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ISTA Pharmaceuticals Reports
Second Quarter 2011 Financial Results
Revenues Increased 6% From Prior Year Quarter to $37.1 Million
BEPREVE 2011 Year-to-Date Revenues Grew 145% Compared to First Half 2010
ISTA Reaffirms 2011 Guidance for Net Revenues and Adjusted Cash Earnings
per Share
IRVINE, CA, Jul 28, 2011 (MARKETWIRE via COMTEX News Network) -- ISTA
Pharmaceuticals, Inc. (NASDAQ: ISTA), today reported financial results
and progress on key milestones for the quarter ended June 30, 2011.
Second Quarter 2011 Highlights
-- Second quarter 2011 net revenues were $37.1 million, an increase of
6% over the second quarter of 2010.
-- Revenues for ISTA's ophthalmic solution for ocular itching associated
with allergic conjunctivitis, BEPREVE(R) (bepotastine besilate
ophthalmic solution) 1.5%, almost doubled over the prior-year quarter,
growing from $6.2 million to $12.2 million.
-- In April 2011, ISTA announced positive, top-line results from its
Phase 2 study of bepotastine besilate nasal spray for allergic rhinitis.
-- Under generally accepted accounting principles in the United States
(GAAP), net income for the second quarter ended June 30, 2011, was $12.8
million, or $0.25 per share, based on 50.2 million fully diluted shares,
impacted primarily by a non-cash warrant valuation gain of $19.0 million
resulting from a decrease in the Company's stock price in the quarter.
On an adjusted cash basis, ISTA had a net loss of $4.2 million, or loss
of $0.11 per share, based on 38.4 million shares outstanding.
"As a company, we consistently record 40% of our net revenues in the
first half of the year and 60% in the second half. Our first half net
revenues of $73.9 million clearly put us on track to achieve our 2011
annual revenue guidance of $175 million to $190 million," stated Vicente
Anido, Jr., Ph.D., President and Chief Executive Officer of ISTA
Pharmaceuticals. "In the second quarter, as a result of a concentrated
sales and marketing campaign during a rather severe spring allergy
season, product revenues for BEPREVE, our prescription eye drops for
ocular itching associated with allergic conjunctivitis, were up 97% over
the prior-year quarter. We have established a solid second position
behind the market leader with a product that brings fast, long-lasting
relief to ocular allergy sufferers.
"Prior to the allergy season, we successfully converted more than 80% of
the bromfenac franchise from twice-daily XIBROM(TM) to once-daily
BROMDAY(TM) for the treatment of postoperative inflammation and
reduction of ocular pain in patients who have undergone cataract
extractions. We discontinued XIBROM shipments in late February and
refocused our selling efforts on BEPREVE. Midway into the second
quarter, a generic competitor to twice-daily XIBROM was approved. While
the sales force was dedicated to BEPREVE, our channel and managed care
teams were working to strengthen our bromfenac franchise position within
the ophthalmic non-steroidal anti-inflammatory drug (NSAID) market.
Year-to-date June 2011, as compared to 2010, total prescriptions for
ISTA's bromfenac franchise (BROMDAY and XIBROM) increased 6.5% and on a
weekly basis, BROMDAY continues to capture share. While revenues for our
bromfenac franchise were down in the second quarter over the prior-year
quarter, now that the spring allergy season is over, our sales force is
fully dedicated to building share with the only once-daily NSAID on the
market. Overall, our commercial business has been highly effective this
year and with recent managed care contract wins for both BEPREVE and
BROMDAY, we have confidence that we can gain share in both the allergic
conjunctivitis and NSAID markets in the second half."
Dr. Anido continued, "In terms of progress on our new product pipeline,
in April, we announced positive, top-line results from our Phase 2 study
of bepotastine besilate nasal spray for allergic rhinitis. We're in
discussions with the U.S. Food and Drug Administration (FDA) on the
clinical study designs for a bepotastine besilate/steroid combination
nasal spray and plan to initiate a Phase 2 trial either during the
Mountain Cedar Pollen season later this year or during spring allergy
season early next year. Our recently initiated Phase 3 studies for
low-concentration BROMDAY are now fully enrolled. We plan to announce
results from the low-concentration BROMDAY studies in fourth quarter of
this year and launch the product in late 2012 or early 2013.
