INSYS Therapeutics Reports First Quarter 2018 Results

May 8, 2018 4:00 PM

Cannabinoid and spray-technology focused pipeline continues to advance, while efforts to stabilize SUBSYS® revenue continue

PHOENIX, May 08, 2018 (GLOBE NEWSWIRE) -- INSYS Therapeutics, Inc. (NASDAQ: INSY), a leader in the development, manufacture and commercialization of pharmaceutical cannabinoids and spray technology, today reported financial results for its first quarter ended March 31, 2018.

OVERALL HIGHLIGHTS

“The continued momentum in our pipeline in the first quarter of 2018 is indicative of the strong foundation we established in 2017 that will enable the company to shift its focus from opioids to become a leader in pharmaceutical cannabinoids and spray technologies,” said Saeed Motahari, president and chief executive officer of INSYS Therapeutics. “Our recently launched clinical trials for the use of CBD in patients with infantile spasms and Prader-Willi syndrome, combined with our collaboration with the University of California San Diego, gives us strong confidence in our future leadership position in the use of cannabinoids to develop potential solutions for patients in need.”

Motahari continued, “In terms of our current commercial products, SUBSYS® revenue declined sequentially, as did the TIRF market overall, and was unfavorably affected by higher than expected sales returns. We continue to take steps to stabilize SUBSYS® revenue and believe our actions in the first quarter to realign our salesforce and expand our managed care access will be effective over the long-term. We have also taken steps to address our inventory dating issue and saw positive results with our in-house inventory in the first quarter, but these benefits will require additional time to work their way through our distribution channel.”

Motahari added, “Prescriptions of SYNDROS® remained relatively flat in the first quarter; however, we continue to have discussions with managed care providers. As we look toward the balance of fiscal 2018, we remain intensely focused on executing against our product pipeline.”

Motahari concluded, “Lastly, we made progress in reducing our operating expenses in the areas where we have direct control. Excluding legal and settlement costs, our operating expenses were down 19 percent from the first quarter of last year as we work to improve our cost base.”

Financial & Operating Highlights

Webcast Information

A conference call is scheduled for 5:00 p.m. Eastern Standard Time on May 8, 2018, to discuss the financial and operational results for the first quarter 2018. Interested parties can listen to the call live via the Company’s website, https://www.insysrx.com/, on the INVESTORS section Presentations & Events page; or by dialing 844-263-8304 (from inside the U.S.) or 213-358-0958 (from outside the U.S.), and using the Conference ID 6338979. A webcasted replay of the call will be available on the site a few hours after the event.

About INSYS

INSYS Therapeutics is a specialty pharmaceutical Company that develops and commercializes innovative drugs and novel drug delivery systems of therapeutic molecules that improve patients’ quality of life. Using proprietary spray technology and capabilities to develop pharmaceutical cannabinoids, INSYS is developing a pipeline of products intended to address unmet medical needs and the clinical shortcomings of existing commercial products. INSYS is committed to developing medications for potentially treating addiction to opioids, opioid overdose, epilepsy and other disease areas with a significant unmet need.

SUBSYS® and SYNDROS® are trademarks of INSYS Development Company, Inc., a subsidiary of INSYS Therapeutics, Inc.

NOTE: All trademarks and registered trademarks are the property of their respective owners.

Forward-Looking Statements

This news release contains forward-looking statements, including discussions about stabilizing and generating future revenue, our future leadership position in the use of cannabinoids to develop potential solutions for patients in need and expectation around research and clinical product development. These forward-looking statements are based on management’s expectations and assumptions as of the date of this news release; actual results may differ materially from those in these forward-looking statements as a result of various factors, many of which are beyond our control. These factors include, but are not limited to, risk factors described in our filings with the United States Securities and Exchange Commission, including those factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended Dec. 31, 2017 and subsequent updates that may occur in our Quarterly Reports on Form 10-Q. Forward-looking statements speak only as of the date of this news release, and we undertake no obligation to publicly update or revise these statements, except as may be required by law.

Non-GAAP Financial Measures

In addition to reporting all financial information required in accordance with generally accepted accounting principles (GAAP), the Company is also reporting Adjusted EBITDA, Adjusted net loss and Adjusted net loss per diluted share, which are non-GAAP financial measures. Since Adjusted EBITDA, Adjusted net loss and Adjusted net loss per diluted share are not GAAP financial measures, they should not be used in isolation or as a substitute for consolidated statements of comprehensive loss and cash flow data prepared in accordance with GAAP. In addition, the Company’s definitions of Adjusted EBITDA, Adjusted net loss and Adjusted net loss per diluted share may not be comparable to similarly titled non-GAAP financial measures reported by other companies. For a full reconciliation of Adjusted EBITDA and Adjusted net loss to GAAP net income, please see the attachments to this earnings release.

