Nice Q for KOSP:
>>MIAMI, Nov. 7 /PRNewswire-FirstCall/ -- Kos Pharmaceuticals, Inc. (Nasdaq: KOSP - News) today announced financial results for the third quarter and nine months ended September 30, 2002.
For the third quarter of 2002, revenue increased 76% to a record $45.5 million, up from $25.9 million for the third quarter of 2001. Revenue for the nine months ended September 30, 2002, was $117.7 million, an 89% increase from revenue of $62.2 million in the same period in 2001. The significant increase in revenue reflected continued strong prescription growth of both Niaspan® and Advicor(TM). As a result of the robust growth of Kos' cholesterol franchise, the Company expects full year 2002 revenue to increase at least 85% from 2001.
The Company reported $732,000 in operating income for the third quarter of 2002, and a net loss of $347,000 or $0.02 per share. The period's operating profit and net loss compared with a $7.7 million operating loss and a net loss of $9.2 million, or $0.45 per share, for the same period in 2001. The net loss for the first nine months of 2002 was $26.9 million, or $1.31 per share, compared with a net loss of $28.8 million, or $1.43 per share, for the same period a year ago. The significant improvement in operating results for the quarter was principally attributable to the better than expected growth of Niaspan and Advicor and continued control of operating expenses at the Company. Such record operating results represent the first time in Kos' history that the Company recorded an operating profit, which occurred one year ahead of expectations.
The Company also generated $7.2 million in cash in the third quarter of 2002, attributable mostly to advance payments from customers as a result of "forward buying" by wholesalers. As of September 30, 2002, the Company had approximately $50 million of cash and available credit, of which $6.9 million was cash.
Sales of Niaspan in the third quarter of 2002 grew 60% from the third quarter of 2001, and accounted for $38.1 million of revenue, while Advicor sales accounted for $7.4 million of revenue, an increase of more than 50% from the previous quarter. More than 904,000 total prescriptions were written for Niaspan in the quarter, and prescriptions for Niaspan continue to grow more than five times faster than prescriptions in the overall cholesterol market. More than 114,000 total prescriptions were written for Advicor during the quarter. Kos' two cholesterol drugs have now captured a 3.62% market share of new prescriptions in the overall cholesterol market.
"We set very aggressive strategic goals for the year, and we continue to meet or surpass those goals," said Adrian Adams, President and Chief Executive Officer. "We reached operating profitability ahead of schedule principally because of the exceptional growth of our cholesterol franchise, particularly Niaspan. Additionally, we submitted an application to market Advicor in Europe, filed three sNDAs for enhanced labeling for Niaspan, and announced the results of two significant trials, ADVOCATE and ADVENT. We established an international commercialization alliance with Merck KGaA to market both our products outside North America and Japan. Finally, we generated cash from operations, leaving us with more than adequate cash and available credit to carry out our strategic business plan and fuel the future growth of the Company."
Kos now expects full year revenue to increase approximately 85% from 2001, up from the 75% guidance previously communicated with Kos' second quarter financial results on August 6, 2002. The increased revenue guidance is principally attributable to the strong growth of both Niaspan and Advicor, with Niaspan sales appearing to benefit from the heightened awareness to utilize combination therapy to treat multiple lipid disorders. Additionally, Kos expects expenses in the fourth quarter to be about 10% higher than third quarter expenses, principally due to the timing of certain marketing initiatives, including programs at the American Heart Association. The Company expects to record net income for the fourth quarter of 2002 and expects a loss of $1.20 to $1.30 per share for the full year 2002.
For 2003, the Company projects that revenue will increase about 55% and that operating expenses will increase approximately 30% from 2002 levels. The Company is improving its outlook on profitability in 2003 and anticipates that it will be profitable on a full year basis, notwithstanding the additional investments the Company plans to make in sales force expansion and research and development. Such investments, to begin in January, 2003, include expanding the sales force to 600 representatives, and progressing the development of three NDA products. Consequently, the Company expects a loss for the first two quarters of the year.
In connection with the $30 million credit facility established in 1998 and set to mature on December 31, 2002, the Company and Mr. Jaharis have agreed in principle on the terms of a replacement of the $30 million credit facility with a standby facility of an equal amount that will be available to the Company until June 30, 2008. The terms of the refinancing include a grant of non-detachable warrants to purchase up to 1,000,000 shares of the Company's Common Stock at its market price whenever the first draw may occur.
