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As Of Filer Filing As/For/On Docs:Pgs Issuer Agent
7/25/03 Aaipharma Inc 8-K{7,9} 7/23/03 2:16 Bowne of Atlanta Inc/FA
Document/Exhibit Description Pages Size 1: 8-K Aaipharma, Inc HTML 15K 2: EX-99.1 Press Release Dated July 23,2003 HTML 103K
|
| PRess Release dated July 23,2003 |
Exhibit 99.1
|
News Release |
|
| 2320 Scientific Park
Drive Wilmington, NC 28405 |
Nasdaq: AAII
| Contacts: | ||
| Investors: | Media: | |
| William L. Ginna, Jr. | Andrea L. Johnston | |
| EVP & CFO | VP, Corporate Communications | |
| James B. Sloan, Jr. | 910-254-7340 | |
| SVP, Corporate Finance | ||
| 910-254-7000 |
aaiPharma Inc. Announces Record 2003 Earnings and Revenues in the
Second Quarter Driven by Pharmaceutical Product Sales
Second Quarter 2003 Highlights
| • | Revenues Increase 15% over the Prior Year Quarter to $70.8 Million | |
| • | Pharmaceutical Product Sales Increase to $45.8 Million | |
| • | Earnings Rise to $0.28 Per Diluted Share, an Increase of 33% over the Second Quarter of 2002 | |
| • | Launched Darvon® Compound 32, the Company’s First Darvon®/Darvocet™ Line Extension |
Wilmington, N.C., July 23, 2003 – aaiPharma Inc. (Nasdaq:AAII), a science-based specialty pharmaceutical company, today reported financial results for the second quarter ended June 30, 2003.
“Our positive second quarter financial performance was driven by strong revenue growth in our pharmaceutical products division,” stated Dr. Philip S. Tabbiner, President and Chief Executive Officer. “We are very pleased with the strategic and operational milestones we achieved in the first six months of 2003 which reflect our continued focus on our core strategy of being a science-based, specialty pharmaceutical company.”
Financial Results
Total revenues for the second quarter were $70.8 million, representing organic
growth of 15% above the $61.4 million recorded in the second quarter of 2002.
For the six-month period ended June 30, 2003, revenues increased 26% to $134.8
million, compared with revenues of $107.1 million in the first half of 2002.
Net income and earnings per diluted share increased 31% to $8.0 million and 33%
to $0.28, respectively, as compared to the second quarter of 2002, driven
by a continued shift toward higher margin pharmaceutical products. The Company reported net income of $15.1 million for the first half of 2003, or $0.53 per diluted share, an increase of 85% over income before extraordinary loss in the year ago period of $8.2 million, or $0.29 per diluted share.
Gross margin (excluding depreciation) for the second quarter of 2003 improved 12% to $45.2 million, compared with $40.4 million last year. Selling, general and administrative expenses represented 28% of net revenues in the second quarter of 2003, up from 26% in the 2002 quarter, primarily driven by the build-out of our pharmaceutical sales force. Research and development spending was on plan at $5.6 million, or 8% of total revenues for the quarter.
aaiPharma’s strong second quarter product sales reflected market share gains of M.V.I. Pediatric®, increased demand for Brethine® injectable and continued performance in line with expectations for our pain management franchise. Product sales grew organically to $45.8 million, an increase of 32% versus the same period in 2002. Sequentially, product sales were up 14% over the first quarter of 2003. Product sales, including the acquisition of the Darvon®/Darvocet™ family late in the first quarter of 2002, increased 56% to $85.8 million in the first six months of 2003 as compared with the same period in 2002. Product development revenues (royalties and fees) remain in line with management’s expectations at $3.9 million for the second quarter 2003. Development services revenues for the second quarter of 2003 increased to $21.1 million, as compared to $20.3 million in the prior year period, driven primarily by increased demand for our analytical services and contract manufacturing capabilities.
