Kos Pharmaceuticals, Inc. (Nasdaq: KOSP): Second Quarter 2006
Financial Highlights+ -- Revenue increased 25% to a record $223.7
million -- Net income excluding one-time events was $28.9 million
or $0.59 per share; including one-time events, net income was $13.9
million, or $0.28 per share -- Generated approximately $20.6
million in cash from operations; total cash and marketable
securities balance increased to $482.8 million Recent Operational
Highlights -- Announced positive results from a study confirming
the benefits of combining aspirin with maximum dose optimized
Niaspan(R) CF; sNDA for Niaspan CF products submitted in June 2006
-- Announced strategic license agreement with a subsidiary of
SkyePharma PLC, for the US rights to Flutiform(TM) for the
treatment of adult asthma and COPD -- Advicor(R)1000/40 approved
and launched in July 2006 -- Phase III trials for Icatibant and
Simcor(R) completed enrollment; preliminary data expected in the
third and fourth quarter, respectively + Attached is a
reconciliation of GAAP to Non-GAAP calculations. Kos
Pharmaceuticals, Inc. (Nasdaq: KOSP) today announced financial
results for the second quarter ended June 30, 2006. For the second
quarter of 2006, revenue increased almost 25% to a record $223.7
million, up from $179.4 million for the second quarter of 2005.
Revenue during the quarter was negatively impacted by approximately
$4 million as a result of reductions in wholesaler inventories
pursuant to inventory management agreements. As of the end of the
quarter, inventories held by the company's three largest
wholesalers were at or below the levels provided for in the
inventory management agreements. Adjusted to exclude one-time
events, which included the impact of the Flutiform(TM) transaction
and certain other one-time items, net income for the second quarter
was $28.9 million, or $0.59 per share, as compared to net income
and earnings per share of $25.9 million and $0.55 (as adjusted for
certain one-time items and on a pro forma basis to reflect the
accounting expense associated with share-based compensation),
during the comparable 2005 quarter. Including one-time events, net
income for the second quarter of 2006 was $13.9 million or $0.28
per share, compared to net income of $28.9 million or $0.61 for the
2005 period. Kos generated approximately $20.6 million in cash from
operations in the second quarter of 2006, which represented the
16th consecutive quarter of cash generation. As of June 30, 2006,
the Company had $482.8 million in cash and marketable securities.
Revenue for the Company's cholesterol franchise increased 22%
during the second quarter of 2006 to $165.9 million, as compared to
$136.2 million reported during the same period in 2005. Niaspan(R)
revenue in the second quarter increased 24% to $131.0 million as
compared to $105.9 million during the same period one year ago.
Advicor(R) revenue increased 16% to $34.9 million during the
quarter as compared to $30.2 million during the second quarter of
2005. The cholesterol franchise realized a 4% increase in total
prescriptions and a 5.4% increase in unit volume versus the first
six months of 2005. Second quarter 2006 revenues for Kos'
hypertension portfolio, comprised of Teveten(R), Teveten(R) HCT and
Cardizem(R) LA totaled $31.3 million. Revenue from the Teveten
products totaled $5.5 million, and Cardizem LA revenues totaled
$25.8 million. Azmacort(R) second quarter 2006 revenues were $26.5
million, an increase of 12% as compared to $23.7 million reported
during the second quarter of 2005. Total Azmacort prescriptions
declined 13% versus the second quarter of 2005 in the overall
market. However, Azmacort prescriptions increased among Kos' target
physicians. "We are pleased to report, yet again, solid financial
results and continued strong execution in all areas of our
business," said Adrian Adams, President and Chief Executive
Officer. "Our financial momentum has resulted in the generation of
$197 million in cash from operations since the end of the second
quarter of 2005, almost doubling our cash position in the past 12
months. This strong cash flow generation has allowed us to build
our pipeline, make additional measured investments in R&D and
fund successful corporate development initiatives. These
initiatives have positioned the Company well to meet our short,
medium and long-term goals." He continued, "In addition, excellent
progress is being made toward many of the milestones set for this
transition year, particularly in R&D. We believe that we are on
track to achieve our goal of launching two new products and filing
a New Drug Application for our Niaspan/simvastatin product,
Simcor(R), in 2007." The Company also announced updates on the
status of the Phase III Niaspan/lovastatin Intermittent
Claudication Proof of Principle (ICPOP) study and on the future of
the co-promotion agreement with Takeda Pharmaceuticals North
America, Inc. The Company recently notified Takeda that, in view of
the Company's decision to increase the size of its sales force in
order to fully maximize commercial opportunities in 2007, it does
not intend to extend the co-promotion arrangement, which expires on
December 31, 2006. Finally, the Company has also decided, based on
inconclusive overall results from the ICPOP study, to discontinue
its development of Niaspan/lovastatin for the indication of
Peripheral Arterial Disease (PAD), and devote its resources to
other research projects with higher productivity potential.
