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Eagle Pharmaceuticals Reports First Quarter 2021 Results

5/10/2021

Q1 2021 net loss was $0.03 per basic and diluted share and adjusted non-GAAP net income was $0.24 per basic and diluted share

Anticipate vasopressin approval and launch this year; completed last required study; expect to respond to vasopressin Complete Response Letter (“CRL”) in full by mid-year

Expects approximately $20-$25 million from combined royalty and milestone revenue in 2022 for TREAKISYM (bendamustine) Ready-to-Dilute (“RTD”) and Rapid Infusion (“RI”) formulations

Eagle Pharmaceuticals, Inc. (Nasdaq: EGRX) (“Eagle” or the “Company”) today announced financial results for the three months ended March 31, 2021.

Business and Recent Highlights:

  • Completed the last study required by FDA for the Company’s vasopressin product and expect to have the results shortly. Eagle plans to respond to the CRL issued for its first-to-file Abbreviated New Drug Applicable (“ANDA”) for vasopressin in full by mid-year. The Company’s patent trial against Endo Par Innovation Company, LLC was postponed and is now scheduled to begin on July 7, 2021. The Company believes it will have first-to-file 180 day exclusivity for vasopressin;
  • Approval of TREAKISYM (bendamustine) RTD formulation, in combination with rituximab for treatment of relapsed or refractory diffuse large B-cell lymphoma (“r/r DLBCL”) received from the Pharmaceuticals and Medical Devices Agency (“PMDA”) in Japan. This represents a meaningful extension of Eagle’s bendamustine franchise and is expected to significantly increase the market opportunity;
  • Filing of TREAKISYM RI (50ml) liquid formulation with the PMDA in Japan. Eagle expects approximately $20-$25 million from combined royalty and milestone revenue in 2022 for TREAKISYM (bendamustine) RTD and RI formulations;
  • Appointed former FDA Official and Public Health Expert Dr. Luciana Borio to its Board of Directors; and
  • In active discussions for several promising in-licensing and acquisition candidates that the Company believes will strengthen its portfolio and pipeline going forward.

Financial Highlights

First Quarter 2021

Total revenue for Q1 2021 was $41.2 million, compared to $46.0 million in Q1 2020, primarily reflecting decreased product sales of RYANODEX® and royalty revenue of BENDEKA®.

  • Q1 2021 net loss was $0.4 million, or $0.03 per basic and diluted share, compared to net loss of $2.9 million, or $0.21 per basic and diluted share in Q1 2020.
  • Q1 2021 adjusted non-GAAP net income was $3.2 million, or $0.24 per basic and diluted share, compared to adjusted non-GAAP net income of $11.7 million, or $0.86 per basic and $0.84 per diluted share, in Q1 2020.
  • Cash and cash equivalents were $105.2 million, net accounts receivable was $44.9 million, and debt was $32.0 million as of March 31, 2021.

“Vasopressin is tracking as expected. The trial is now less than two months away and we have now completed the last study required to submit our response to the CRL to the FDA. Our expectation remains that we will receive final approval in time to bring the product to market this year. We believe we also have an outstanding and large opportunity with TREAKISYM in Japan representing another extension of our bendamustine franchise. Equally important and exciting is the PEMFEXY launch early next year, which gives us four months of initial exclusivity,” stated Scott Tarriff, Chief Executive Officer of Eagle Pharmaceuticals.

“We are now in late-stage diligence for several in-licensing opportunities that would leverage our capabilities, meet our criteria and broaden our portfolio and pipeline. We will aim to finalize a few such transactions that have the potential to bolster our earnings both in the short and longer term,” concluded Tarriff.

First Quarter 2021 Financial Results

Total revenue for the three months ended March 31, 2021 was $41.2 million, as compared to $46.0 million for the three months ended March 31, 2020.

Q1 2021 BELRAPZO® product sales were $5.7 million, compared to $4.6 million in Q1 2020.

Q1 2021 RYANODEX product sales were $6.8 million, compared to $11.4 million in Q1 2020.

Royalty revenue was $24.1 million in the first quarter of 2021, compared to $28.3 million in the first quarter of 2020. BENDEKA royalties were $23.8 million in the first quarter of 2021, compared to $28.0 million in the first quarter of 2020. A summary of total revenue is outlined below:

 

Three Months Ended March 31,

 

2021

 

2020

 

(unaudited)

 

(unaudited)

Revenue (in thousands):

 

 

 

Product sales, net

$17,120

 

$17,694

Royalty revenue

24,129

 

28,326

Total revenue

$41,249

 

$46,020

Gross Margin was 74% during the first quarter of 2021, as compared to 83% in the first quarter of 2020. The compression in gross margin for the first quarter of 2021 was driven by revenue mix including the launch of TREAKISYM product sales to our partner in the first quarter of 2021, on which we earn no profit.

