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ISTA Pharmaceuticals Reports Fourth Quarter and Full-Year 2011 Financial Results
2011 Net Revenues Increase to $160.3 Million On an Adjusted Cash Net Income Basis, ISTA Posts Second Year of Profitability Company Reaffirms 2012 Financial Guidance IRVINE, CA, Feb 23, 2012 -- ISTA Pharmaceuticals, Inc. (NASDAQ: ISTA) announced today financial results for the quarter and the year ended December 31, 2011. Fourth Quarter and Full-Year 2011 Highlights
"This was a transitional year for ISTA. Our switch from XIBROM to BROMDAY was unprecedented in our industry. In only six months we successfully converted more than 80% of the XIBROM franchise over to BROMDAY," stated Vicente Anido, Jr., Ph.D., President and Chief Executive Officer of ISTA Pharmaceuticals. "Accordingly, we were able to fend off an early entrant generic twice-daily bromfenac eye drop, approved in May, which now accounts for only 4% market share in the NSAID market. By September, we took BROMDAY to the number one market share spot as measured in prescription dollars. We also grew revenues for our allergic conjunctivitis product BEPREVE 82% over prior year. So, we've been very pleased with the progress we've made on the commercial side. As a result, we continued to generate revenue growth year over year and delivered our second full year of profitability on an adjusted cash basis. With the launch of the BROMDAY twin-pack, addition of several major managed care contracts and continued growth in BEPREVE sales, we plan to achieve revenues of at least $180 million in 2012." Continued Dr. Anido, "As for research and development, we have been highly successful in de-risking our new product pipeline. Last month the first patent application for PROLENSA was allowed and is scheduled to be issued in the first half of 2012. This week we received notification that the PROLENSA patent will not expire until September 2025. This positive patent news followed a very successful Phase 3 clinical study that showed PROLENSA to be safe and effective in treating pain and inflammation associated with cataract surgery. We plan to complete submission of the NDA for PROLENSA in the first half of 2012, and, upon approval by the FDA, we intend to accomplish another successful commercial switch before the market exclusivity for BROMDAY expires in October 2013. "We also have moved forward with our nasal spray program. In January 2012, we initiated a Phase 2 clinical study for BEPOSONE, a combination antihistamine/steroid nasal spray for the treatment of symptoms associated with seasonal allergic rhinitis. The trial is fully enrolled and we plan to report preliminary results in the first half of 2012. BEPOSONE represents a major potential expansion of our bepotastine allergy franchise, as it is anticipated to launch into a $2.5 billion nasal allergy market in 2015. And finally, in the second half of 2012, we plan to initiate Phase 3 clinical trials for T-PRED, a promising anti-infective/steroid for ocular inflammation and infection." Fourth Quarter and Year End 2011 Operating Details
Net Revenues (in millions, except percentage data) (unaudited) Three Months Ended Years Ended December 31, December 31, ------------------------- ------------------------- 2011 2010 Change 2011 2010 Change -------- -------- ------- -------- -------- ------- BROMDAY / XIBROM $ 26.5 $ 34.8 -23.9% $ 87.9 $ 105.8 -16.9% BEPREVE 6.8 5.1 33.3% 28.6 15.7 82.2% ISTALOL 7.1 7.0 1.4% 28.3 22.0 28.6% VITRASE 4.7 4.2 11.9% 15.5 13.0 19.4% -------- -------- -------- -------- Total net revenues $ 45.1 $ 51.1 -11.8% $ 160.3 $ 156.5 2.4% ======== ======== ======== ========
