Stock Update (NASDAQ:PTX): Pernix Therapeutics Holdings Inc Reports Fourth Quarter and Full Year 2015 Financial Results and Business Update


Pernix Therapeutics Holdings Inc (NASDAQ:PTX), a specialty pharmaceutical company, today announced financial results for the fourth quarter and year ended December 31, 2015.

2015 Financial Highlights:

  • Full Year Net Revenue increased 44% year-over-year to $175.9 million, representing the highest annual net revenues for Pernix since becoming a pharmaceutical company in March 2010
  • Full Year Gross Margin increased to 71% compared with 61% in 2014
  • Full Year Adjusted EBITDA increased to $31.2 million compared with $23.8 million in 2014

Business Highlights:

  • Reversed a multi-year volume decline for Treximet in the second quarter of 2015
    • Added $54 million of annualized Treximet net sales value in the second half of 2015 when compared to the net sales and volume trend pre-acquisition as a result of increased market share and price re-alignment.
  • Launched Zohydro ER with BeadTek in May 2015
  • Two new Orange Book Patents issued for Zohydro ER with BeadTek extending intellectual property portfolio through 2034; more than six patent applications pending
  • Expanded and rebuilt commercial platform to support three core brands
    • Added experienced talent to strengthen the commercial infrastructure
    • Cross-trained all 200 sales professionals to sell all three brands
  • Launched Pernix Prescriptions Direct (PPD) program in August 2015
    • Over 6,000 patients enrolled in the program to date
    • Average weekly growth of 19% in prescriptions since launch
    • PPD currently represents 9% of Treximet and 5% of Silenor weekly total prescriptions
  • Announced positive interim results from a Phase IV study comparing the effects of Silenor and zolpidem on balance, cognitive performance and arousability

“In 2015, we focused on laying the groundwork for future growth. We spent the year building our capabilities and aligning resources behind our objectives,” said Doug Drysdale, Chairman and Chief Executive Officer.

Over the past year we more than doubled in size, and re-invigorated our product line and selling platform. Based on our accomplishments in 2015, I am confident that we have positioned Pernix for meaningful growth in 2016 and beyond.”

Financial Results – Full Year 2015

For full year 2015, net revenues were $175.9 million versus net revenues of $121.7 million in 2014. A summary of net revenue is outlined in the table below (dollars in millions):

2015 Product Revenue

Treximet net sales increased by $47.0 million, or 86%, compared to the year ended December 31, 2014, as Treximet was acquired in August 2014, with the first sale occurring on September 2, 2014. Silenor net sales increased by $5.6 million, or 37%, compared to the year ended December 31, 2014. The increase in sales of Silenor was driven by a 58% increase in volume as a result of implementing the Company’s selling and marketing strategy to enhance market awareness and grow sales, partially offset by an increase in managed care rebates compared to the prior year. The increase in Zohydro ER sales are due to the launch of this product in early May 2015. The decrease in other product revenue was due to the discontinuation of certain less profitable products and the termination of certain contracts pursuant to which Pernix marketed and distributed products for other companies. These declines were partially offset by sales of Zohydro ER.

Selling, general and administrative (SG&A) expenses increased by $37.3 million, or 62%, to $97.4 million, compared to $60.2 million for the same period in 2014, driven primarily by a full year of Treximet selling and promotion expenses and costs related to the Zohydro ER acquisition.

Research and Development expenses grew by $4.3 million, or 109%, to $8.2 million compared to $3.9 million in 2014. The increase was primarily due to ongoing work related to the lifecycle management of Treximet and Zohydro ER.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) grew to $31.2 million, compared to $23.8 million in 2014. See the table at the end of this press release for a reconciliation of net loss to Adjusted EBITDA.

Depreciation and amortization expense was $94.7 million versus $33.0 million in 2014. The increase was primarily a result of a full year of amortization related to the Treximet acquisition and the Zohydro ER acquisition.

Interest expense, net for the year ended December 31, 2015 was $38.1 million compared to $18.8 million last year. The increase is due primarily to a full year of interest expense on the 12% Senior Secured Notes in 2015 as compared to four months in 2014.

Losses from impairments of intangibles and disposal of assets were $24.4 million for the year ended December 31, 2015 compared to $0.2 million for the year ended December 31, 2014. These losses were primarily attributable to our legacy, non-core products from the 2012 acquisition of Cypress and Hawthorn.

