PERNIX THERAPEUTICS HOLDINGS, INC. (NASDAQ:PTX) Files An 8-K Results of Operations and Financial Condition

PERNIX THERAPEUTICS HOLDINGS, INC. (NASDAQ:PTX) Files An 8-K Results of Operations and Financial ConditionItem 2.02, including Exhibit 99.1, is intended to be “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

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Pernix is also disclosing that it may use its website, pernixtx.com, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Forward-Looking Statements

Certain statements in this Current Report on Form 8-K, including but not limited to statements set forth in the attached press release, may constitute forward-looking statements.  These forward-looking statements involve a number of known and unknown risks, uncertainties and other factors that may cause such forward-looking statements not to be realized and that could cause actual results to differ materially from Pernix’s expectations in these statements. For more information about other risks that could affect the forward-looking statements herein, please see Pernix’s most recent quarterly report on Form 10-Q, annual report on Form 10-K and other filings made with the Securities and Exchange Commission. Pernix expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any changes in expectations, or any change in events or circumstances on which those statements are based, unless otherwise required by law.

9.01     Financial Statements and Exhibits

(d) Exhibits.

99.1    Press Release dated May 15, 2017

EX-99.1 2 exh99-1.htm PRESS RELEASE

Exhibit 99.1

Pernix Therapeutics Reports First Quarter 2017
Financial Results and Provides Business Update

First Quarter Prescription Volumes Grew Year-Over-Year
for Zohydro ER® with BeadTek™ and Silenor®

MORRISTOWN, NJ – May 15, 2017 – Pernix Therapeutics Holdings, Inc. (NASDAQ: PTX) (“Pernix” or the “Company”), a specialty pharmaceutical company, today announced financial results for the three months ended March 31, 2017.

First Quarter 2017 Financial Highlights:

  • First quarter 2017 net revenues decreased 8.6% from the first quarter of 2016, to $29.7 million from $32.5 million in the first quarter of 2016.
  • First quarter 2017 selling, general and administrative expense decreased by 22% compared to the first quarter of 2016, to $20.3 million from $26.0 million.
  • Net loss for the first quarter of 2017 was $29.5 million, as compared to net loss of $25.9 million for the three months ended March 31, 2016.
  • First quarter 2017 adjusted EBITDA improved to approximately ($0.3 million) from ($4.5 million) in the prior year period.

Business Update

  • Solid year-over-year increases in prescription volumes for Zohydro and Silenor in the first quarter due to continued momentum and focused efforts on highest volume prescribers, while Treximet was slightly lower
    • Zohydro ER TRx up 3% year-over-year; growth rate was impacted by the 20mg backorder
    • Silenor TRx up 2% year-over-year
    • Treximet TRx down 1% year-over-year
  • Amended Wells Fargo credit facility
    • Company intends to transition to another financing source on or before July 31, 2017

“We continue to be pleased with the trajectory of our business,” said John Sedor, Chairman and Chief Executive Officer of Pernix Therapeutics. “The first quarter of 2017 was highlighted by year-over-year prescription volume increases for Zohydro ER with BeadTekTM and Silenor, the impact of which was mitigated by less favorable gross-to-nets across all three core brands. Importantly, the cost savings plan that we implemented last year contributed to a significant improvement in adjusted EBITDA in the first quarter, as compared to the prior year period. We remain focused on growing our core brands and prudent cost management.”

Financial Results

For the first quarter of 2017, net revenues were $29.7 million, a decrease of 9% from the $32.5 million in the first quarter of 2016. A summary of net revenues is outlined below (US dollars in millions):

  Three Months Ended
March 31, Increase
  2017 2016 (Decrease) Percent
Net revenues:
     Treximet $ 13.8 $ 16.3 $ (2.5) -15%
     Zohydro ER 5.2 5.5 (0.3) -5%
     Silenor 3.5 3.6 (0.1) -3%
     Other products 7.1 7.0 0.1 1%
Net product revenue 29.6 32.4 (2.8) -9%
     Co-promotion and other revenue 0.1 0.1 0.0 0%
Total net revenues $ 29.7 $ 32.5 $ (2.8) -9%

Treximet net revenues decreased by $2.5 million, or 15%, during the three months ended March 31, 2017, compared to the three months ended March 31, 2016, due to a decrease in sales volume and lower net sales price.