"In a separate press release today, we reported the preliminary results
for the first of two Phase 3 efficacy and short-term safety trials for
REMURA(TM) for dry eye (WEST study), which showed that while REMURA was
highly effective in treating a sign and symptom of dry eye versus
baseline, it was not statistically significantly better than placebo, a
common outcome in dry eye clinical studies. REMURA achieved statistical
significance against placebo in the sign of conjunctival staining in a
key female patient sub-population with moderate dry eye disease. Armed
with this data, we expect to amend the statistical plan to appropriately
focus the EAST study. In the fourth quarter of this year, we expect to
report the Phase 3 results from the REMURA EAST study, which now is
fully enrolled but the database has not been locked. The EAST data will
be combined with the results of the WEST study, and the full dataset
will determine the next steps for this program."
Financial Results
Net revenues for the second quarter ended June 30, 2011, were $37.1
million, or an increase of 6% over the same period in 2010. Net revenue
growth was driven primarily by strong demand for BEPREVE, for ocular
itching associated with allergic conjunctivitis, and ISTALOL(R), a
beta-blocking agent for the treatment of glaucoma.
Net Revenues
(in millions, except percentage data)
--------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
2011 2010 Change 2011 2010 Change
------ ------ ------- ------ ------ -------
BROMDAY and XIBROM $ 13.6 $ 21.1 (36%) $ 36.6 $ 41.4 (12%)
BEPREVE 12.2 6.2 97% 16.4 6.7 145%
ISTALOL 7.9 4.3 84% 14.2 9.7 46%
VITRASE(R) 3.4 3.5 (3%) 6.7 5.6 20%
------ ------ ------ ------
Total Revenues $ 37.1 $ 35.1 6% $ 73.9 $ 63.4 17%
====== ====== ====== ======
Gross margin for the second quarter ended June 30, 2011, was 76%, or
$28.1 million, as compared to 77%, or $26.9 million,
for the same period
in 2010. The decrease in gross margin as a percent of sales was due
primarily to changes in the mix of products sold.
Research and development (R&D) expenses for the first quarter ended June
30, 2011, were $8.9 million, as compared to $5.0 million during the
corresponding period of 2010. The increase over the prior-year period
was due primarily to the 2011 cost of ongoing Phase 3 efficacy and
short-term safety studies related to REMURA for dry eye and initiation
of the Phase 3 studies for low-concentration BROMDAY.
Selling, general, and administrative (SG&A) expenses for the second
quarter ended June 30, 2011, increased to $23.4 million from $19.9
million for the corresponding period in 2010 due primarily to legal,
professional and other fees incurred in connection with the arbitration
process between Senju Pharmaceutical Co., Ltd. and ISTA related to the
bromfenac franchise royalty payments, costs associated with the
litigation with the FDA over the approval of a generic drug to XIBROM,
and marketing efforts for the ongoing promotion of BROMDAY.
Operating loss for the second quarter ended June 30, 2011 was $4.1
million, compared to an operating income of $1.9 million in the
corresponding quarter of 2010, primarily driven by increased R&D and
SG&A expenses described above.
Net income for the second quarter ended June 30, 2011 was $12.8 million,
or $0.25 per diluted share, including a non-cash warrant valuation gain
of $19.0 million, based on 50.2 million fully diluted shares
outstanding. The adjusted cash net loss for the second quarter ended
June 30, 2011 was $4.2 million, or a loss of $0.11 per share, based on
38.4 million shares outstanding.
The Company's reported shares outstanding increased over the prior
quarter from 33.4 million to 41.9 million primarily from warrant holders
exercising shares. Of the original 15 million warrants issued in 2008,
8.1 million have now been exercised either on a direct or cashless
basis. The Company received $6.2 million in cash for the exercise of
warrants in the second quarter. Approximately 6.9 million warrants
expiring in 2014 remain outstanding.
At June 30, 2011, ISTA had total cash of $82.8 million, which included
$13 million under ISTA's revolving line of credit with Silicon Valley
Bank and $29 million in accrued royalties for BROMDAY and XIBROM.
2011 Financial Outlook
Lauren Silvernail, Chief Financial Officer and Vice President of
Corporate Development commented, "With the ongoing revenue growth of
BEPREVE and the second-half focus on increasing market share for
BROMDAY, we remain on-track to achieve net revenues for 2011 in the
range we provided at the beginning of the year. On the expense lines,
while R&D and SG&A expenses were tracking above the ranges for the full
year in the first half, these should moderate in the second half,
enabling us to achieve our guidance for adjusted cash earnings per
share."
