AMRIX Growing Rapidly
TREANDA Successfully Launched in April
FRAZER, Pa., May 1 /PRNewswire-FirstCall/ -- Cephalon, Inc. (Nasdaq:
CEPH) today reported first quarter 2008 sales of $433.9 million, compared
to sales of $423.9 million for the first quarter 2007 and the company's
sales guidance of $435 - $445 million. Basic income per common share for
the quarter was $0.57. Excluding amortization expense and certain other
items, basic adjusted income per common share for the quarter was $1.12,
compared to $1.45 for the same period in 2007 and the company's earnings
guidance range of $1.00 to $1.10.
Central nervous system (CNS) franchise sales were $226.7 million during
the quarter, a 4 percent increase compared to the same period last year.
Pain franchise reported strong sales of $125.7 million, a decrease of only
4 percent versus 2007, with sales of AMRIX(R) (cyclobenzaprine
hydrochloride extended-release capsules) and FENTORA(R) (fentanyl buccal
tablet) [C-II] largely offsetting the continued generic erosion of ACTIQ(R)
(oral transmucosal fentanyl citrate) [C-II]. Oncology franchise sales were
$27.5 million and do not include sales of TREANDA(R) (bendamustine
hydrochloride), which was launched in April.
"We are receiving overwhelmingly positive feedback from the TREANDA
launch," said Frank Baldino, Jr., Ph.D., Chairman and CEO. "In addition,
prescriptions for AMRIX doubled compared to last quarter as acceptance of
this product in the market continues to grow. These two products will
continue to drive Cephalon sales growth."
The company is updating its guidance for 2008. Total sales guidance is
$1.83-$1.88 billion. This includes CNS franchise sales of $975-$1,000
million, pain franchise sales of $500-$525 million, oncology franchise
sales of $125- $150 million, and other product sales of $200-$225 million.
Full year SG&A and R&D guidance is $740-$760 million and $340-$360 million,
respectively. Adjusted net income guidance is $346-$353 million and basic
adjusted income per common share guidance is $5.10-$5.20.
For the second quarter of 2008, Cephalon is introducing sales guidance
of $455-$465 million, adjusted net income guidance of $74.6-$81.4 million
and basic adjusted income per common share guidance of $1.10-$1.20.
Basic adjusted income per common share guidance for both the second
quarter 2008 and full-year 2008 is reconciled below and is subject to the
assumptions set forth therein.
Cephalon's management will discuss the company's second quarter 2008
performance in a conference call with investors beginning at 5:00 p.m. U.S.
EDT today. To participate in the conference call, dial +1-913-981-5581 and
refer to conference code number 7561641. Investors can listen to the call
live by logging on to the company's website at http://www.cephalon.com and
clicking on "Investor Information," then "Webcast." The conference call
will be archived and available to investors for one week after the call.
About Cephalon, Inc.
Founded in 1987, Cephalon, Inc. is an international biopharmaceutical
company dedicated to the discovery, development and marketing of innovative
products in four core therapeutic areas: central nervous system, pain,
oncology and addiction. A member of the Fortune 1000, Cephalon currently
employs close to 3,000 people in the United States and Europe. U.S. sites
include the company's headquarters in Frazer, Pennsylvania, and offices,
laboratories or manufacturing facilities in West Chester, Pennsylvania,
Salt Lake City, Utah, and suburban Minneapolis, Minnesota. Cephalon's
European headquarters are located in Maisons-Alfort, France.
The company's proprietary products in the United States include:
PROVIGIL(R) (modafinil) Tablets [C-IV], FENTORA, TRISENOX(R) (arsenic
trioxide), AMRIX, TREANDA, VIVITROL(R) (naltrexone for extended-release
injectable suspension), GABITRIL(R) (tiagabine hydrochloride), and ACTIQ.
The company also markets numerous products internationally. Full
prescribing information on its U.S. products is available at
http://www.cephalon.com or by calling 1-800-896-5855.
In addition to historical facts or statements of current condition,
this press release may contain forward-looking statements. Forward-looking
statements provide Cephalon's current expectations or forecasts of future
events. These may include statements regarding anticipated scientific
progress on its research programs; development of potential pharmaceutical
products; interpretation of clinical results; prospects for regulatory
approval; manufacturing development and capabilities; market prospects for
its products, including the growth and acceptance of AMRIX in the market
and the relative success of the recent launch of Treanda; sales, adjusted
net income and basic adjusted income per common share guidance for the
second quarter and full-year 2008 and SG&A and R&D guidance for the
full-year 2008; and other statements regarding matters that are not
historical facts. You may identify some of these forward-looking statements
by the use of words in the statements such as "anticipate," "estimate,"
"expect," "project," "intend," "plan," "believe" or other words and terms
of similar meaning. Cephalon's performance and financial results could
differ materially from those reflected in these forward-looking statements
due to general financial, economic, regulatory and political conditions
affecting the biotechnology and pharmaceutical industries as well as more
specific risks and uncertainties facing Cephalon such as those set forth in
its reports on Form 8-K, 10-Q and 10-K filed with the U.S. Securities and
Exchange Commission. Given these risks and uncertainties, any or all of
these forward-looking statements may prove to be incorrect. Therefore, you
should not rely on any such factors or forward-looking statements.