Zohydro ER net revenues decreased by $0.3 million, or 5%, during the three months ended March 31, 2017, compared to the three months ended March 31, 2016, due to a decrease in sales volume primarily as a result of the 20mg stock out and lower net sales price.

Silenor net revenues decreased by approximately $0.1 million, or 3%, during the three months ended March 31, 2017, compared to the three months ended March 31, 2016.  The decrease was due primarily to lower net price which was partially offset by higher sales volume.

Net product revenues – Other Products increased by $0.1 million, or approximately 1%, during the three months ended March 31, 2017, compared to the three months ended March 31, 2016.  The increase was due primarily to favorable gross-to-nets for our generic products portfolio.

Co-promotion and other revenue remained relatively flat during the three months ended March 31, 2017, as compared to the three months ended March 31, 2016.

Cost of product sales decreased by $1.2 million, or 11%, during the three months ended March 31, 2017, compared to the three months ended March 31, 2016. The decrease in cost of product sales was primarily due to a reduction in inventory obsolescence costs and lower royalty expenses based on decreased net revenues.

Selling, general and administrative expense decreased by $5.7 million, or 22%, during the three months ended March 31, 2017, compared to the three months ended March 31, 2016. The decrease was driven primarily by lower selling and marketing expenses as a result of the initiative to restructure our sales force and operations during the three months ended September 30, 2016.

Research and development expense decreased by $0.4 million during the three months ended March 31, 2017, compared to the three months ended March 31, 2016. The decrease was related to lower spend for Treximet.

Depreciation and amortization expense decreased by $5.1 million, or 22%, during the three months ended March 31, 2017, compared to the three months ended March 31, 2016. The decrease was primarily related to intangible asset impairments during the year ended December 31, 2016.

Net loss was $29.5 million for the first quarter of 2017, compared to $25.9 million in the first quarter of 2016.

Adjusted EBITDA was ($0.3 million) for the first quarter of 2017, compared to adjusted EBITDA of ($4.5 million) in the first quarter of 2016.

Liquidity

As of March 31, 2017, the Company had $22.7 million of cash.

Total principal amount of debt outstanding at March 31, 2017 was approximately $320.8 million. The total principal amount of debt consisted of approximately $176.8 million of 12% Senior Secured Notes, $130 million of 4.25% convertible notes and $14.0 million under our revolving credit facility. On February 1, 2017, we made the semi-annual principal and interest payment of $24.2 million on our 12% Senior Secured Notes per the terms of the indenture.

Further, as the Company intends to transition to another financing source on or before July 31, 2017, it has also agreed that a failure to repay all borrowings under the revolving credit facility on or before July 31, 2017 would constitute an event of default under the revolving credit facility. The Company has engaged in discussions with parties that have expressed interest in refinancing the Company’s revolving credit facility. However, there can be no assurance that these discussions will result in a transaction.

The Company continues to analyze various alternatives, including strategic and refinancing alternatives, asset sales and mergers and acquisitions.

Conference Call

As previously announced, Pernix will hold a conference call to discuss results for the first quarter:

•   Date:
•   Time:
•   Toll free (U.S.):
•   International:
•   Conference ID:
•   Webcast:
May 15, 2017
4:30 PM EDT
888-504-7953
719-457-2643
4336660
http://public.viavid.com/index.php?id=124373

The webcast of the call will be archived for 30 days via the Investors section of the Company’s website.

About Pernix Therapeutics

Pernix Therapeutics is a specialty pharmaceutical business with a focus on acquiring, developing and commercializing prescription drugs primarily for the U.S. market. The Company targets underserved therapeutic areas such as CNS, including neurology and psychiatry, and has an interest in expanding into additional specialty segments. The Company promotes its branded products to physicians through its Pernix sales force and markets its generic portfolio through its wholly owned subsidiaries, Macoven Pharmaceuticals, LLC and Cypress Pharmaceutical, Inc.

To learn more about Pernix Therapeutics, visit www.pernixtx.com.

Treximet® and Silenor® are registered trademarks of Pernix Therapeutics Holdings, Inc.
Zohydro® ER is a registered trademark of Pernix Therapeutics Holdings, Inc.
BeadTek™ is a trademark used by Pernix under license.