Financial Results – Fourth Quarter 2015

For the fourth quarter of 2015, net revenue was $46.4 million compared to $53.8 million for the fourth quarter of 2014. A summary of net revenue is outlined below (dollars in millions):

Q4 2015 Product Revenue

Treximet net sales decreased by $11.7 million, or 30%, to $26.8 million compared to $38.5 million in the fourth quarter of 2014. The decrease was driven by an 18% decrease in volume and higher managed rebate rates in the fourth quarter of 2015 due to completion of managed care contracting post-acquisition. The decrease in volume was the result of the impact of a multi-year declining volume trend underway when Pernix acquired the product. Pernix reversed this trend during the second quarter of 2015. Silenor net sales declined by $1.0 million, or 18%, compared to the fourth quarter of 2014. While volume increased by 32% in the fourth quarter of 2015 as compared to the fourth quarter of 2014, this was more than offset by higher managed care rebate rates in 2015 than in 2014. The decrease in other product revenue was due to the discontinuation of certain less profitable products and the termination of certain contracts pursuant to which Pernix marketed and distributed products for other companies. These declines were partially offset by sales of Zohydro ER, which was acquired in April 2015.

Selling, general and administrative (SG&A) expenses in the fourth quarter of 2015 increased by $4.5 million, or 23%, to $24.2 million, compared to $19.6 million for the same period in 2014, driven primarily by the addition of the Zohydro ER sales force.

Research and Development expenses grew by $0.3 million, or 11%, to $2.6 million in the fourth quarter of 2015, compared to $2.3 million in the fourth quarter of 2014. The increase was primarily due to ongoing work related to the lifecycle management of Treximet and Zohydro ER.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, a non-GAAP measure) was $10.0 million for the fourth quarter of 2015 compared to $22.9 million in the fourth quarter of 2014. See the table at the end of this press release for a reconciliation of net loss to Adjusted EBITDA.

Depreciation and amortization expense was $28.2 million versus $18.7 million in the same period last year. The increase was primarily a result of the Zohydro ER acquisition.

Interest expense, net for the three months ended December 31, 2015 was $9.5 million compared to $10.0 million last year.

Losses from impairments of intangibles and disposal of assets were $24.4 million for the quarter ended December 31, 2015 compared to $0.2 million for the quarter ended December 31, 2014. These losses were primarily attributable to the Company’s legacy, non-core products from the 2012 acquisition of Cypress and Hawthorn.

Prescription Trends
The prescription trends for the fourth quarter of 2015 highlighted below are derived from Symphony Health Solutions’ Integrated DataVerse (IDV)® solution:

  • Treximet total and new prescriptions decreased by 7% and 2%, respectively, as compared to the fourth quarter of the prior year. Total prescriptions increased by 5% versus the third quarter of 2015, while new prescriptions were flat as compared to the third quarter of 2015. Treximet total and new prescriptions from the start of sampling in March 2015 through the last full week of 2015 increased 14% and 20%, respectively, on a weekly basis.
  • Silenor total and new prescriptions increased by 41% and 31%, respectively, as compared to the fourth quarter of the prior year. Total and new prescriptions increased by 2%, and 3% respectively, compared to the third quarter of 2015;
  • Zohydro ER total prescriptions increased by 15% as compared to the fourth quarter of the prior year. Total prescriptions increased by 5% compared to the third quarter of 2015.

Liquidity

As of December 31, 2015, the Company had total liquidity of $71.4 million, consisting of $56.1 million of cash and approximately $15.3 million available to draw under its $50.0 million credit agreement. Total principal amount of debt outstanding at the end of the year was $355.0 million and net debt was $298.9 million. This consists of $210.0 million of 12% Senior Secured notes, $130.0 million of 4.25% convertible notes and $15.0 million under the Company’s revolving Credit Facility.

2016 Full-Year Guidance

For the full twelve months ended December 31, 2016, Pernix is providing net sales and adjusted EBITDA guidance as follows:
Net Sales Guidance: $190 million to $205 million
Adjusted EBITDA Guidance: $35 million to $45 million. (Original Source)

Shares of Pernix Therapeutics closed yesterday at $2.28, up $0.02 or 0.88%. PTX has a 1-year high of $11.43 and a 1-year low of $1.68. The stock’s 50-day moving average is $2.14 and its 200-day moving average is $3.00.

On the ratings front, Pernix has been the subject of a number of recent research reports. In a report issued on March 7, Needham analyst Serge Belanger maintained a Buy rating on PTX, with a price target of $8, which implies an upside of 250.9% from current levels. Separately, on December 14, Oppenheimer’s Akiva Felt assigned a Buy rating to the stock and has a price target of $9.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Serge Belanger and Akiva Felt have a total average return of 8.4% and -2.1% respectively. Belanger has a success rate of 42.9% and is ranked #692 out of 3694 analysts, while Felt has a success rate of 32.2% and is ranked #3162.

Pernix Therapeutics Holdings Inc is a specialty pharmaceutical company focused on the sales, marketing and development of branded and generic pharmaceutical products for sleep, bacterial infections and cough and cold conditions.