R&D expense was $14.3 million for the first quarter of 2021, compared to $9.4 million in the first quarter of 2020. The increase is largely attributable to $2.6 million in development costs for vasopressin, a $0.9 million increase in the cost for fulvestrant, and a $0.9 million increase in development costs for RYANODEX related projects. Excluding stock-based compensation and other non-cash and non-recurring items, R&D expense during the first quarter of 2021 was $13.1 million.

SG&A expenses in the first quarter of 2021 totaled $19.9 million compared to $24.8 million in the first quarter of 2020. The decrease is primarily related to the non-recurrence of a $2.5 million charge for the Tyme transaction, and lower marketing, travel, entertainment, and trade show expenses as a result of reduced travel due to the COVID-19 pandemic. Excluding stock-based compensation and other non-cash and non-recurring items, first quarter 2021 SG&A expense was $13.4 million.

Net loss for the first quarter of 2021 was $0.4 million, or $0.03 per basic and diluted share, compared to net loss of $2.9 million, or $0.21 per basic and diluted share, in the first quarter of 2020, due to the factors discussed above.

Adjusted non-GAAP net income for the first quarter of 2021 was $3.2 million, or $0.24 per basic and diluted share, compared to adjusted non-GAAP net income of $11.7 million or $0.86 per basic and $0.84 per diluted share in the first quarter of 2020. For a full reconciliation of adjusted non-GAAP net income to the most comparable GAAP financial measures, please see the tables at the end of this press release.

2021 Expense Guidance

  • R&D spend in 2021, on a non-GAAP basis, is expected to be $26-$30 million, as compared to $27.8 million in 2020.
  • SG&A spend in 2021, on a non-GAAP basis, is expected to be $52-$56 million, as compared to $50.9 million in 2020. This represents a reduction from earlier guidance for 2021 SG&A spend of $56-60 million.

The guidance provided in this section represents forward-looking information, and actual results may vary. Please see the risks and assumptions referred to in the Forward-Looking Statements section of this press release.

Liquidity

As of March 31, 2021, the Company had $105.2 million in cash and cash equivalents plus $44.9 million in net accounts receivable. The Company had $32.0 million in outstanding debt. Therefore, as of March 31, 2021, the Company had net cash plus receivables of $118.1 million.

In the first quarter of 2021, the Company purchased $1.4 million of its common stock as part of its $160.0 million Share Repurchase Program. From August 2016 through March 31, 2021, the Company has repurchased $208.3 million of its common stock.

Conference Call

As previously announced, Eagle management will host its first quarter 2021 conference call as follows:

Date

 

 

 

 

 

 

 

 

 

 

 

 

Monday, May 10, 2021

Time

 

 

 

 

 

 

 

 

 

 

 

 

8:30 A.M. EDT

Toll free (U.S.)

 

 

 

 

 

877-876-9173

International

 

 

 

 

 

785-424-1667

Webcast (live and replay)

 

 

 

 

 

www.eagleus.com, under the “Investor + News” section

A replay of the conference call will be available for one week after the call's completion by dialing 800-839-6980 (US) or 402-220-6062 (International) and entering conference call ID EGRXQ121. The webcast will be archived for 30 days at the aforementioned URL.

About Eagle Pharmaceuticals, Inc.

Eagle is a fully integrated pharmaceutical company with research and development, clinical, manufacturing and commercial expertise. Eagle is committed to developing innovative medicines that result in meaningful improvements in patients’ lives. Eagle’s commercialized products include RYANODEX®, BENDEKA®, BELRAPZO®, and its oncology and CNS/metabolic critical care pipeline includes product candidates with the potential to address underserved therapeutic areas across multiple disease states. Additional information is available on Eagle’s website at www.eagleus.com.