During the second quarter of 2003, the Company paid down an additional $8.5 million of debt, bringing the amount of debt repaid to $17.0 million for the first six months of 2003. By the end of the quarter, the Company again reduced its total leverage ratio as a result of increasing earnings before interest, taxes, depreciation and amortization, and decreasing its debt balance. At June 30, 2003, aaiPharma’s cash position was $8.1 million.
Business Highlights
Subsequent to the end of the second quarter, on July 17, 2003, aaiPharma
announced the acquisition of a unique Darvocet™ line extension from Athlon
Pharmaceuticals. Upon FDA approval, which is expected before the end of this
year, this unique line extension is expected to be the only propoxyphene
napsylate/acetaminophen combination product on the market offering this
particular dose combination. The total propoxyphene market, generic and
branded, is valued at more than $500 million, according to 2002 Verispan data.
This new, unique Darvocet™ line extension is expected to add substantial value
to aaiPharma’s growing pain management franchise.
On June 24, 2003, aaiPharma launched its first line extension of the Darvon®/Darvocet™ family, Darvon® Compound 32 (propoxyphene hydrochloride, aspirin and caffeine). Darvon® Compound 32 offers a lower dose (i.e., 32 mg of propoxyphene) alternative to Darvon® Compound 65 (i.e., 65 mg of propoxyphene), providing physicians with more options and increased titration flexibility to aid in the management of headache pain.
2
“In the last fifteen months since we acquired the Darvon®/Darvocet™ franchise from Eli Lilly & Company, we have successfully executed our strategy to grow the prescription volume for the semi-exclusive products and slow the decline of the genericized portion of the franchise while also progressing with the development of key line extensions to the portfolio,” indicated Dr. Tabbiner. “Furthermore, we remain on track to launch another Darvon® line extension, separate from the recently announced Darvocet™ acquisition, before the end of this year. We believe that these factors, coupled with our continued sales force expansion and targeted pain management promotional campaigns, substantiate continued revenue growth for the Darvon®/Darvocet™ brand family, consistent with our strategic objectives.”
On June 25, 2003, the Company filed a supplemental new drug application (SNDA) for Brethine® Ampuls with the U.S. Food and Drug Administration (FDA) seeking approval for a new and safer vial presentation of injectable Brethine® and certification of aaiPharma’s sterile manufacturing facility in Charleston, South Carolina as an alternate production site for the product.
On April 16, 2003, aaiPharma announced the acquisition of the exclusive rights to a parenterally administered methadone product, formerly branded as Dolophine® Hydrochloride Injection, from Roxane Laboratories, Inc. The Company remains on plan for re-branding this product under a new trade name and launching it in 2003. This acquisition expands aaiPharma’s pain management product offerings into the severe pain, Schedule II class of pain products while also complementing its existing portfolio of hospital-based injectable products.
Outlook
The Company updated financial guidance for the 2003 third quarter by stating
that earnings per diluted share are expected to be in the range of $0.28 to
$0.30.
aaiPharma management will conduct a conference call to review the financial results for the second quarter of 2003 tomorrow, Thursday, July 24, 2003 at 8:00 a.m., Eastern Daylight Time. A simultaneous web cast of the call for interested investors and others may be accessed by visiting aaiPharma’s website at www.aaipharma.com. Presentation slides will accompany the web cast and will be available for viewing just prior to the web cast. A replay of the web cast will be available on this website shortly after the call through 5:00 p.m. on August 6, 2003.
About
aaiPharma
aaiPharma Inc. is a science-based specialty pharmaceutical company with more
than 23 years of drug development experience. Focusing on targeted therapeutic
areas, the Company markets a growing portfolio of established branded products
and applies innovative technologies to increase the commercial potential of
these products. At the same time, aaiPharma’s research and development
organization is developing a pipeline of products to position the Company for
near-term and long-term growth in its targeted therapeutic areas. In addition
to developing and marketing its own line of proprietary pharmaceutical
products, aaiPharma continues to be a leader in providing contract
pharmaceutical development services through its AAI Development Services
division. For more information on the Company, please visit us on the web at
www.aaipharma.com.