Gross margin for the fourth quarter and year ended December 31, 2011, was 76.3%, or $34.4 million, and 75.6%, or $121.2 million, respectively, as compared to 75.7%, or $38.7 million, and 75.0%, or $118.9 million, for the same periods in 2010. The decrease in gross profit for the fourth quarter was primarily due to lower revenues from the BROMDAY/XIBROM franchise partially offset by continued growth in revenues from our higher margin product BEPREVE. The increase in gross profit in 2011 as compared to 2010 is primarily the result of continued increased growth in prescription levels and market share, particularly for BEPREVE, our higher gross margin product, partially impacted by lower revenues from the BROMDAY/XIBROM franchise. Research and development expenses for the fourth quarter and year ended December 31, 2011, were $4.7 million and $31.6 million, respectively, as compared to $8.2 million and $25.9 million during the same periods in 2010. The decrease in the fourth quarter is primarily due to higher clinical trials costs in 2010 related to studies for dry eye and BEPOMAX (bepotastine besilate nasal spray) for seasonal allergic rhinitis along with FDA filings. The increase in 2011 as compared to 2010 was primarily the result of an increase in clinical development costs related to Phase 3 studies for PROLENSA and the dry eye program and Phase 2 studies for BEPOMAX and BEPOSONE. Selling, general, and administrative expenses for the fourth quarter and year ended December 31, 2011, were $19.6 million and $89.6 million, respectively, as compared to $22.2 million and $82.6 million for the same periods in 2010. The decrease in fourth quarter 2011 expenses is primarily due to launch costs for BROMDAY incurred in fourth quarter 2010 which were not incurred in 2011, while the increase for the full year is primarily due to expenses of $10 million of higher legal costs, professional and other fees associated with the bromfenac royalty litigation, our complaint against the FDA regarding the approval of a generic version of XIBROM, costs associated with a government investigation into marketing practices related to XIBROM, pursuing a potential acquisition of a company and costs to review our strategic options partially offset by $2.1 million of lower selling and marketing expenses primarily due to costs incurred in 2010 to launch BROMDAY and which were not incurred in 2011. Operating income for the fourth quarter and year ended December 31, 2011, was $10.1 million and $19,000, respectively, compared with operating income of $8.3 million and $10.4 million for the same periods in 2010. Other expense for the fourth quarter and year ended December 31, 2011 included non-cash valuation charges of $22.2 million and $47.1 million, respectively, compared to $14.7 million and $7.5 million for the same periods in 2010, primarily as a result of marking common stock warrants to market. Non-cash warrant valuation adjustments are driven primarily by the change in ISTA's stock price quarter over quarter. Net loss on a GAAP basis for the fourth quarter and year ended December 31, 2011, was $15.9 million, or $0.38 per share, and $56.6 million, or $1.47 per share, based on 41.5 million and 38.6 million shares outstanding, respectively, compared with a net loss of $8.4 million, or $0.25 per diluted share, and $5.3 million, or $0.16 per diluted share, for the same periods in 2010, based on 33.5 million and 33.4 million shares outstanding. Adjusted cash net income for the quarter and year ended December 31, 2011, was $11.8 million, or $0.25 per share, and $6.2 million, or $0.13 per share, based on 47.3 million diluted shares outstanding and 48.2 million shares, respectively, compared to adjusted cash net income for the quarter and year ended December 31, 2010 of $8.2 million, or $0.18 per share, and $9.9 million, or $0.23 per share, based on 44.8 million diluted shares outstanding and 43.5 million shares, respectively. As of December 31, 2011, ISTA had $71.6 million in cash, following a $21.5 million debt repayment made in August of 2011. The cash balance includes $38.3 million in reserves for royalties on BROMDAY and XIBROM and $24 million from the Company's bank line. ISTA Reaffirms 2012 Financial Outlook ISTA expects:
Before non-cash warrant valuation adjustments and other non-cash items, ISTA expects 2012 to be ISTA's third consecutive year of profitability on an adjusted cash net income basis. The second of three scheduled principal repayments on the Company's original $65 million debt facility comes due in September of 2012. The Company anticipates making the $21.5 million repayment out of cash on hand.
Conference Call
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 52781126. This conference call also will be webcast live and archived on ISTA's website at http://www.istavision.com until March 23, 2012.
