On November 2, 2017 INSYS Therapeutics, Inc. (NASDAQ:INSY) (“INSYS” or “the company”) reported financial results for its third quarter ended Sept. 30, 2017 (Press release, Insys Therapeutics, NOV 2, 2017, View Source [SID1234521480]).
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OVERALL HIGHLIGHTS
Gross revenue was $48.9 million, resulting in net revenue of $30.7 million
Net revenue was unfavorably impacted by approximately $5 million due to product returns
Total R&D investment was $19.6 million
Accrued minimum liability of $150.0 million paid over five years in connection with ongoing Department of Justice (DOJ) investigation
Net loss totaled $166.3 million, which included DOJ accrual, or ($2.30) per basic and diluted share
Launched SYNDROS (dronabinol) oral solution, first and only FDA-approved liquid dronabinol, generating $0.7M of revenue in first two months
Filed New Drug Application (NDA) for novel formulation of buprenorphine as sublingual spray for management of moderate-to-severe acute pain
Completed pharmacokinetics (PK) study of proprietary intranasal naloxone spray formulation for treatment of opioid overdose
“Earlier this year, we took meaningful, strategic steps to restore trust with our key stakeholders, including patients, clinicians, regulators, and investors,” said Saeed Motahari, president and chief executive officer of INSYS Therapeutics. “The past few months have only strengthened our commitment to move forward and continue our efforts to address unmet medical needs. In the third quarter, our team soundly executed against the organization’s strategic initiatives and we made strong progress to transform and diversify our business over the long term. This included further work to stabilize our SUBSYS product through the signing of additional managed care contracts. These wins should help solidify the product’s base revenue beginning in 2018. We also continued to realize the benefits of our strong pipeline as we brought our second commercial product to market and delivered on several of our R&D commitments, including the early filing of our NDA for buprenorphine as a sublingual spray. I am pleased with our progress to date across the business and recognize there is still more to be done.”
Mr. Motahari concluded, “As part of our effort to broaden the company’s capabilities, we’ve expanded and upgraded our fully-integrated manufacturing facility in Round Rock, Texas over the last year. The expansion component of the project is complete, and the related upgrade will be finished by the end of the year. This facility will be a distinct competitive advantage for us when it is complete, as we will be one of the only companies in the United States that can manufacture synthetic cannabinoids ranging from clinical to commercial scale. Further, it will allow us to continue to pursue partnership opportunities with supportive institutions, including those in academia and the scientific community, all of whom are currently looking to further the science of cannabinoids.”
Financial & Operating Highlights
Net revenue for the third quarter of 2017 was $30.7 million, compared to $57.8 million for the third quarter of 2016. The results reflect a decline in SUBSYS prescription volumes due to ongoing softness in overall demand in the TIRF category, and was partially offset by $0.7 million in revenues from the recently launched SYNDROS product.
Gross margin was 75.6% for the third quarter of 2017, compared to 91.9% in the same period of 2016. Gross margin was negatively impacted by product returns and inventory expiration.
Sales and marketing investment was $12.8 million during the third quarter of 2017, compared to $16.7 million for the third quarter of 2016. The reduction was driven by cost management in light of lower revenue.
Research and development investment increased to $19.6 million for the third quarter of 2017, compared to $16.5 million for the same period in 2016, reflecting the company’s commitment to its robust new product pipeline including filing fees associated with our NDA for buprenorphine.
General and administrative expense decreased to $15.7 million for the third quarter of 2017 from $17.7 million for the third quarter of 2016, driven by a stock compensation charge taken in the third quarter of 2016, and a reduction in outside legal expenses.
Income tax benefit was $9.0 million for the third quarter of 2017, compared to a benefit of $0.4 million during the third quarter of 2016.
The company accrued an aggregate reserve of $150.0 million in connection with the DOJ investigation.
Net loss for the third quarter of 2017 was $166.3 million, or ($2.30) per basic and diluted share, compared to net income of $2.9 million, or $0.04 per basic and diluted share, for the third quarter of 2016.
Adjusted EBITDA loss for the third quarter of 2017 was $18.4 million, compared to Adjusted EBITDA of $12.2 million in the prior-year quarter. The reconciliation of net income to Adjusted EBITDA is included at the end of this news release.
The company had $177.2 million in cash, cash equivalents, and short-term and long-term investments; no debt; and $106.0 million in stockholders’ equity as of Sept. 30, 2017.
Webcast Information
A conference call is scheduled for 8:30 a.m. Eastern Standard Time on Nov. 2, 2017, to discuss the financial and operational results for the third quarter of fiscal year 2017. Investors, analysts and members of the media interested in listening to the live presentation are encouraged to join a webcast of the call available through the INVESTORS section of the company’s website at View Source Interested parties may also participate in the call by dialing 844-263-8304 (from inside the U.S.) or 213-358-0958 (from outside the U.S.). A replay of the conference call will be available a few hours after the event through the website’s INVESTORS section, under the NEWS & EVENTS tab for “Presentations.”