Thus, ISTA expects 2011 full year results of the following:
-- Net revenues of approximately $175 million to $190 million.
-- Gross
margins of 75% to 77% of net revenues.
-- R&D expenses of 18% to 22% of
net revenues.
-- SG&A expenses at the higher end of the guidance range of
44% to 48% of net revenues.-- Operating income of $13 million to $16
million.
-- Non-GAAP adjusted cash net income of $13 million to $16
million.
-- Non-GAAP adjusted cash earnings per diluted share of $0.26 to
$0.32, using 50 million fully diluted shares. The Company defines
"adjusted cash net income" as the Company's net income adjusted for the
non-cash mark-to-market adjustments relating to warrants, plus non-cash
interest expense and non-cash stock-based compensation costs of
approximately $7.5 million to $8.5 million annually.
-- Year-end cash
balance of $80 million to $90 million. Of note, one-third of ISTA's $65
million debt facility comes due in September 2011. The Company
anticipates making the $21.5 million principal repayment in the coming
weeks. The year-end cash balance reflects the scheduled debt repayment
and includes amounts drawn from our bank line and the BROMDAY/XIBROM
accrued royalties.
Update on Litigation With FDA
We filed a Citizen Petition, or CP, with the FDA in March 2011. The CP
requested the FDA to refrain from granting tentative or final approval
of any abbreviated new drug application, or ANDA, for bromfenac sodium
ophthalmic solution 0.09% that utilizes the labeling for discontinued
XIBROM (bromfenac ophthalmic solution) 0.09% or omits any portion of the
BROMDAY label relating to the once-per-day dosing. In May 2011, the FDA
partially denied our CP and approved a generic version of twice-daily
bromfenac ophthalmic solution 0.09%, which is substitutable for one
bottle size of our twice-daily XIBROM. In May 2011, we filed a Complaint
in the United States District Court for the District of Columbia
alleging that the FDA 's approval of a generic version of XIBROM was
arbitrary, capricious, and contrary to law. We also filed papers seeking
injunctive relief with respect to the FDA's approval of a generic
version of twice-daily bromfenac ophthalmic solution 0.09% and relief
from denial of our 2011 CP requesting that the FDA refrain from granting
tentative or final approval of any abbreviated new drug application for
bromfenac sodium ophthalmic solution 0.09% that utilizes the labeling
for discontinued XIBROM or omits any portion of the BROMDAY label
relating to the once-per-day dosing. Although our request for a
temporary injunction was denied by the Court in May 2011, our subsequent
motion for summary judgment seeking revocation of the approval of the
generic bromfenac product is currently being briefed before the Court.
Conference Call
ISTA will host a conference call with a simultaneous webcast today, July
28, 2011, at 4:30 PM Eastern Time, to discuss its second quarter 2011
results and the preliminary Phase 3 data for the REMURA dry eye WEST
study. To access the live conference call, U.S. and Canadian
participants may dial 866-804-6922; international participants may dial
857-350-1668. The access code for the live call is 73568588. To access
the 24-hour audio replay, U.S. and Canadian participants may dial
888-286-8010; international participants may dial 617-801-6888. The
access code for the replay is 37743515. This conference call also will
be webcast live and archived on ISTA's website for 30 days at
http://www.istavision.com.
ABOUT ISTA PHARMACEUTICALS
ISTA Pharmaceuticals, Inc. is a fast growing and the fourth largest
branded prescription eye care business in the United States, with an
expanding focus on allergy therapeutics. ISTA currently markets four
products, including treatments for ocular inflammation and pain
post-cataract surgery, glaucoma and ocular itching associated with
allergic conjunctivitis. The Company's development pipeline contains
additional candidates in various stages of development to treat dry eye,
ocular inflammation and pain, and nasal allergies. Headquartered in
Irvine, California, ISTA generated revenues of $156.5 million in 2010.
For additional information about ISTA, please visit the corporate
website at www.istavision.com.
BROMDAY(TM) (bromfenac ophthalmic solution) 0.09%, XIBROM (bromfenac
ophthalmic solution)(R) 0.09%, ISTALOL(R) (timolol maleate ophthalmic
solution) 0.5%, VITRASE(R) (hyaluronidase injection) Ovine, 200 USP
Units/mL, BEPREVE(R) (bepotastine besilate ophthalmic solution) 1.5% and
REMURA(TM) (bromfenac ophthalmic solution for dry eye) are trademarks of
ISTA Pharmaceuticals, Inc.
