Insys Therapeutics Reports First Quarter 2014 Results
$41.6 Million in Net Revenue Marks Fifth Consecutive Quarter of Revenue Growth; Three-for-Two Stock Split Increases Shares Outstanding to 34.2 Million Shares
PHOENIX, AZ–(Marketwired – May 13, 2014) – Insys Therapeutics, Inc. (NASDAQ: INSY), today announced its financial results for the three-month period ended March 31, 2014. First quarter 2014 highlights include:
- Total net revenue increased to $41.6 million versus $11.1 million for the first quarter of 2013;
- Revenues from Subsys® (fentanyl sublingual spray) were $40.7 million, up 319% compared with first quarter 2013 sales of $9.7 million;
- Prescriptions for Subsys were strong, increasing 15.3% from Q4 2013 to Q1 2014, according to IMS data
- The Company expects Subsys net revenue in excess of $52 million in the second quarter of 2014
- Net income of $7.7 million, or $0.23 per basic and $0.21 per diluted share, compared to a net income of $143 thousand, or $0.01 per basic and diluted share, for the first quarter of 2013;
- Completed a three-for-two stock split through a stockholder dividend, thereby increasing shareholder liquidity to 34.2 million shares outstanding; and,
- Insys is on track to file one New Drug Application (NDA) and at least four Investigational New Drug (IND) applications with the Food and Drug Administration (FDA) in 2014.
“Our fifth consecutive quarter of top line growth was driven by continued market penetration of Subsys, our market-leading sublingual spray used to alleviate breakthrough pain for cancer patients. Our expanded sales and marketing efforts led to increased market share for Subsys, solidifying its position as the most prescribed transmucosal immediate-release fentanyl (TIRF) product on the market today,” said Michael L. Babich, President and Chief Executive Officer. “We continue to aggressively execute our strategy to develop our pipeline of pharmaceutical cannabinoids and other innovative products candidates with the goal of further increasing shareholder value while meeting underserved medical needs.”
First Quarter 2014 Financial Results
During the fourth quarter of 2013, we changed the timing of revenue recognition on sales of Subsys to record revenue at the time of product delivery to the wholesale pharmaceutical distributor. This change in timing of revenue recognition is customary after gaining experience for a period of time after the launch of a new product. This change impacted our revenue in the first quarter of 2014, as we are now subjected to the wholesaler ordering patterns and inventory fluctuations.
Total net revenue for the first quarter of 2014 was $41.6 million compared to $11.1 million for the first quarter of 2013, an increase of 276%. A summary of total revenue is outlined below (in millions):
|Three Months Ended
|Product sales, net|
|Dronabinol SG Capsule||0.9||1.4||(0.5||)|
|Total net revenue||$||41.6||$||11.1||$||30.5|
Gross margin was 89% for the first quarter of 2014 compared with 84% for the first quarter of 2013. The increase in gross margin was due primarily to a shift in sales mix toward Subsys, which has higher margins than Dronabinol SG Capsule.
Sales and marketing expense was $11.6 million during the first quarter of 2014, compared to $4.4 million for the first quarter of 2013. The increase was a result of higher sales compensation expenses associated with the increase in sales of Subsys and increased marketing expenses during the first quarter of 2014.
Research and development expense increased to $4.0 million for the first quarter of 2014, compared to $1.7 million for the first quarter of 2013, primarily as a result of a pipeline development investment during 2014.
General and administrative expense increased to $8.6 million for the first quarter of 2014, compared to $2.4 million for the first quarter of 2013, primarily resulting from costs incurred in connection with increased administrative infrastructure to support the growth of Subsys sales, expenses related to various legal matters, and corporate costs associated with being a public company.
Income tax expense was $5.0 million for the first quarter of 2014, reflecting an effective corporate tax rate of 39.6%. No tax expense was recognized during the three months ended March 31, 2013 due to the effects of previously recorded valuation allowances on our net deferred tax assets.
Net income for the first quarter of 2014 was $7.7 million, or $0.23 per basic and $0.21 per diluted share, compared to net income of $143 thousand, or $0.01 per basic and diluted share, for the first quarter of 2013. Non-GAAP adjusted net income for the first quarter of 2014 was $15.1 million, or $0.41 per diluted share, compared to non-GAAP adjusted net income of $1.8 million, or $0.12 per diluted share, in the prior year quarter. The reconciliation of net income to Non-GAAP adjusted net income is included at the end of this press release.
The Company had $57.2 million in cash, restricted cash, cash equivalents, and short-term and long-term investments, $19.1 million in working capital (excluding cash, cash equivalents, and short-term investments), no debt, and $97.3 million in stockholders’ equity as of March 31, 2014.
Three-for-two Stock Split
The Company completed a three-for-two stock split of its common stock through a stock dividend during the first quarter of 2014. The record date for the stock split was the close of business on March 17, 2014, with share distribution on March 28, 2014. As a result of the dividend, shareholders received one additional share of Insys Therapeutics, Inc. common stock, par value $0.0002145, for each two shares held as of the record date. Total shares outstanding increased from approximately 22.8 million to 34.2 million shares.
Insys plans to advance development of pharmaceutical Cannabidiol (CBD), a synthetically produced and over 99% pure form of cannabidiol, to treat epilepsy in children and adults. In pediatrics, Insys plans to pursue development of treatments for Lennox-Gastaut Syndrome and Dravet Syndrome, which may qualify Insys’ treatments for orphan drug status. Insys has engaged a large, international Contract Research Organization (CRO) to provide development and regulatory services for this program.
Insys management will host its fourth quarter and year end conference call as follows:
A telephone replay will be available shortly after the completion of the call for two weeks at 888-203-1112 (U.S.) or 719-457-0820 (International), passcode 5607376.
About Insys Therapeutics, Inc.
Insys Therapeutics is a specialty pharmaceutical company that develops and commercializes innovative products for supportive care of cancer and pain patients. Using its proprietary sublingual spray technology and its capability to develop pharmaceutical cannabinoids, the company addresses the clinical shortcomings of existing commercial products. The company currently markets two products, Subsys, which is sublingual Fentanyl spray for break through cancer pain, and a generic version of Dronabinol (THC) capsules. The company plans to file a New Drug Application (NDA) for an oral liquid formulation of Dronabinol in the second half of 2014 and believes it is a clinically superior product to current Dronabinol capsules. The company is developing a robust pipeline of sublingual sprays, as well as pharmaceutical CBD.
Subsys® is a registered trademark of Insys Therapeutics, Inc.