3
Forward Looking Statements
Information in this press release contains certain “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities and Exchange Act of 1934, including the statements by Dr.
Tabbiner and those pertaining to the Company’s plans and expectations as to
earnings and revenues outlooks for the Company, for the Darvon®/Darvocet™ brand
family, and for its product development segment, and as to the Company’s future
sales force expansion, targeted pain management promotional campaigns, launch
plans for the acquired methadone product and for an additional Darvon® line
extension later in 2003, uniqueness of the acquired Darvocet™ product’s dose
combination, commercial and medical value of the acquired Darvocet™ product,
the acquired methadone product and Darvon® Compound 32 to the medical and
patient communities and to the Company’s branded pain management product
portfolio, requested approvals in its regulatory filings with the FDA, and
development, commercialization, commercial potential and growth of products and
line extensions in the Company’s pipeline and its product portfolio. The
“forward-looking statements” herein involve risks and uncertainties that could
cause actual results to differ materially, including, without limitation, risks
and uncertainties pertaining to the Company’s ability to timely and
successfully find, acquire, finance, develop, improve, enhance, obtain timely
regulatory approval for, maximize the value of, extend product life cycles of,
conduct successful research on, renew marketing of, and sell, on a commercially
profitable basis, pharmaceutical products without adversely affecting its
client relationships or business opportunities and without future litigation or
resulting damages or injunctive relief; the Company’s ability to obtain, use,
enforce, defend and license valid and commercially valuable patents; the
Company’s ability to obtain and enforce existing and future contracts with
major pharmaceutical companies for significant royalties and other
consideration; the effect of possible future acquisitions, dispositions and
other strategic transactions involving the Company; and the commercial success
of the Company’s contemplated products. Additional factors that may cause the
actual results to differ materially are discussed in aaiPharma’s recent filings
with the Securities and Exchange Commission, including, but not limited to, its
Annual Report on Form 10-K filed on March 28, 2003, including its Exhibit 99.1
and other exhibits; its Form 10-Q filed on May 15, 2003; its Form 8-Ks; and its
other periodic filings.
Darvon®, Darvocet-N®, M.V.I. Pediatric®, M.V.I.® and Brethine® are registered trademarks, and Azasan™ and Darvocet™ are trademarks, of aaiPharma Inc.
Dolophine® is a registered trademark of Roxane Laboratories.
Tables to Follow –
4
aaiPharma Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||||||
Product sales |
$ | 45,752 | $ | 34,673 | $ | 85,760 | $ | 54,850 | ||||||||||||
Product
development (royalties &
fees) |
3,897 | 6,469 | 7,707 | 8,604 | ||||||||||||||||
Development services |
21,102 | 20,305 | 41,314 | 43,613 | ||||||||||||||||
Total revenues |
70,751 | 61,447 | 134,781 | 107,067 | ||||||||||||||||
Operating costs and expenses: |
||||||||||||||||||||
Direct costs (excluding
depreciation): |
||||||||||||||||||||
Product sales |
13,201 | 8,335 | 23,152 | 16,140 | ||||||||||||||||
Development services |
12,377 | 12,756 | 24,381 | 26,301 | ||||||||||||||||
Total direct costs |
25,578 | 21,091 | 47,533 | 42,441 | ||||||||||||||||