Furthermore, Cephalon does not intend to update publicly any
forward-looking statement, except as required by law. The Private
Securities Litigation Reform Act of 1995 permits this discussion.
This press release and/or the financial results attached to this press
release include "Adjusted Net Income," "Basic Adjusted Income per Common
Share," "Adjusted Net Income Guidance," "Basic Adjusted Income per Common
Share Guidance," and "Diluted Adjusted Income Per Common Share," amounts
that are considered "non-GAAP financial measures" under SEC rules. As
required, we have provided reconciliations of these measures. Additional
required information is located in the Form 8-K furnished to the SEC in
connection with this press release.
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
2008 2007
REVENUES:
Sales $433,897 $423,879
Other revenues 9,322 13,155
443,219 437,034
COSTS AND EXPENSES:
Cost of sales 89,916 86,546
Research and development 81,435 83,958
Selling, general and administrative 198,984 152,454
Restructuring charges 3,911 -
Acquired in-process research and development 10,000 -
384,246 322,958
INCOME FROM OPERATIONS 58,973 114,076
OTHER INCOME (EXPENSE):
Interest income 6,601 6,576
Interest expense (8,994) (4,595)
Other income, net 5,315 2,756
2,922 4,737
INCOME BEFORE INCOME TAXES 61,895 118,813
INCOME TAX EXPENSE 23,044 43,628
NET INCOME $38,851 $75,185
BASIC INCOME PER COMMON SHARE $0.57 $1.14
DILUTED INCOME PER COMMON SHARE $0.52 $0.99
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 67,665 65,806
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING-ASSUMING DILUTION 74,286 75,835
CEPHALON, INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Income to Adjusted Net Income
(Unaudited)
Three Months Ended
March 31,
2008 2007
GAAP NET INCOME $38,851 $75,185
Cost of sales adjustments 27,888 (1) 20,965 (1)
Research and development adjustments 7,754 (2) 10,000 (2)
Selling, general and administrative
adjustments 2,955 (3) -
In-process research and development
adjustments 10,000 (4) -
Restructuring adjustments 3,911 (5) -
Interest expense adjustment 3,750 (6) -
Income tax adjustment (19,515)(7) (10,982)(7)
36,743 19,983
ADJUSTED NET INCOME $75,594 $95,168
BASIC ADJUSTED INCOME PER COMMON SHARE $1.12 $1.45
DILUTED ADJUSTED INCOME PER COMMON SHARE $1.02 $1.25
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 67,665 65,806
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING-ASSUMING DILUTION 74,286 75,835
Notes to Reconciliation of GAAP Net Income to Adjusted Net Income
(1) To exclude the on-going amortization of acquired intangible assets
($26.2M in 2008; $21.0M in 2007) and accelerated depreciation related
to restructuring ($1.7M in 2008).
(2) To exclude charges related to payment for research and development
collaboration, as well as other charges ($1.8M) related to severance
in 2008.
(3) To exclude charges related to employee severance costs.
(4) To exclude charges related to the acquisition of the licensed
technology in the oncology field.
(5) To exclude costs related to CIMA restructuring.
(6) To exclude an estimate of accrued interest related to the agreement in
principle reached with U.S. Attorney's Office in Philadelphia.
(7) To reflect the tax effect of pre-tax adjustments at the applicable tax
rates and certain other tax adjustments primarily related to changes
in valuation allowances and other changes in tax assets and
liabilities.