ABOUT ISTA PHARMACEUTICALS BROMDAY (bromfenac ophthalmic solution) 0.09%, XIBROM (bromfenac ophthalmic solution)® 0.09%, ISTALOL® (timolol maleate ophthalmic solution) 0.5%, VITRASE® (hyaluronidase injection) Ovine, 200 USP Units/mL, BEPREVE® (bepotastine besilate ophthalmic solution) 1.5%, PROLENSA (bromfenac ophthalmic solution), BEPOMAX (bepotastine besilate nasal spray) and BEPOSONE (bepotastine besilate/steroid combination nasal spray) are trademarks of ISTA Pharmaceuticals, Inc. Full prescribing information for BROMDAY is available on ISTA Pharmaceuticals' website at http://www.istavision.com/pdf/BROMDAYPI101008.pdf Full prescribing information for BEPREVE is available on ISTA Pharmaceuticals' website at http://www.istavision.com/pdf/Bepreve_insert.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
FORWARD-LOOKING STATEMENTS
ISTA Pharmaceuticals, Inc. Statement of Operations (in thousands, except per share data) (unaudited) Three Months Ended Years Ended December 31, December 31, ------------------ ------------------ 2011 2010 2011 2010 -------- -------- -------- -------- Revenues: Product sales, net $ 45,089 $ 51,133 $160,333 $156,525 -------- -------- -------- -------- Total revenues 45,089 51,133 160,333 156,525 Cost of products sold 10,670 12,437 39,109 37,608 -------- -------- -------- -------- Gross profit 34,419 38,696 121,224 118,917 -------- -------- -------- -------- Costs and expenses: Research and development 4,714 8,150 31,628 25,929 Selling, general and administrative 19,649 22,249 89,577 82,631 -------- -------- -------- -------- Total costs and expenses 24,363 30,399 121,205 108,560 -------- -------- -------- -------- Income from operations 10,056 8,297 19 10,357 Other (expense) income: Interest expense, net (1,458) (2,082) (7,271) (7,902) (Loss) gain on derivative valuation (2,292) - (2,223) 130 Loss on warrant valuation (22,229) (14,681) (47,139) (7,522) Other 1 39 8 (363) -------- -------- -------- -------- Total other expense (25,978) (16,724) (56,625) (15,657) -------- -------- -------- -------- Net loss $(15,922) $ (8,427) $(56,606) $ (5,300) ======== ======== ======== ======== Net loss per common share, basic and diluted $ (0.38) $ (0.25) $ (1.47) $ (0.16) ======== ======== ======== ======== Shares used in computing net loss per common share, basic and diluted 41,513 33,504 38,610 33,440 ======== ======== ======== ======== ISTA Pharmaceuticals, Inc. Summary of Balance Sheet Data (in thousands) (unaudited) December 31, ------------------------ 2011 2010 ----------- ----------- Cash and cash equivalents $ 71,593 $ 78,777 Working capital 2,265 15,822 Total assets 153,091 134,240 Current portion of Facility Agreement 21,450 21,450 Facility Agreement, net of current portion and unamortized discounts and derivatives 21,975 38,706 Warrant Liability 40,130 66,185 Total liabilities 202,164 213,337 Total stockholders' deficit (49,073) (79,097)
Non-GAAP Financial Measures
ISTA Pharmaceuticals, Inc. Reconciliation of GAAP Net Loss to Adjusted Cash Net Income (in thousands, except per share data) (unaudited) Three Months Ended Years Ended December 31, December 31, ------------------ ------------------ 2011 2010 2011 2010 -------- -------- -------- -------- Net loss $(15,922) $ (8,427) $(56,606) $ (5,300) Add: Stock-based compensation costs 1,411 970 4,277 3,862 Amortization of deferred financing costs 188 268 938 1,075 Amortization of discount on Facility Agreement 501 711 2,495 2,846 Change in value of warrants related to Facility Agreement 22,229 14,681 47,139 7,522 Change in value of derivative related to Facility Agreement 2,291 - 2,223 (130) -------- -------- -------- -------- Cash net income 10,698 8,203 466 9,875 Add: Costs associated with attempted acquisition and review of strategic options 1,105 - 5,743 - -------- -------- -------- -------- Adjusted cash net income $ 11,803 $ 8,203 $ 6,209 $ 9,875 ======== ======== ======== ======== Net loss per share - basic and diluted $ (0.38) $ (0.25) $ (1.47) $ (0.16) ======== ======== ======== ======== Shares used in computing net loss per common share, basic and diluted 41,513 33,504 38,610 33,440 ======== ======== ======== ======== Adjusted cash net income per share - basic $ 0.28 $ 0.24 $ 0.16 $ 0.30 ======== ======== ======== ======== Adjusted cash net income per share - diluted $ 0.25 $ 0.18 $ 0.13 $ 0.23 ======== ======== ======== ======== Shares used in computing cash net income per common share, basic 41,513 33,504 38,610 33,440 ======== ======== ======== ======== Shares used in computing cash net income per common share, diluted 47,260 44,870 48,213 43,505 ======== ======== ======== ======== |