Selling expenses |
8,201 | 5,710 | 15,935 | 9,984 | ||||||||||||||||
General and administrative expenses |
11,289 | 10,161 | 21,318 | 18,919 | ||||||||||||||||
Depreciation and amortization |
2,711 | 2,671 | 5,362 | 4,472 | ||||||||||||||||
Research and development |
5,588 | 5,486 | 10,074 | 9,864 | ||||||||||||||||
| 53,367 | 45,119 | 100,222 | 85,680 | |||||||||||||||||
Income from operations |
17,384 | 16,328 | 34,559 | 21,387 | ||||||||||||||||
Other income (expense): |
||||||||||||||||||||
Interest, net |
(4,931 | ) | (6,553 | ) | (10,481 | ) | (8,376 | ) | ||||||||||||
Other, net |
226 | 69 | 143 | 203 | ||||||||||||||||
| (4,705 | ) | (6,484 | ) | (10,338 | ) | (8,173 | ) | |||||||||||||
Income before income taxes and
extraordinary loss |
12,679 | 9,844 | 24,221 | 13,214 | ||||||||||||||||
Provision for income taxes |
4,691 | 3,740 | 9,077 | 5,021 | ||||||||||||||||
Income before extraordinary loss |
7,988 | 6,104 | 15,144 | 8,193 | ||||||||||||||||
Extraordinary loss, net of a tax
benefit of $2,714 |
— | — | — | (5,339 | ) | |||||||||||||||
Net income |
$ | 7,988 | $ | 6,104 | $ | 15,144 | $ | 2,854 | ||||||||||||
Basic earnings (loss) per share: |
||||||||||||||||||||
Income before extraordinary loss |
$ | 0.29 | $ | 0.22 | $ | 0.55 | $ | 0.30 | ||||||||||||
Extraordinary loss |
— | — | — | (0.20 | ) | |||||||||||||||
Net income |
$ | 0.29 | $ | 0.22 | $ | 0.55 | $ | 0.10 | ||||||||||||
Weighted average shares outstanding |
27,621 | 27,365 | 27,590 | 27,236 | ||||||||||||||||
Diluted earnings (loss) per share: |
||||||||||||||||||||
Income before extraordinary loss |
$ | 0.28 | $ | 0.21 | $ | 0.53 | $ | 0.29 | ||||||||||||
Extraordinary loss |
— | — | — | (0.19 | ) | |||||||||||||||
Net income |
$ | 0.28 | $ | 0.21 | $ | 0.53 | $ | 0.10 | ||||||||||||
Weighted average shares outstanding |
28,488 | 28,565 | 28,442 | 28,580 | ||||||||||||||||
5
aaiPharma Inc.
Consolidated Balance Sheets
(In thousands)
| June 30, | December 31, | |||||||||
| 2003 | 2002 | |||||||||
ASSETS |
||||||||||
Current assets: |
||||||||||
Cash and cash equivalents |
$ | 8,132 | $ | 6,532 | ||||||
Accounts receivable, net |
39,438 | 29,467 | ||||||||
Work-in-progress |
12,249 | 10,515 | ||||||||
Inventories |
15,349 | 17,004 | ||||||||
Prepaid and other current assets |
7,613 | 7,633 | ||||||||
Total current assets |
82,781 | 71,151 | ||||||||
Property and equipment, net |
55,968 | 53,125 | ||||||||
Goodwill, net |
211,759 | 210,792 | ||||||||
Intangibles, net |
88,168 | 89,078 | ||||||||
Other assets |
13,318 | 16,179 | ||||||||
Total assets |
$ | 451,994 | $ | 440,325 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||
Current liabilities: |
||||||||||
Current maturities of long-term debt |
$ | 6,553 | $ | 5,921 | ||||||
Accounts payable |
17,309 | 17,671 | ||||||||
Customer advances |
18,726 | 15,051 | ||||||||
Accrued wages and benefits |
7,263 | 6,718 | ||||||||
Interest payable |
5,026 | 5,232 | ||||||||
Other accrued liabilities |
6,625 | 5,201 | ||||||||
Total current liabilities |
61,502 | 55,794 | ||||||||
Long-term debt, less current portion |
259,271 | 277,899 | ||||||||
Other liabilities |
13,512 | 7,182 | ||||||||
Stockholders’ equity: |
||||||||||
Common stock |
28 | 27 | ||||||||
Paid-in capital |
80,140 | 79,049 | ||||||||
Retained earnings |
35,736 | 20,592 | ||||||||
Accumulated other comprehensive income (loss) |
1,805 | (218 | ) | |||||||
Total stockholders’ equity |
17,709 | 99,450 | ||||||||
Total liabilities and stockholders’ equity |
$ | 451,994 | $ | 440,325 | ||||||
6
aaiPharma Inc.