Non-GAAP Financial Measures

To supplement our financial results determined by GAAP, we have also disclosed in this Press Release and the table below the following non-GAAP information: adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).

Adjusted EBITDA is a non-GAAP financial measure that excludes the impact of certain items and, therefore, has not been calculated in accordance with GAAP. This non-GAAP financial measure excludes from net loss net interest, depreciation and amortization, taxes, deal expenses, share-based compensation expense, severance expenses, non-recurring litigation expenses, change in fair value of contingent consideration and derivative liabilities, foreign currency transactions and restructuring costs. In addition, from time to time in the future there may be other items that we may exclude for the purposes of our use of adjusted EBITDA; likewise, we may in the future cease to exclude items that we have historically excluded for the purpose of adjusted EBITDA.

We believe that adjusted EBITDA provides meaningful supplemental information regarding our operating results because it excludes or adjusts amounts that management and the board of directors do not consider part of core operating results or that are non-recurring when assessing the performance of the organization. We believe that inclusion of adjusted EBITDA provides consistency and comparability with past reports of financial results and provides consistency in calculations by outside analysts reviewing our results. Accordingly, we believe that adjusted EBITDA is useful to investors in allowing for greater transparency of supplemental information used by management.

We believe that this non-GAAP financial measure is helpful in understanding our past financial performance and potential future results, but there are limitations associated with the use of this non-GAAP financial measure. This non-GAAP financial measure is not prepared in accordance with GAAP, does not reflect a comprehensive system of accounting and may not be completely comparable to similarly titled measures of other companies due to potential differences in the exact method of calculation between companies. Adjustment items that are excluded from our non-GAAP financial measures can have a material impact on net earnings. As a result, this non-GAAP financial measure has limitations and should not be considered in isolation from, or as a substitute for, net loss, cash flow from operations or other measures of performance prepared in accordance with GAAP. We compensate for these limitations by using these non- GAAP financial measures as a supplement to GAAP financial measures and by reconciling the non-GAAP financial measure to its most comparable GAAP financial measure. Investors are encouraged to review the reconciliations of the non-GAAP financial measure to its most comparable GAAP financial measure that is included below in this Press Release.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements including words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions are forward-looking statements. These statements reflect the Company’s current views, expectations and beliefs concerning future events. These forward-looking statements include information regarding: our plans to restructure our existing debt, in particular our intent to transition to an alternative financing source for our credit facility; and our exploration of various alternatives to a debt restructuring, including strategic and refinancing alternatives, assets sales and mergers and acquisitions. The inclusion of forward-looking statements should not be regarded as a representation by Pernix that any of its plans will be achieved. Investors should note that many factors, including the risks and uncertainties inherent in Pernix’s business, as more fully described in Pernix’s filings with the SEC (including, but not limited to, its Annual Report on Form 10-K for the year ended December 31, 2016 and subsequent filings with the SEC), could affect the Company’s future financial results and could cause actual results to differ materially from those expressed in forward-looking statements, such as those contained in this press release. The forward-looking statements in this press release are qualified by risk factors identified by the Company. These risk factors, individually or in the aggregate, could cause our actual results to differ materially from expected and historical results. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company assumes no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.

CONTACT
Investor Relations
Matthew P. Duffy, 212-915-0685
LifeSci Advisors, LLC
[email protected]

 

PERNIX THERAPEUTICS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)

 

March 31, December 31,
2017 2016
Assets
Current assets:
     Cash and cash equivalents $ 22,737 $ 36,375
     Accounts receivable, net 31,000 50,729
     Inventory, net 7,444 7,775
     Prepaid expenses and other current assets 15,069 12,617
     Income tax receivable 680 1,414
          Total current assets 76,930 108,910
Property and equipment, net 1,013 1,103
Goodwill 30,600 30,600
Intangible assets, net 151,086 169,571
Other 235 257
               Total assets $ 259,864 $ 310,441
Liabilities and Stockholders’ Deficit
Current liabilities:
     Accounts payable and accrued expenses $ 20,391 $ 21,343
     Accrued allowances 55,810 60,961
     Interest payable 6,329 10,897
     Treximet Secured Notes – current 11,103
     Other liabilities – current 4,912 5,224
          Total current liabilities 87,442 109,528
Convertible notes – long-term 105,217 104,071
Derivative liability 584 230
Contingent consideration 2,749 2,403
Treximet Secured Notes – long-term 172,677 172,250
Credit facilities – long-term 14,000 14,000
Arbitration award 17,410 17,522
Other liabilities – long-term 2,559 4,500
          Total liabilities 402,638 424,504
Commitments and contingencies
Stockholders’ deficit:
     Preferred stock, $0.01 par value, authorized 10,000,000 shares; no shares issued
          and outstanding
     Common stock, $0.01 par value, 140,000,000 shares authorized, 10,015,641
          shares issued and outstanding at March 31, 2017 and December 31, 2016 100 100
     Additional paid-in capital 245,054 244,309
     Accumulated other comprehensive loss (73) (79)
     Accumulated deficit (387,855) (358,393)
          Total stockholders’ deficit (142,774) (114,063)
               Total liabilities and stockholders’ deficit $ 259,864 $ 310,441