Forward-Looking Statements

This press release contains forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, and other securities laws. Forward-looking statements are statements that are not historical facts. Words and phrases such as “anticipated,” “forward,” “will,” “would,” “may,” “remain,” “potential,” “prepare,” “expected,” “believe,” “plan,” “near future,” “belief,” “guidance,” and similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to, statements regarding future events such as: the number and timing of potential product launches, development initiatives or new indications for the Company’s product candidates; the period of market exclusivity for any of the Company’s product candidates; the Company's clinical development plan for the product candidates in its portfolio; the potential benefits and efficacy of RYANODEX, including the potential for RYANODEX as a treatment for additional indications; the ability of the Company’s executive team to execute on the Company’s strategy and build stockholder value; the timing, scope or likelihood and timing of regulatory filings and approvals from the FDA for the Company’s product candidates; the timing of the Company's PEMFEXY launch, if ever; the success of the Company's collaborations with its strategic partners and the timing and results of these partners’ preclinical studies and clinical trials, including the Company’s collaboration with its Japanese licensing partner, SymBio, with respect to the commercialization of SymBio’s product TREAKISYM; the future commercial success of TREAKISYM RTD and, if approved, TREAKISYM RI, including anticipated royalty and milestone revenue and potential market opportunity; the Company’s timing and ability to enroll patients in ongoing and upcoming clinical trials; the ability of the Company to obtain and maintain coverage and adequate reimbursement for its products; the implementation of certain healthcare reform measures; the Company's timing and ability to repurchase additional shares of the Company's common stock, if any, under its Share Repurchase Program; the Company's ability to deliver value in 2021 and over the long term; the Company’s ability to utilize its cash and other assets to increase shareholder value; the Company’s ability to effectively manage and control expenses in line with its budget; and the Company's plans and ability to advance the products in its pipeline. All of such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the Company's control, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Such risks and uncertainties include, but are not limited to: the impacts of the COVID-19 pandemic, including disruption or impact in the sales of the Company's marketed products, interruptions or other adverse effects to clinical trials, delays in regulatory review, manufacturing and supply chain interruptions, adverse effects on healthcare systems, disruption in the operations of the Company's third party partners and disruption of the global economy, and the overall impact of the COVID-19 pandemic on the Company's business, financial condition and results of operations; risks that the Company's business, financial condition and results of operations will be impacted by the spread of COVID-19 in the geographies where the Company's third-party partners operate; whether the Company will incur unforeseen expenses or liabilities or other market factors; whether the Company will successfully implement its development plan for its product candidates; delay in or failure to obtain regulatory approval of the Company's product candidates; whether the Company can successfully market and commercialize its product candidates; the success of the Company's relationships with its partners; the availability and pricing of third party sourced products and materials; the outcome of litigation involving any of our products or that may have an impact on any of our products; successful compliance with the FDA and other governmental regulations applicable to product approvals, manufacturing facilities, products and/or businesses; general economic conditions, including the potential adverse effects of public health issues, including the COVID-19 pandemic, on economic activity and the performance of the financial markets generally; the strength and enforceability of the Company's intellectual property rights or the rights of third parties; competition from other pharmaceutical and biotechnology companies and the potential for competition from generic entrants into the market; the risks inherent in the early stages of drug development and in conducting clinical trials; and those risks and uncertainties identified in the “Risk Factors” sections of the Company's Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission (the “SEC”) on March 5, 2021, as updated by the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, which the Company expects to file with the SEC on May 10, 2021, and its other subsequent filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof, and the Company does not undertake any obligation to revise and disseminate forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of or non-occurrence of any events.

Non-GAAP Financial Performance Measures

In addition to financial information prepared in accordance with U.S. GAAP, this press release also contains adjusted non-GAAP net income and adjusted non-GAAP earnings per share attributable to Eagle. The Company believes these measures provide investors and management with supplemental information relating to operating performance and trends that facilitate comparisons between periods and with respect to projected information.

Adjusted non-GAAP net income excludes stock-based compensation expense, depreciation expense, amortization expense, severance, non-cash interest expense, expense related to collaboration with Tyme, fair value adjustments on equity investment, and the tax effect of these adjustments. The Company believes these non-GAAP financial measures help indicate underlying trends in the Company’s business and are important in comparing current results with prior period results and understanding projected operating performance. Non-GAAP financial measures provide the Company and its investors with an indication of the Company’s baseline performance before items that are considered by the Company not to be reflective of the Company’s ongoing results. See the attached Reconciliation of GAAP to Adjusted Non-GAAP Net Income and Adjusted Non-GAAP Earnings per Share and Reconciliation of GAAP to Adjusted Non-GAAP EBITDA for details of the amounts excluded and included to arrive at adjusted non-GAAP net income, adjusted non-GAAP earnings per share amounts, and adjusted non-GAAP EBITDA amounts, respectively.

These adjusted measures are non-GAAP and should be considered in addition to, but not as a substitute for, the information prepared in accordance with U.S. GAAP. The Company strongly encourages investors to review its consolidated financial statements and publicly-filed reports in their entirety and cautions investors that the non-GAAP measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures.

