Company Update (NASDAQ:PTX): Pernix Therapeutics Holdings Inc Reports Third Quarter 2015 Financial Results

Pernix Therapeutics Holdings Inc (NASDAQ:PTX), a specialty pharmaceutical company, today announced financial results for the third quarter ended September 30, 2015.

“Pernix had a solid third quarter, and we are well on the way to meeting our full year goals. We are building momentum across our three core brands and advancing our strategy to create a portfolio of leading CNS and pain management products,” said Doug Drysdale, Chairman and Chief Executive Officer.

Our efforts with Treximet continue to drive double digit increases in new Treximet prescriptions, and prescriptions per prescriber. We have made significant advances in securing broad coverage for Zohydro ER, with 15 managed care approvals so far, and we are optimistic about our ability to obtain additional favorable coverage. Silenor, re-launched last year, remains a solid contributor to overall growth.

We expect our national Pernix Prescriptions Direct program for Treximet and Silenor, launched in August, will further contribute to the sustained growth of these products. We are encouraged by the early success of the program, evidenced by an increased fulfillment rate and significant weekly growth in patient enrollments. By offering patients and healthcare professionals improved convenience and health plan management, we believe our PPD program will result in better compliance and reduced prescription abandonment among those participating in the program. With the full support of our 200-person specialty sales force — now fully cross-trained to promote all three of our portfolio products — we are confident that we will continue to unlock the growth potential of each of our products as we head into 2016.

As we execute our strategic plan and position Pernix for growth in 2016, we will continue to optimize and improve our sales platform. We will aggressively pursue managed care coverage, removing barriers for patients and physicians, and we will pursue enhanced prescription growth through the national expansion of PPD,” concluded Drysdale.

Financial Results – Third Quarter 2015
For the third quarter of 2015, net revenue was $48.6 million, an increase of $17.1 million, or 54%, versus $31.5 million for the third quarter of 2014. A summary of net revenue is outlined below (in thousands):

Q3 2015 Product Revenue

The year over year improvement was driven by the re-launch of Treximet in September 2014, the launch of Zohydro ER with BeadTek in May 2015, and continued growth for Silenor. These increases were partially offset by higher rebates to managed care organizations to maintain or expand coverage, and the discontinuation of certain less profitable products.

Net sales of Other products declined due to the discontinuation of certain less profitable products and the termination of certain contracts pursuant to which we marketed and distributed products for others, offset by price increases on certain products.

Gross profit margin as a percentage of net revenues was 75% versus 60% in the third quarter of 2014. The improvement was primarily due to the Treximet and Zohydro ER launches.

Selling, general and administrative (SG&A) expenses in the third quarter of 2015 increased by $13.3 million, or 95%, to $27.4 million, compared to $14.1 million for the same period in 2014, driven primarily by the addition of the Zohydro ER sales force, investments in selling and marketing for our core brands, and training costs.

Research and Development expenses grew by $2.9 million to $3.2 million in the third quarter of 2015, compared to $290,000 in the third quarter of 2014. The increase was mostly due to on-going work related to Treximet lifecycle management and Zohydro ER.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, a non-GAAP measure) was $8.7 million for the third quarter of 2015 compared to $6.9 million in the third 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 $25.7 million versus $10.2 million in the same period last year. The increase was primarily a result of $10.3 million in Treximet acquisition amortization and $5.0 million in Zohydro ER acquisition amortization.

Interest expense for the three months ended September 30, 2015 was $9.7 million compared to $5.5 million last year. The increase was primarily due to interest related to our $220.0 million Treximet Notes, issued in August 2014.

Pernix recognized an income tax benefit of $5.6 million in the third quarter of 2015, versus an expense of $655,000 for the same period last year.

The net loss for the third quarter of 2015 was $10.7 million, or $0.18 per basic and diluted share, compared to net loss of $11.7 million, or $0.31 per basic and diluted share, last year. Weighted average common shares outstanding were 61.0 million and 38.1 million per basic and diluted shares in the third quarter of 2015 and 2014, respectively. On a non-GAAP basis, 3Q 2015 adjusted net income was $5.0 million versus an adjusted net loss of $1.4 million in 3Q 2014.

Financial Results – Nine Months ending September 30, 2015
For the nine month period ended September 30, 2015, net revenues were $129.5 million versus net revenues of $67.9 million for the same period last year. Gross profit margin was 71% of net revenues, up from 52% for the prior year period. On a GAAP basis, net loss was $66.6 million, or $1.31 per share versus a net loss of $27.5 million, or $0.73 per share during the prior year period.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) grew to $21.2 million for the nine months ended September 30, 2015, compared to $985,000 for the same period last year.

As of September 30, 2015, the Company had total liquidity of $79.4 million, consisting of $57.2 million of cash and approximately $22.2 million available to draw, and an additional $17.8 million available to borrow based on the company’s accounts receivable and inventory levels under its $50.0 million credit agreement, which may be increased by an additional $20 million at the lenders’ discretion. Total principal amount of debt outstanding at the end of the quarter was $350.0 million.

Pernix is reaffirming guidance for the year. The Company expects net revenue for 2015 to be in the range of $170 to $180 million. Adjusted EBITDA is expected to be in the range of $30 to $35 million.

2015 represents an investment year for Pernix, strengthening our commercial platform and positioning the company for growth in 2016. These investment actions include:

  • Retargeting and improving the effectiveness of the Company’s recently-expanded sales organization through cross training of all 200 sales professionals to sell its three major brands;
  • Continuing to expand managed care access across all products, in particular Zohydro ER, which is expected to drive positive Zohydro ER sales growth in 2016; and
  • Rolling out its Pernix Prescriptions Direct program to all major metropolitan areas by the end of 2015. (Original Source)

Shares of Pernix Therapeutics closed yesterday at $3.05. PTX has a 1-year high of $12.88 and a 1-year low of $1.91. The stock’s 50-day moving average is $3.34 and its 200-day moving average is $5.07.

On the ratings front, Pernix Therapeutics has been the subject of a number of recent research reports. In a report issued on October 5, Brean Murray Carret analyst Difei Yang reiterated a Buy rating on PTX, with a price target of $14, which implies an upside of 359.0% from current levels. Separately, on September 9, JMP’s Oren Livnat resumed coverage with a Hold rating on the stock .

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Difei Yang and Oren Livnat have a total average return of 1.7% and -3.6% respectively. Yang has a success rate of 45.8% and is ranked #1662 out of 3824 analysts, while Livnat has a success rate of 46.7% and is ranked #3033.

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.


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