nutritional marketplace.
Gestiva(TM)
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In January 2008, KV acquired an important asset that we anticipate will be
added to the Ther-Rx women's healthcare line of products. The Company entered
into a definitive product purchase agreement in fiscal 2008 that gives KV full
U.S. and worldwide rights to Gestiva(TM) (17a-hydroxyprogestorone caproate)
upon FDA approval of the pending New Drug Application for this product. The
pending NDA seeks approval of Gestiva(TM), which has been granted an Orphan
Drug Designation by the FDA, for use in the prevention of preterm birth for
women with a history of at least one spontaneous preterm delivery (i.e., less
than 37 weeks) who are pregnant with a single fetus. A PDUFA date by which FDA
is expected to make a decision on the Gestiva(TM) NDA is October 24, 2008. We
believe that Gestiva(TM) will make a significant contribution to Ther-Rx
revenues during the second half of fiscal 2009.
ETHEX CORPORATION - 53% NET SALES GROWTH DUE TO METOPROLOL SUCCINATE
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ETHEX Corporation net sales of $92.3 million in the first quarter represented
a 52.6% increase compared to the prior year first quarter of $60.5 million.
Sales growth during the quarter was impacted by volume growth from the sale of
all four strengths of metoprolol succinate extended-release tablets, which
contributed $35.5 million in net revenues during the quarter, offset in part
by the reduced level of sales from our discontinued cough/cold product line.
ETHEX's cough/cold product line, except for one product, was discontinued
earlier this calendar year following a shift in FDA policy on products
containing guaifenesin. Our currently marketed generic cough/cold product
generated net revenues of $0.5 million during the quarter, compared with sales
of the entire cough/cold product line of $9.3 million for the first quarter of
fiscal 2008.
ETHEX's profitability remained strong for another quarter as measured by its
gross profit margins of 60.5%, compared to gross margins of 56.0% in the first
quarter of fiscal 2008.
The ETHEX pipeline remains strong. Last year we filed 16 ANDA's and this year
we expect to file another 16 ANDA's. During this fiscal year, we expect six
ANDA approvals, following five ANDA approvals received by KV in our preceding
fiscal year. In addition, ETHEX believes it is the first to file for a number
of Paragraph IV generic products with significant revenue contribution
potential.
OUTLOOK FOR THE YEAR
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The Company currently expects to report net revenue of between $650 million
and $675 million and net income per diluted Class A share of between $1.65 and
$1.75 for the fiscal year ending March 31, 2009. Although KV historically has
not issued revenue or earnings guidance, in light of potential competitive
challenges related to certain of the Company's products, as well as new
product launches planned during fiscal 2009 and their potential impact on
fiscal 2009 financial performance, we are providing guidance for the current
fiscal year. It is not the Company's
expectation to further update this guidance during the course of the fiscal
year or for future periods.
SUBSEQUENT EVENT
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The Company was notified last week that the Audit Committee of its Board of
Directors has recently commenced an independent inquiry into allegations made
by sources not identified to management regarding alleged misconduct by
management of the Company. Since 1995, the Company has had in place a Standard
of Business Ethics Policy. As part of this policy, an employee is encouraged
to report, independent of management and for any reason, any action an
employee suspects to be contrary to this code of ethics. Management has not
been advised as to the specifics of the allegations and is not in a position
to make an informed determination as to whether the allegations have any
merit. Management is not aware of and does not believe that there has been any
misconduct that would have a material impact on the Company's financial
results. Management is cooperating fully with the Committee.
As a result of the inquiry, KPMG LLP, the Company's independent registered
public accounting firm, has advised the Company that they will be unable to
complete its SAS 100 review of the consolidated financial statements for the
first quarter of fiscal 2009, prior to reviewing the results of the completed
Audit Committee inquiry.
ABOUT EVAMIST(TM)
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Evamist(TM), the first and only estradiol transdermal spray, delivers a low
dose of plant-based estradiol and provides convenient relief of
moderate-to-severe vasomotor symptoms, reducing both the frequency and
severity of hot flashes. Evamist(TM) utilizes metered-dose technology to
deliver a consistent and accurate dose of estradiol when sprayed on the inner
forearm, drying in a median of 67 seconds. Patients should wait at least 2
minutes after applying Evamist(TM) before dressing.
ABOUT ESTROGEN THERAPY
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Estrogen therapy ("ET") is the medical administration of estrogen to
supplement the hormones which the ovaries no longer produce, due to natural or
surgical menopause. ET can provide relief from the unpleasant symptoms of
menopause such as hot flashes. ET products are available in oral, transdermal
patch, injectible and transdermal gel/lotion formulations.
Evamist(TM) is indicated for the treatment of moderate-to-severe vasomotor
symptoms due to menopause.
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WARNING--ENDOMETRIAL CANCER, CARDIOVASCULAR, AND OTHER RISKS
ENDOMETRIAL CANCER Adequate diagnostic measures, including endometrial
sampling when indicated, should be undertaken to rule out malignancy in all
cases of undiagnosed persistent or recurring abnormal vaginal bleeding.