PERNIX THERAPEUTICS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except per share data)
(Unaudited)

 

Three Months Ended
March 31,
2017 2016
Net revenues $ 29,742 $ 32,469
Costs and operating expenses:
     Cost of product sales 10,040 11,238
     Selling, general and administrative expense 20,275 25,950
     Research and development expense 528 928
     Depreciation and amortization expense 18,547 23,664
     Change in fair value of contingent consideration 346 (5,502)
     Restructuring costs 100
          Total costs and operating expenses 49,836 56,278
Loss from operations (20,094) (23,809)
Other income (expense):
     Interest expense (8,959) (9,024)
     Change in fair value of derivative liability (354) 6,794
     Foreign currency transaction gain 138
          Total other expense, net (9,313) (2,092)
Loss before income tax expense (29,407) (25,901)
Income tax expense 55 35
Net loss (29,462) (25,936)
Other comprehensive loss:
     Unrealized gain during period, net of tax of $0 and $0,
          respectively 6
Comprehensive loss $ (29,456) $ (25,936)
Net loss per common share
     Basic $ (2.94) $ (4.24)
     Diluted $ (2.94) $ (4.24)
Weighted-average common shares outstanding:
     Basic 10,016 6,112
     Diluted 10,016 6,112

 

Reconciliation of GAAP reported net loss to adjusted EBITDA is as follows (in thousands, unaudited):

Three Months Ended
March 31,
2017 2016
GAAP net loss $ (29,462) $ (25,936)
Adjustments:
     Interest expense, net 8,959 9,024
     Depreciation and amortization 18,576 23,664
     Income tax expense 55 35
EBITDA (1,872) 6,787
     Selling, general and administrative adjustments (1) 799 1,146
     Change in fair value of contingent consideration 346 (5,502)
     Change in fair value of derivative liability 354 (6,794)
     Restructuring costs 100
     Foreign currency transaction gain (138)
Adjusted EBITDA $ (273) $ (4,501)

 

(1) To exclude deal costs of $7,000 and $142,000; stock compensation expense of $746,000 and $1.5 million; severance expense of $43,000 and $490,000; and litigation settlement expenses of $3,000 and ($956,000) for the three months ended March 31, 2017 and 2016, respectively.

 

 

 

About PERNIX THERAPEUTICS HOLDINGS, INC. (NASDAQ:PTX)
Pernix Therapeutics Holdings, Inc. is a specialty pharmaceutical company. The Company focuses on identifying, developing and commercializing differentiated products that address unmet medical needs. It focuses on underserved therapeutic areas, such as central nervous system (CNS), including neurology and psychiatry, as well as other specialty therapeutic areas. Its products include Treximet, indicated for acute migraine; Zohydro ER with BeadTek, an extended-release opioid agonist indicated for the management of pain severe; Silenor for the treatment of insomnia characterized by difficulty with sleep maintenance, and Khedezla for major depressive disorder. It promotes selected non-core branded products, such as its cough and cold products, through co-promotion arrangements with third-party sales organizations, and distributes its generic products through its subsidiaries, Macoven Pharmaceuticals, LLC (Macoven) and Cypress Pharmaceuticals, Inc. PERNIX THERAPEUTICS HOLDINGS, INC. (NASDAQ:PTX) Recent Trading Information
PERNIX THERAPEUTICS HOLDINGS, INC. (NASDAQ:PTX) closed its last trading session down -0.12 at 5.73 with 284,854 shares trading hands.

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