BROMDAY is indicated for the treatment of postoperative inflammation and
reduction of ocular pain in patients who have undergone cataract
surgery. One drop of BROMDAY ophthalmic solution should be applied to
the affected eye(s) once daily beginning 1 day prior to cataract
surgery, continued on the day of surgery, and through the first 14 days
of the postoperative period.
XIBROM was indicated for the treatment of postoperative inflammation and
reduction of ocular pain in patients who have undergone cataract
surgery. One drop of XIBROM ophthalmic solution was to be applied to the
affected eye(s) twice daily starting on the day of surgery, and through
the first 14 days of the postoperative period. Shipments of XIBROM were
discontinued in February of 2011.
Full prescribing information for BROMDAY is available on ISTA
Pharmaceuticals' website at
http://www.istavision.com/pdf/BROMDAYPI101008.pdf
Full prescribing information for ISTALOL is available on ISTA
Pharmaceuticals' website at
http://www.istavision.com/pdf/Istalol_Full_PI-ISL274.pdf
Full prescribing information for VITRASE is available on ISTA
Pharmaceuticals' website at
http://www.istavision.com/pdf/vitrase200_package_insert.pdf
Full prescribing information for BEPREVE is available on ISTA
Pharmaceuticals' website at
http://www.istavision.com/pdf/Bepreve_insert.pdf
FORWARD-LOOKING STATEMENTS
Any statements contained in this press release that refer to future
events or other non-historical matters are forward-looking statements.
Without limiting the foregoing, but by way of example, statements
contained in this press release related to ISTA's 2011 financial outlook
and expected financial results, market share growth for BROMDAY and
BEPREVE, initiation of new clinical trials, announcement of clinical
trial results in 2011, changes to clinical trial statistical plans,
potential launch of products in 2012 or 2013, and potential hearings
with regard to the litigation with the FDA are forward-looking
statements. Except as required by law, ISTA disclaims any intent or
obligation to update any forward-looking statements. These
forward-looking statements are based on ISTA's expectations as of the
date of this press release and are subject to risks and uncertainties
that could cause actual results to differ materially. Important factors
that could cause actual results to differ from current expectations
include, among others, delays and uncertainties related to the conduct
and success of clinical trials, the FDA or other regulatory agency
approval or actions, the dispute with Senju regarding XIBROM and BROMDAY
royalties, and such other risks and uncertainties as detailed from time
to time in ISTA's public filings with the U.S. Securities and Exchange
Commission, including but not limited to ISTA's Annual Report on Form
10-K for the year ended December 31, 2010 and 10-Q for quarter-ended
March 31, 2011.
ISTA PHARMACEUTICALS, INC.
Unaudited Statement of Operations
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2011 2010 2011 2010
-------- -------- -------- --------
Revenues:
Product sales, net $ 37,138 $ 35,068 $ 73,858 $ 63,373
-------- -------- -------- --------
Total revenues 37,138 35,068 73,858 63,373
Cost of products sold 9,083 8,209 18,300 15,494
-------- -------- -------- --------
Gross profit 28,055 26,859 55,558 47,879
-------- -------- -------- --------
Costs and expenses:
Research and development 8,850 5,031 19,194 9,834
Selling, general and
administrative 23,353 19,900 50,284 40,768
-------- -------- -------- --------
Total costs and expenses 32,203 24,931 69,478 50,602
-------- -------- -------- --------
(Loss) income from operations (4,148) 1,928 (13,920) (2,723)
Other income (expense):
Interest expense (2,068) (2,073) (4,140) (4,144)
(Loss) gain on derivative
valuation (7) 6 (7) 13
Gain (loss) on warrant valuation 18,996 26,306 (53,238) 33,497
Other income 2 - 6 -
-------- -------- -------- --------
Total other income (expense) 16,923 24,239 (57,379) 29,366
-------- -------- -------- --------
Net income (loss) $ 12,775 $ 26,167 $(71,299) $ 26,643
======== ======== ======== ========
Net income (loss) per common share,
basic $ 0.33 $ 0.78 $ (1.98) $ 0.80
======== ======== ======== ========
Net income (loss) per common share,
diluted $ 0.25 $ 0.61 $ (1.98) $ 0.62
======== ======== ======== ========
Shares used in computing net income
(loss) per common share, basic 38,378 33,408 36,060 33,386
======== ======== ======== ========
Shares used in computing net income
(loss) per common share, diluted 50,172 42,606 36,060 43,277
======== ======== ======== ========
ISTA PHARMACEUTICALS INC.