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CARDIOVASCULAR AND OTHER RISKS Estrogens with or without progestins should not
be used for the prevention of cardiovascular disease or dementia. The Women's
Health Initiative (WHI) estrogen-alone substudy reported increased risks of
stroke and deep vein thrombosis (DVT) in postmenopausal women (50 to 79 years
of age) during 6.8 years and 7.1 years, respectively, of treatment with daily
oral conjugated estrogens (CE 0.625 mg), relative to placebo. The estrogen
plus progestin WHI substudy reported increased risk of myocardial infarction,
stroke, invasive breast cancer, pulmonary emboli, and DVT in postmenopausal
women (50 to 79 years of age) during 5.6 years of treatment with daily oral CE
0.625 mg combined with medroxyprogesterone acetate (MPA 2.5 mg), relative to
placebo. The Women's Health Initiative Memory Study (WHIMS), a substudy of the
WHI, reported increased risk of developing probable dementia in postmenopausal
women 65 years of age or older during 5.2 years of treatment with daily CE
0.625 mg alone and during 4 years of treatment with daily CE 0.625 mg combined
with MPA 2.5 mg, relative to placebo. It is unknown whether this finding
applies to younger postmenopausal women. In the absence of comparable data,
these risks should be assumed to be similar for other doses of CE and MPA and
other combinations and dosage forms of estrogens and progestins. Because of
these risks, estrogens with or without progestins should be prescribed at the
lowest effective doses and for the shortest duration consistent with treatment
goals and risks for the individual woman.
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In a clinical trial with Evamist(TM), the most common side effects were
headache, breast tenderness, nasopharyngitis, nipple pain, back pain, nausea,
and arthralgia.
Evamist(TM) should not be used in women with undiagnosed abnormal genital
bleeding; known, suspected, or history of breast cancer; known or suspected
estrogen-dependent neoplasia; active deep vein thrombosis, pulmonary embolism,
or history of these conditions; active or recent arterial thromboembolic
disease; liver dysfunction or disease; or known or suspected pregnancy.
FULL PRESCRIBING INFORMATION FOR EVAMIST IS AVAILABLE AT WWW.EVAMIST.COM
ABOUT KV PHARMACEUTICAL COMPANY
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KV Pharmaceutical Company is a fully integrated specialty pharmaceutical
company that develops, manufactures, markets and acquires
technology-distinguished branded and generic/non-branded prescription
pharmaceutical products. The Company markets its technology-distinguished
products through ETHEX Corporation, a national leader in pharmaceuticals that
compete with branded products, and Ther-Rx Corporation, its branded drug
subsidiary.
For further information about KV Pharmaceutical Company, please visit the
Company's corporate website at www.kvpharmaceutical.com.
SAFE HARBOR
The information in this release may contain various forward-looking statements
within the meaning of the United States Private Securities Litigation Reform
Act of 1995 ("PSLRA") and which may be based on or include assumptions
concerning KV's operations, future results and prospects. Such statements may
be identified by the use of words like "plans", "expect", "aim", "believe",
"projects", "anticipates", "commit", "intend", "estimate", "will", "should",
"could" and other expressions that indicate future events and trends.
All statements that address expectations or projections about the future,
including without limitation, statements about the Company's strategy for
growth, product development, product launches, regulatory approvals, market
position, market share increases, acquisitions, revenues, expenditures and
other financial results, and expectations and beliefs pertaining to the
announced Audit Committee inquiry or any allegations of misconduct that are
the subject of such inquiry, are forward-looking statements.
All forward-looking statements are based on current expectations and are
subject to risk and uncertainties. In connection with the "safe harbor"
provisions, KV provides the following cautionary statements identifying
important economic, political and technology factors, which among others,
could cause actual results or events to differ materially from those set forth
or implied by the forward-looking statements and related assumptions.
Such factors include (but are not limited to) the following: (1) changes in
the current and future business environment, including interest rates and
capital and consumer spending; (2) the difficulty of predicting FDA approvals,
including timing, and that any period of exclusivity may not be realized; (3)
acceptance and demand for new pharmaceutical products; (4) the impact of
competitive products and pricing, including as a result of so-called
authorized-generic drugs; (5) new product development and launch, including
the possibility that any product launch may be delayed or that product
acceptance may be less than anticipated; (6) reliance on key strategic
alliances; (7) the availability of raw materials and/or products manufactured
for the Company under contract manufacturing arrangements with third parties;
(8) the regulatory environment, including regulatory agency and judicial
actions and changes in applicable law or regulations; (9) fluctuations in
revenues; (10) the difficulty of predicting international regulatory approval,
including timing; (11) the difficulty of predicting the pattern of inventory
movements by the Company's customers; (12) the impact of competitive response
to the Company's sales, marketing and strategic efforts, including the
introduction or potential introduction of generic or competing products
against products sold by the Company and its subsidiaries; (13) risks that the
Company may not ultimately prevail in litigation, including challenges to our
intellectual property right by actual or potential competitors or to our
ability to market generic products due to brand company patents and challenges
to other companies' introduction or potential introduction of generic or
competing products by third parties against products sold by the Company or
its subsidiaries including without limitation the litigation and claims
referred to in Note 16 of the Notes to the Consolidated Financial Statements
in the Company's Form 10-Q for the quarter ended June 30, 2008; (14) actions
by the Securities and Exchange Commission and the Internal Revenue Service
with respect to the Company's stock option grants and accounting practices;
(15) the possibility that KV's current estimates of the financial effect of
certain previously announced product recalls could prove to be incorrect; (16)
whether any product recalls results in litigation, agency action or material
damages; (17) the possibility that the findings of the Audit Committee inquiry
referenced in the Company's Form 10-Q for the quarter ended June 30, 2008,
could have a material impact on the Company's financial results; and (18) the
risks detailed from time-to-time in the Company's filings with the Securities
and Exchange Commission.
This discussion is by no means exhaustive, but is designed to highlight
important factors that may impact the Company's outlook. We are under no
obligation to update any of the forward-looking statements after the date of
this release.