Kos' senior management will host a conference call at 10:30 a.m. ET to discuss the Company's quarterly results. There will be slides associated with our conference call remarks and press release, available on our Q3 2002 webcast. The conference call will be available live via the Internet by accessing Kos' website at kospharm.com. Please go to the website at least fifteen minutes prior to the call to register, download and install any necessary audio software. For those who cannot access the web cast, you can dial into the conference call at (719) 457-2641 and enter the confirmation code 476886. A replay will also be available on the website at kospharm.com or by calling (719) 457-0820, and entering 476886 from 1:30 p.m. ET until 12:00 midnight ET on Friday, November 8, 2002.
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. The Company's principal product development strategy is to reformulate existing pharmaceutical products with large market potential to improve safety, efficacy, or patient compliance. The Company currently markets Niaspan and Advicor for the treatment of cholesterol disorders. Kos is developing additional products and has proprietary drug delivery technologies in solid-dose and aerosol metered-dose inhalation administration.
Certain statements in this press release, including statements regarding the Company's expected amount of increase in revenues in 2002, the sufficiency of the Company's cash and available credit, the Company's expectations regarding its ability to limit increases in expenses, the Company's expectations regarding its expected loss per share in 2002, its expectation regarding its profitability in the fourth quarter of 2002, its expectation regarding its revenue, expenses and profitability in 2003 are forward-looking and are subject to risks and uncertainties. These risks and uncertainties include the market acceptance of the Advicor product, the expected continued growth in sales of the Niaspan and Advicor products, the ability of Kos to build awareness for Advicor within the medical community, the ability of the Company to generate increasing sales of Advicor without diminishing the sales of Niaspan, the Company's ability to attract and retain sales professionals, the Company's ability to grow revenue and control expenses, the Company's ability to meet the conditions necessary to obtain funding under its funding arrangements, its ability to replace its existing $30 million credit facility with the standby facility, the protection afforded by the Company's patents and the results of pending patent litigation against the Company, the effect of conditions in the pharmaceutical industry and the economy in general, 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 period ended December 31, 2001, filed with the Securities and Exchange Commission, and in other reports filed with the SEC.
Kos Pharmaceuticals, Inc. and Subsidiary
SELECTED FINANCIAL INFORMATION
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
(unaudited) (unaudited)
Condensed Consolidated
Statement of Operations
(in thousands, except per share data)
Revenues $45,536 * $25,877 $117,677 * $62,151
Cost of Sales 4,445 1,955 11,594 5,357
41,091 23,922 106,083 56,794
Operating Expenses:
Research and development 9,765 8,621 33,756 22,551
Selling, general and
administrative 30,594 23,001 96,234 58,497
Total operating expenses 40,359 31,622 129,990 81,048
Income (Loss) from Operations 732 (7,700) (23,907) (24,254)
Interest Expense, net 1,079 1,497 2,998 4,551
Net Loss $(347) $(9,197) $(26,905) $(28,805)
Net Loss per Share,
basic and diluted $(0.02) $(0.45) $(1.31) $(1.43)
Shares Used in Computing Net
Loss per Share 20,626 20,341 20,577 20,099
September 30, December 31,
2002 2001
Condensed Consolidated Balance Sheet (unaudited)
(in thousands)
Cash and Cash Equivalents $6,924 $45,319
Accounts Receivable, net 18,790 12,441
Other Current Assets 8,038 15,698
Fixed Assets, net of depreciation 11,812 6,879
Other Assets 1,418 2,604
Total assets $46,982 $82,941
Current Liabilities $41,032 $46,298
Long-term Debt 87,039 95,082
Shareholders' Deficit (81,089) (58,439)
Total liabilities and
shareholders' deficit $46,982 $82,941
* Revenue for the quarter and nine months ended September 30, 2002,
excludes $11.7 million of Niaspan and Advicor net sales, which
resulted from excessive wholesaler inventory accumulation due to
wholesalers' "forward buy-in" practices. In determining the level of
recognized revenue, the Company utilizes various data to establish
"normal" wholesaler inventory levels. These data established 1.9 months
of inventory as "normal" for Niaspan for the September 2002 quarter, an
increase from the second quarter of 2002, but consistent with inventory
levels for Niaspan for periods prior to June 30, 2002. The effect of
such change in the wholesaler inventory calculation resulted in the
Company recognizing $3.2 million more Niaspan net revenue than if it
utilized the lower inventory value, while still not recognizing
$11.7 million in total net sales.<<
Cheers, Tuck |