Unaudited Summary of Balance Sheet Data
(in thousands)
December 31,
June 30, 2011 2010
-------------- --------------
Cash and cash equivalents $ 82,841 $ 78,777
Working capital 10,388 15,822
Total assets 135,727 134,240
Current portion of Facility Agreement 21,450 21,450
Facility Agreement, net of current portion and
unamortized discounts and derivatives 40,137 38,706
Warrant Liability 46,230 66,185
Total liabilities 202,274 213,337
Total stockholders' deficit (66,547) (79,097)
Non-GAAP Financial Measures ISTA believes the metric "adjusted cash net income (loss) and adjusted cash EPS excluding
non-cash interest expense, stock option expense and non-cash warrant valuation adjustments," are useful financial measures for investors in evaluating the Company's performance for the periods presented. ISTA's management believes the presentation of these non-GAAP financial measures provides useful information to the Company and to investors regarding ISTA's results of operations as these non-GAAP financial measures allow better evaluation of ongoing business performance. These metrics, however, are not a measure of financial performance under accounting principles generally accepted in the United States (GAAP) and should not be considered a substitute for net income (loss) or EPS in accordance with GAAP and may not be comparable to similarly titled measures reported by other companies. For a reconciliation of net income (loss) to adjusted cash net income (loss), see the table below.
ISTA PHARMACEUTICALS, INC
Reconciliation of GAAP Net Income (Loss) to Adjusted Cash Net Loss (Income)
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2011 2010 2011 2010
--------- --------- --------- ---------
Net income (loss) $ 12,775 $ 26,167 $ (71,299) $ 26,643
Add:
Stock-based compensation costs 1,002 1,004 1,771 1,872
Amortization of deferred
financing costs 268 266 535 536
Amortization of discount on
Facility Agreement 712 713 1,424 1,424
Change in value of warrants
related to Facility Agreement (18,996) (26,306) 53,238 (33,497)
Change in value of derivatives
related to Facility Agreement 7 (6) 7 (13)
--------- --------- --------- ---------
Cash net (loss) income (4,232) 1,838 (14,324) (3,035)
Add:
Costs associated with attempted
acquisition - - 4,638 -
--------- --------- --------- ---------
Adjusted cash net (loss) income $ (4,232) $ 1,838 $ (9,686) $ (3,035)
========= ========= ========= =========
Net income (loss) per share -
basic $ 0.33 $ 0.78 $ (1.98) $ 0.80
========= ========= ========= =========
Net income (loss) per share -
diluted $ 0.25 $ 0.61 $ (1.98) $ 0.62
========= ========= ========= =========
Shares used in computing net
income (loss) per common share,
basic 38,378 33,408 36,060 33,386
========= ========= ========= =========
Shares used in computing net
income (loss) per common share,
diluted 50,172 42,606 36,060 43,277
========= ========= ========= =========
Adjusted cash net (loss) income
per share - basic $ (0.11) $ 0.06 $ (0.27) $ (0.09)
========= ========= ========= =========
Adjusted cash net (loss) income
per share - diluted $ (0.11) $ 0.04 $ (0.27) $ (0.09)
========= ========= ========= =========
Shares used in computing
adjusted cash (loss) income per
common share, basic 38,378 33,408 36,060 33,386
========= ========= ========= =========
Shares used in computing
adjusted cash (loss) income per
common share, diluted 38,378 42,606 36,060 33,386
========= ========= ========= =========
For Investor Relations:
Lauren Silvernail
949-788-5302
lsilvernail @istavision.com
Jeanie Herbert
949-789-3159
jherbert @istavision.com
Juliane Snowden
Burns McClellan
212-213-0006
jsnowden @burnsmc.com
For General Media:
Justin Jackson
Burns McClellan
212-213-0006
jjackson @burnsmc.com
For Trade Media:
Tad Heitmann
BioComm Network
714-273-2937
theitmann@BioCommNetwork.com
Web Site: http://www.istavision.com
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