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED SALES DETAIL
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2008 2007
United United
States Europe Total States Europe Total
Sales:
PROVIGIL $198,469 $14,766 $213,235 $188,727 $12,562 $201,289
GABITRIL 11,131 2,293 13,424 13,884 2,336 16,220
CNS 209,600 17,059 226,659 202,611 14,898 217,509
ACTIQ 37,517 12,203 49,720 57,157 8,571 65,728
Generic OTFC 27,318 - 27,318 34,020 - 34,020
FENTORA 38,933 - 38,933 31,690 - 31,690
AMRIX 9,768 - 9,768 - - -
Pain 113,536 12,203 125,739 122,867 8,571 131,438
Oncology 5,188 22,270 27,458 3,991 19,290 23,281
Other 13,527 40,514 54,041 13,181 38,470 51,651
$341,851 $92,046 $433,897 $342,650 $81,229 $423,879
%
Increase
(Decrease)
United
States Europe Total
Sales:
PROVIGIL 5% 18% 6%
GABITRIL (20%) (2%) (17%)
CNS 3% 15% 4%
ACTIQ (34%) 42% (24%)
Generic OTFC (20%) 0% (20%)
FENTORA 23% 0% 23%
AMRIX 100% 0% 100%
Pain (8%) 42% (4%)
Oncology 30% 15% 18%
Other 3% 5% 5%
(0%) 13% 2%
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
March 31, December 31,
2008 2007
CURRENT ASSETS:
Cash and cash equivalents $855,846 $818,669
Investments - 7,596
Receivables, net 295,035 276,776
Inventory, net 117,726 99,098
Deferred tax assets, net 150,456 176,619
Other current assets 41,828 43,267
Total current assets 1,460,891 1,422,025
PROPERTY AND EQUIPMENT, net 509,933 500,396
GOODWILL 486,865 476,515
INTANGIBLE ASSETS, net 822,342 817,828
DEFERRED TAX ASSETS, net 172,162 141,752
OTHER ASSETS 155,227 147,753
$3,607,420 $3,506,269
CURRENT LIABILITIES:
Current portion of long-term debt $1,037,163 $1,237,169
Accounts payable 94,547 91,437
Accrued expenses 665,746 677,184
Total current liabilities 1,797,456 2,005,790
LONG-TERM DEBT 203,317 3,788
DEFERRED TAX LIABILITIES, net 75,860 56,540
OTHER LIABILITIES 143,020 138,084
Total liabilities 2,219,653 2,204,202
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value 701 700
Additional paid-in capital 1,951,294 1,934,965
Treasury stock, at cost (158,197) (158,173)
Accumulated deficit (585,277) (624,128)
Accumulated other comprehensive income 179,246 148,703
Total stockholders' equity 1,387,767 1,302,067
$3,607,420 $3,506,269
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $38,851 $75,185
Adjustments to reconcile net income
to net cash provided by operating
activities:
Deferred income tax expense 6,141 11,629
Shortfall tax benefits from stock-based
compensation - (83)
Depreciation and amortization 41,577 30,592
Amortization of debt issuance costs 60 60
Stock-based compensation expense 10,950 11,699
Loss on disposals of property and
equipment 252 -
Changes in operating assets and
liabilities:
Receivables (11,126) (36,850)
Inventory (9,567) (14,585)
Other assets (7,961) (12,523)
Accounts payable, accrued expenses
and deferred revenues (18,572) (9,160)
Other liabilities 13,639 2,584
Net cash provided by operating
activities 64,244 58,548
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (18,295) (21,384)
Acquisition of intangible assets (25,046) -
Sales and maturities of
available-for-sale investments 7,596 18,023
Purchases of available-for-sale
investments - (4,786)
Net cash used for investing
activities (35,745) (8,147)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercises of common
stock options 5,277 17,479
Windfall tax benefits from stock-based
compensation 234 1,431
Acquisition of treasury stock (24) (128)
Payments on and retirements of
long-term debt (1,029) (953)
Net cash provided by financing
activities 4,458 17,829
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS 4,220 2,688
NET INCREASE IN CASH AND CASH EQUIVALENTS 37,177 70,918
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 818,669 496,512
CASH AND CASH EQUIVALENTS, END OF PERIOD $855,846 $567,430
CEPHALON, INC. AND SUBSIDIARIES
Reconciliation of Projected GAAP Basic Income per Common Share
to Basic Adjusted Income Per Common Share Guidance
(Unaudited)
Three Months Ended Twelve Months Ended
June 30, 2008 December 31, 2008
Projected GAAP basic income
per common share $0.81 - $0.91 $3.75 - $3.85
Amortization of current intangibles $0.40 - $0.40 $1.58 - $1.58
Accelerated depreciation adjustment $0.03 - $0.03 $0.10 - $0.10
Research and development adjustments $- - $- $0.11 - $0.11
Selling, general and administrative
adjustments $- - $- $0.04 - $0.04
In-process research and development
adjustment $- - $- $0.15 - $0.15
Restructuring adjustments $0.02 - $0.02 $0.10 - $0.10
Interest expense adjustment $- - $- $0.06 - $0.06
Tax effect of pre-tax adjustments at
the applicable tax rates $(0.16)- $(0.16) $(0.79)- $(0.79)
Basic adjusted income per common share
guidance $1.10 - $1.20 $5.10 - $5.20
The company's guidance is being issued based on certain assumptions
including:
-- Entrance into the market of an additional generic version of ACTIQ in
the second half of 2008;
-- Adjusted effective tax rate of approximately 36 to 37 percent; and
-- Weighted average number of common shares outstanding of 67.8 million
shares for the three months ended June 30, 2008 and for the twelve
months ended December 31, 2008, respectively.
SOURCE Cephalon, Inc.
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Related links:
http://www.cephalon.com
http://www.prnewswire.com/comp/134563.html /
CONTACT:
Media: Sheryl Williams, +1-610-738-6493,
swilliam@cephalon.com, or Investors: Robert (Chip) Merritt,
+1-610-738-6376, cmerritt@cephalon.com, both of Cephalon, Inc.
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