-- Financial tables follow --

EAGLE PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share amounts)
 
 
March 31, 2021 December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents

$

105,229

 

$

103,155

 

Accounts receivable, net

 

44,868

 

 

50,678

 

Inventories

 

6,862

 

 

8,075

 

Prepaid expenses and other current assets

 

7,027

 

 

4,157

 

Total current assets

 

163,986

 

 

166,065

 

Property and equipment, net

 

2,270

 

 

2,077

 

Intangible assets, net

 

12,211

 

 

12,917

 

Goodwill

 

39,743

 

 

39,743

 

Deferred tax asset, net

 

14,278

 

 

15,180

 

Other assets

 

27,480

 

 

17,208

 

Total assets

$

259,968

 

$

253,190

 

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable

$

12,559

 

$

6,268

 

Accrued expenses and other liabilities

 

21,414

 

 

23,817

 

Current portion of long-term debt

 

8,000

 

 

8,000

 

Total current liabilities

 

41,973

 

 

38,085

 

Other long-term liabilities

 

3,664

 

 

3,959

 

Long-term debt, less current portion

 

23,253

 

 

25,135

 

Total liabilities

 

68,890

 

 

67,179

 

Commitments and Contingencies
Stockholders' equity:
Preferred stock, 1,500,000 shares authorized and no shares issued or outstanding as of March 31, 2021 and December 31, 2020

 

 

 

 

Common stock, $0.001 par value; 50,000,000 shares authorized; 16,858,031 and 16,739,203 shares issued as of March 31, 2021 and December 31, 2020, respectively

 

17

 

 

17

 

Additional paid in capital

 

312,323

 

 

305,403

 

Retained earnings

 

84,068

 

 

84,489

 

Treasury stock, at cost, 3,712,571 and 3,682,176 shares as of March 31, 2021 and December 31, 2020, respectively

 

(205,330

)

 

(203,898

)

Total stockholders' equity

 

191,078

 

 

186,011

 

Total liabilities and stockholders' equity

$

259,968

 

$

253,190

 

EAGLE PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except share and per share amounts)
 
 
Three Months Ended March 31,

 

2021

 

 

2020

 

 
Revenue:
Product sales, net

$

17,120

 

$

17,694

 

Royalty revenue

 

24,129

 

 

28,326

 

License and other revenue

 

 

 

 

Total revenue

 

41,249

 

 

46,020

 

Operating expenses:
Cost of product sales

 

8,442

 

 

4,765

 

Cost of royalty revenue

 

2,413

 

 

3,038

 

Research and development

 

14,288

 

 

9,427

 

Selling, general and administrative

 

19,879

 

 

24,755

 

Total operating expenses

 

45,022

 

 

41,985

 

(Loss) income from operations

 

(3,773

)

 

4,035

 

Interest income

 

35

 

 

346

 

Interest expense

 

(422

)

 

(889

)

Other income (expense)

 

5,500

 

 

(6,500

)

Total other income (expense), net

 

5,113

 

 

(7,043

)

Income (loss) before income tax (provision) benefit

 

1,340

 

 

(3,008

)

Income tax (provision) benefit

 

(1,761

)

 

137

 

Net Loss

$

(421

)

$

(2,871

)

Loss per share attributable to common stockholders:
Basic

$

(0.03

)

$

(0.21

)

Diluted

$

(0.03

)

$

(0.21

)

Weighted average number of common shares outstanding:
Basic

 

13,069,373

 

 

13,667,606

 

Diluted

 

13,069,373

 

 

13,667,606

 

EAGLE PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
 
 
Three Months Ended March 31,

 

2021

 

 

2020

 

 
Cash flows from operating activities:
Net loss

$

(421

)

$

(2,871

)

Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes

 

902

 

 

(90

)

Depreciation expense

 

190

 

 

251

 

Noncash operating lease expense related to right-of-use assets

 

252

 

 

221

 

Amortization expense of intangible assets

 

706

 

 

666

 

Fair value adjustments on equity investment

 

(5,600

)

 

6,500

 

Stock-based compensation expense

 

6,508

 

 

7,472

 

Convertible promissory note related credit losses

 

100

 

 

 

Amortization of debt issuance costs

 

118

 

 

65

 

Changes in operating assets and liabilities which provided (used) cash:
Accounts receivable

 

5,810

 

 

(6,487

)

Inventories

 

1,213

 

 

(1,868

)

Prepaid expenses and other current assets

 

(2,870

)

 

4,473

 

Accounts payable

 

6,291

 

 

4,294

 

Accrued expenses and other liabilities

 

(2,403

)