Consolidated Statements of Cash Flows
(In thousands)
| Six Months Ended | |||||||||||
| June 30, | |||||||||||
| 2003 | 2002 | ||||||||||
Cash flows from operating activities: |
|||||||||||
Income before extraordinary loss |
$ | 15,144 | $ | 8,193 | |||||||
Adjustments to reconcile income before extraordinary loss to
net cash provided by (used in) operating activities: |
|||||||||||
Depreciation and amortization |
5,362 | 4,472 | |||||||||
Other |
(78 | ) | 117 | ||||||||
Changes in operating assets and liabilities: |
|||||||||||
Accounts receivable, net |
(9,735 | ) | (13,427 | ) | |||||||
Work-in-progress |
(1,319 | ) | (761 | ) | |||||||
Inventories |
1,718 | (275 | ) | ||||||||
Prepaid and other assets |
1,038 | (12,970 | ) | ||||||||
Accounts payable |
(527 | ) | (32 | ) | |||||||
Customer advances |
3,437 | 3,413 | |||||||||
Interest payable |
(206 | ) | 6,245 | ||||||||
Accrued wages and benefits and other accrued liabilities |
5,898 | (104 | ) | ||||||||
Net cash provided by (used in) operating activities |
20,732 | (5,129 | ) | ||||||||
Cash flows from investing activities: |
|||||||||||
Purchases of property and equipment |
(6,482 | ) | (4,402 | ) | |||||||
Purchase of property and equipment previously leased |
— | (14,145 | ) | ||||||||
Proceeds from sales of property and equipment |
389 | — | |||||||||
Acquisitions |
(600 | ) | (211,997 | ) | |||||||
Other |
(287 | ) | (151 | ) | |||||||
Net cash used in investing activities |
(6,980 | ) | (230,695 | ) | |||||||
Cash flows from financing activities: |
|||||||||||
Proceeds from long-term borrowings |
— | 248,755 | |||||||||
Payments on long-term borrowings |
(17,000 | ) | (18,400 | ) | |||||||
Proceeds from interest rate swap, net |
2,678 | — | |||||||||
Issuance of common stock |
1,091 | 3,031 | |||||||||
Other |
1,018 | 170 | |||||||||
Net cash (used in) provided by financing activities |
(12,213 | ) | 233,556 | ||||||||
Net increase (decrease) in cash and cash equivalents |
1,539 | (2,268 | ) | ||||||||
Effect of exchange rate changes on cash |
61 | 109 | |||||||||
Cash and cash equivalents, beginning of period |
6,532 | 6,371 | |||||||||
Cash and cash equivalents, end of period |
$ | 8,132 | $ | 4,212 | |||||||
7
| This 8-K Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 3/28/03 | 10-K | |||
| 4/16/03 | ||||
| 5/15/03 | 10-Q, DEF 14A, PRE 14A | |||
| 6/24/03 | ||||
| 6/25/03 | ||||
| 6/30/03 | 10-Q, 10-Q/A | |||
| 7/17/03 | ||||
| For The Period Ended | 7/23/03 | |||
| 7/24/03 | ||||
| Filed On / Filed As Of | 7/25/03 | |||
| 8/6/03 | 425, 8-K | |||
| 12/31/03 | 10-K, 5, NT 10-K | |||
| Top | List All Filings | |||
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