Following the end of the second quarter of 2006, the Company
commenced an internal review of its historical stock option grants
and the accounting for such awards. Following the commencement of
this internal review, the Company received an informal inquiry from
the Securities and Exchange Commission relating to stock option
grants and exercises. The Company intends to fully cooperate with
this informal inquiry. Based on its review to date, which has not
yet been completed, the Company believes that certain stock option
grants were accounted for using incorrect measurement dates. The
review has not found any pattern or practice of inappropriately
identifying grant dates with hindsight to provide officers and
directors with in-the-money grants. The Company expects that its
audited consolidated financial statements for its fiscal years
ended December 31, 2005 through 2001 and for the quarter ended
March 31, 2006, will need to be restated and should not be relied
upon. Although the review is ongoing, the Company has preliminarily
determined that it will record cumulative prior period non-cash
stock-based compensation expense in amounts that are not presently
anticipated to exceed approximately $10 million in the aggregate
after taxes. Any further changes to the Company's accounting for
stock option grants may result in changes to the Company's reported
financial results, including its net income and earnings per share
reported in this press release for the three months ended June 30,
2006. Any subsequent findings arising out of the Company's internal
review or the review being performed by the Securities and Exchange
Commission may materially affect the Company's results of
operations. Kos' senior management will host a conference call
today at 8:30 a.m. ET to discuss the Company's quarterly results.
The conference call will be available live via the Internet by
accessing Kos' website at www.kospharm.com. Please go to the
website at least fifteen minutes prior to the call to register,
download and install any necessary audio software. Those who cannot
access the webcast can participate via telephone by calling
913-981-4911, confirmation code 6754547. A replay will also be
available on the website at www.kospharm.com or by calling
888-203-1112 domestic or international, and entering 6754547 from
2:00 p.m. ET today until 12:00 a.m. ET on Tuesday, August 15, 2006.
Financial information to be discussed during the conference call is
located on Kos' website in the Investor Relations section. Kos
Pharmaceuticals, Inc. is a fully integrated specialty
pharmaceutical company engaged in developing, commercializing,
manufacturing and marketing proprietary prescription products for
the treatment of chronic diseases with a particular focus on the
cardiovascular, metabolic and respiratory disease areas. The
Company's principal product development strategy is to reformulate
existing pharmaceutical products with large market potential to
improve safety, efficacy, and patient compliance. Kos' strategy
also includes making measured investments in new chemical entity
research through in-house and sponsored research, scientific
in-licensing and general corporate development activities. The
Company currently markets Niaspan, Advicor, Azmacort, Cardizem LA,
Teveten and Teveten HCT. Kos has a strong and growing research and
development pipeline including proprietary drug delivery
technologies in solid-dose, inhalation and aerosol metered-dose
device administration to help fuel sustained, organic sales growth
into the future. Certain statements in this press release,
including statements regarding the Company's ability to generate
enhanced revenue and earnings, continue to grow sales of Niaspan,
Advicor, Azmacort, Cardizem LA, Teveten and Teveten HCT, the
Company's belief that wholesaler inventories are now at or below
levels provided in the inventory management agreements, the
Company's ability to make continued investments in research and
development, to aggressively pursue corporate development
activities, to continue excellent growth momentum in the short,
medium and long-term, the Company's expectation to receive
preliminary data in the third and fourth quarter for the Phase III
trials for Icatibant and Simcor, respectively, the Company's
expectations regarding the launch dates for two new products and
filing a New Drug Application for Simcor in 2007, the Company's
anticipated hiring of additional sales representatives and the cost
associated therewith, and the Company's expectations regarding the
duration and outcome of its internal investigation, and the SEC's
informal inquiry regarding stock option grants, are forward-looking
and are subject to risks and uncertainties which may cause actual
results to differ materially from those projected in a
forward-looking statement. These risks and uncertainties include,
the Company's ability to grow revenue and control expenses, the
protection afforded by the Company's patents and those related to
the acquired and licensed products, the ability to build awareness
for Niaspan, Advicor, Azmacort, Cardizem LA, Teveten and Teveten
HCT within the medical community, the continued success of the
alliances with Merck KGaA, Oryx, Arisaph, Barr, Biovail, SkyePharma
and Jerini, the continuing growth of the cardiovascular and
respiratory markets, the Company's ability to maintain its
compliance with FDA regulations and standards without adversely
affecting the Company's manufacturing capability or ability to meet
its production requirements or profit margins, the Company's
ability to increase the size of its sales force and to attract and
retain sales professionals, and, ensure compliance with
prescription drug sales and marketing laws and regulations, changes
in the regulatory environment governing the Company's compliance
with the FDA, PTO, tax and competition issues, the impact of a
possible generic version of the Cardizem LA product or other
products sold by the Company, the ability of third party suppliers