 

(8,238

)

Other assets and other long-term liabilities, net

 

(318

)

 

(1,230

)

Net cash provided by operating activities

 

10,478

 

 

3,158

 

Cash flows from investing activities:
Purchase of equity investment security

 

 

 

(17,500

)

Purchase of property and equipment

 

(384

)

 

(472

)

Purchase of convertible promissory note

 

(5,000

)

 

 

Net cash used in investing activities

 

(5,384

)

 

(17,972

)

Cash flows from financing activities:
Proceeds from common stock option exercises

 

1,963

 

 

330

 

Employee withholding taxes related to stock-based awards

 

(1,551

)

 

(1,276

)

Proceeds from existing revolving credit facility

 

 

 

110,000

 

Payment of debt

 

(2,000

)

 

(1,000

)

Repurchases of common stock

 

(1,432

)

 

(999

)

Net cash (used in) provided by financing activities

 

(3,020

)

 

107,055

 

Net increase in cash and cash equivalents

 

2,074

 

 

92,241

 

Cash and cash equivalents at beginning of period

 

103,155

 

 

109,775

 

Cash and cash equivalents at end of period

$

105,229

 

$

202,016

 

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes, net

$

267

 

$

24

 

Interest

 

321

 

 

576

 

Right-of-use asset obtained in exchange for lease obligation - lease amendment

 

 

 

842

 

EAGLE PHARMACEUTICALS, INC.
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP NET INCOME AND
ADJUSTED NON-GAAP EARNINGS PER SHARE (UNAUDITED)
(In thousands, except share and per share amounts)
 
 
Three Months Ended March 31,

 

2021

 

 

2020

 

 
Net loss - GAAP

$

(421

)

$

(2,871

)

 
Adjustments:
Cost of product revenues:
Amortization expense

 

301

 

 

261

 

Research and development:
Stock-based compensation expense

 

895

 

 

1,550

 

Depreciation expense

 

53

 

 

177

 

Severance

 

274

 

 

 

Selling, general and administrative:
Stock-based compensation expense

 

5,613

 

 

5,922

 

Expense related to collaboration with Tyme

 

 

 

2,500

 

Amortization expense

 

405

 

 

405

 

Depreciation expense

 

137

 

 

74

 

Severance

 

306

 

 

245

 

 
Other:
Non-cash interest expense

 

118

 

 

118

 

Fair value adjustments on equity investment

 

(5,600

)

 

6,500

 

Tax effect of the non-GAAP adjustments

 

1,086

 

 

(3,179

)

 
Adjusted non-GAAP net income

$

3,167

 

$

11,702

 

 
Adjusted non-GAAP earnings per share:
Basic

$

0.24

 

$

0.86

 

Diluted

$

0.24

 

$

0.84

 

Weighted number of common shares outstanding:
Basic

 

13,069,373

 

 

13,667,606

 

Diluted

 

13,276,283

 

 

14,000,932

 

EAGLE PHARMACEUTICALS, INC.
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP EBITDA (UNAUDITED)
(In thousands)
 
 
Three Months Ended March 31, Twelve Months
Ended March 31,
Twelve Months Ended
December 31,

 

2021

 

 

2020

 

 

2021

 

 

2020

 
Net (loss) income - GAAP

$

(421

)

$

(2,871

)

$

14,439

 

$

11,989

 
Add back:
Interest expense, net of interest income

 

387

 

 

543

 

 

1,859

 

 

2,015

Income tax provision (benefit)

 

1,761

 

 

(137

)

 

12,586

 

 

10,688

Depreciation and amortization expense

 

896

 

 

917

 

 

3,517

 

 

3,538

 
Add back:
Stock-based compensation expense

 

6,508

 

 

7,472

 

 

23,792

 

 

24,756

Fair value adjustments on equity investment

 

(5,600

)

 

6,500

 

 

(6,800

)

 

5,300

Fair value adjustments on settled accelerated share repurchase agreement

 

 

 

 

 

2,962

 

 

2,962

Expense related to collaboration with Tyme

 

 

 

2,500

 

 

 

 

2,500

Severance

 

580

 

 

245

 

 

1,259

 

 

924

Adjusted Non-GAAP EBITDA

$

4,111

 

$

15,169

 

$

53,614

 

$

64,672

 

Investor Relations for Eagle Pharmaceuticals, Inc.:
Lisa M. Wilson
In-Site Communications, Inc.
T: 212-452-2793
E: lwilson@insitecony.com

Source: Eagle Pharmaceuticals, Inc.

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Lisa M. Wilson,
212-452-2793

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