to the Company continuing to be able to perform their supply
obligations, the Company's ability to achieve regulatory approvals
for its products under development in a timely manner, such as the
modified formulation of Niaspan, Simcor and others, the Company's
ability to establish a footprint and generate sales in the
hypertension and angina markets, the Company's ability to
successfully negotiate additional important strategic business
development opportunities, the progress of the Company's research
and development pipeline, fluctuating buying patterns by the
Company's wholesalers and distributors, the adequacy of the
Company's reserves for income taxes, the Company's ability to
maintain coverage of its products by government agencies and the
effects of the loss of such coverage with such agencies, such as
the Centers for Medicare and Medicaid Services, the effect of
conditions in the pharmaceutical industry and the economy in
general, the timing of the completion of the Company's internal
review of its historical stock option grant practices and related
accounting, the types of problems with the Company's historical
stock option grant practices and accounting identified by the
Company as a result of its internal review to date, the timing of
completion of the Company's internal review, restatement and filing
of its amended historical financial statements, the possibility
that accounting treatment for the Company's historical stock option
grant practices and related accounting will be different than that
currently anticipated by the Company, the possibility that the
Company's internal investigation or any investigation conducted by
the Securities and Exchange Commission may reveal issues that the
Company does not currently realize exist, the possibility that the
Company may not be able to file its Quarterly Report on Form 10-Q
for the fiscal quarter ended June 30, 2006 within the time frame
prescribed by the Securities and Exchange Commission, the effect of
any third party litigation arising out of the Company's
investigation of its historical stock option grant practices and
related accounting and the costs incurred by the Company in
connection with such investigation and the SEC investigation, as
well as certain other risks. A more detailed discussion of risks
attendant to the forward-looking statements included in this press
release are set forth in the "Forward-Looking Information: Certain
Cautionary Statements" section of the Company's Annual Report on
Form 10-K for the year ended December 31, 2005, filed with the
Securities and Exchange Commission, and in other reports filed with
the SEC. All information in this press release is as of August 8,
2006 and the Company undertakes no duty to update this information.
- Table to follow - -0- *T Kos Pharmaceuticals, Inc. and
Subsidiaries SELECTED FINANCIAL INFORMATION Three Months Ended June
30, ----------------------- 2006 2005 --------- ---------
(unaudited) Condensed Consolidated Statement of Operations (in
thousands, except per share data) Revenues $223,680 $179,399 Cost
of Sales 25,788 19,057 --------- --------- 197,892 160,342
--------- --------- Operating Expenses: Research and development
59,602 (I) 31,479 Selling, general and administrative 123,452
88,681 --------- --------- Total operating expenses 183,054 120,160
--------- --------- Income from Operations 14,838 40,182 Interest
and Other Income (4,745) (1,039) Provision for Income Taxes 5,698
12,308 --------- --------- Net Income $13,885 $28,913 =========
========= Net Income per Share: Basic 0.29 0.70 Diluted 0.28 (II)
0.61 (II) Shares Used in Computing Net Income per Share: Basic
47,294 41,205 Diluted 49,358 47,911 Three Months Ended June 30,
-------------------------------------- 2006 2005 ------------------
------------------ Diluted Diluted Amount Per Share Amount Per
Share -------- --------- -------- --------- (unaudited) (unaudited)
Reconciliation of Reported Net Income to Adjusted Net Income (in
thousands, except per share data) Net Income, as reported $13,885
$0.28 $28,913 $0.61 Adjustments to Reported Net Income: SkyePharma
licensing fee 15,500 0.32 - - Reduction in wholesaler inventories
due to IMAs 2,480 0.05 - - Share-based compensation expense under
employee - - incentive plans - - (7,219) (0.15) Correction of error
relative to stock option accounting under APB 25 578 0.01 - -
One-time income tax benefit (3,504) (0.07) - - Write-off of
investment in Arisaph - - 2,500 0.05 Biovail transaction - - 1,750
0.04 -------- --------- -------- --------- Net Income, as adjusted
$28,939 $0.59 $25,944 $0.55 ======== ========= ======== =========
June 30, December 31, 2006 2005 ------------ ------------ Condensed
Consolidated Balance Sheet (unaudited) (in thousands) Cash and Cash
Equivalents $480,111 $412,736 Marketable Securities 2,711 -
Accounts Receivable, net 104,464 111,652 Deferred Tax Asset,
current 37,897 36,775 Other Current Assets 42,267 41,303 Fixed
Assets, net of depreciation 38,036 28,745 Deferred Tax Asset,
non-current 46,221 29,490 Intangible Assets 215,355 230,830 Other
Assets 24,824 18,223 ------------ ------------ Total assets
$991,886 $909,754 ============ ============ Current Liabilities
$209,003 $210,273 Other Long-Term Liabilities 48,519 (III) 21,122
Shareholders' Equity 734,364 678,359 ------------ ------------
Total liabilities and shareholders' equity $991,886 $909,754
============ ============ Notes: (I) Includes a $25-million
licensing fee associated with the SkyePharma agreement. (II)
Calculation of fully diluted EPS reflects net income excluding
$171,000 and $262,000 in interest expense for the quarters ended
June 30, 2006 and 2005, respectively. (III) Includes $30 million of
debt due to Michael Jaharis, Chairman Emeritus of the Company's
Board of Directors, which matures on June 30, 2008. *T
Kos (NASDAQ:KOSP)
Historical Stock Chart
Von Mai 2024 bis Jun 2024
Kos (NASDAQ:KOSP)
Historical Stock Chart
Von Jun 2023 bis Jun 2024