Adjusted EBITDA, as defined by the Company, is calculated as follows:

Net loss, plus:

The Company believes that Adjusted EBITDA can be a meaningful indicator, to both Company management and investors, of the past and expected ongoing operating performance of the Company. EBITDA is a commonly used and widely accepted measure of financial performance. Adjusted EBITDA is deemed by the Company to be a useful performance indicator because it includes an add-back of non-cash and non-recurring operating expenses that may be subject to uncontrollable factors not reflective of the Company’s true operational performance.

Adjusted net loss, as defined by the Company, is calculated as follows:

Net loss, plus:

Adjusted net loss per diluted share is equal to Adjusted net loss divided by the diluted share count for the applicable period.

The Company believes that Adjusted net loss and Adjusted net loss per diluted share are meaningful financial indicators, to both Company management and investors, in that they exclude non-cash income and expense items, as well as other income and expense items that are not expected to recur and therefore are not reflective of continuing operating performance.

While the Company uses Adjusted EBITDA, Adjusted net loss and Adjusted net loss per diluted share in managing and analyzing its business and financial condition and believes these non-GAAP financial measures to be useful to investors in evaluating the Company’s performance, each of these financial measures has certain shortcomings. Adjusted EBITDA does not take into account the impact of capital expenditures on either the liquidity or the GAAP financial performance of the Company and likewise omits share-based compensation expenses, which may vary over time and may represent a material portion of overall compensation expense. Adjusted net loss does not take into account non-cash expenses that reflect the amortization of past expenditures, or include stock-based compensation, which is an important and material element of the Company’s compensation package for its directors, officers and other key employees. As a result of the inherent limitations of each of these non-GAAP financial measures, the Company’s management utilizes comparable GAAP financial measures to evaluate the business in conjunction with Adjusted EBITDA, Adjusted net loss and Adjusted net loss per diluted share and encourages investors to do likewise.

— Financial tables follow —

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(unaudited)
Three Months Ended March 31,
2018 2017
Net revenue$23,911 $35,962
Cost of revenue 2,204 4,639
Gross profit 21,707 31,323
Operating expenses:
Sales and marketing 9,051 15,658
Research and development 12,260 12,934
General and administrative 19,889 15,042
Charges related to litigation award and settlements 740 -
Total operating expenses 41,940 43,634
Loss from operations (20,233) (12,311)
Other income (expense), net (469) 26
Interest income 503 435
Loss before income taxes (20,199) (11,850)
Income tax expense (benefit) 171 (5,326)
Net loss$(20,370) $(6,524)
Net loss per common share:
Basic$(0.28) $(0.09)
Diluted$(0.28) $(0.09)
Shares used in computing net income per common share:
Basic 73,745,202 71,945,743
Diluted 73,745,202 71,945,743
Percentage of Net revenue:
Net revenue 100.0% 100.0%
Cost of revenue 9.2% 12.9%
Gross profit 90.8% 87.1%
Operating expenses:
Sales and marketing 37.9% 43.5%
Research and development 51.3% 36.0%
General and administrative 83.2% 41.8%
Charges related to litigation award and settlements 3.1% 0.0%
Total operating expenses 175.5% 121.3%
Loss from operations -84.7% -34.2%
Other income (expense),net -1.9% 0.1%
Interest income 2.1% 1.2%
Loss before income taxes -84.5% -32.9%
Income tax expense (benefit) 0.7% -14.8%
Net loss -85.2% -18.1%

INSYS THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
March 31, December 31,
2018 2017
ASSETS:
Cash and cash equivalents$18,549 $31,999
Short-term investments 95,895 85,189
Accounts receivable, net 15,761 21,513
Inventories 16,300 17,408
Prepaid expenses and other current assets 20,189 19,833
Long-term investments 31,633 46,733
Other non-current assets 55,612 56,405
Total assets$253,939 $279,080
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities$206,576 $215,798
Stockholders' equity 47,363 63,282
Total liabilities and stockholders' equity$253,939 $279,080

INSYS THERAPEUTICS, INC.
RECONCILIATION OF NET LOSS TO NON-GAAP ADJUSTED EBITDA
(In thousands)
(unaudited)
Three Months Ended March 31,
2018 2017
Net loss$(20,370) $(6,524)
Adjustments to arrive at EBITDA:
Interest income (503) (435)
Income tax expense (benefit) 171 (5,326)
Depreciation and amortization expense 1,938 1,774
EBITDA (18,764) (10,511)
Non-cash stock compensation expense 3,170 3,992
Charges related to litigation award and settlements 740 -
Adjusted EBITDA$(14,854) $(6,519)

INSYS THERAPEUTICS, INC.
RECONCILIATION OF NET LOSS TO NON-GAAP ADJUSTED NET LOSS
(In thousands, except per share amounts)
(unaudited)
Three Months Ended March 31,
2018 2017
Net loss$(20,370) $(6,524)
Income tax expense (benefit) 171 (5,326)
Loss before income taxes (20,199) (11,850)
Adjustments to arrive at Adjusted net loss:
Non-cash stock compensation expense 3,170 3,992
Charges related to litigation award and settlements 740 -
Adjusted loss before income taxes (16,289) (7,858)
Less: Adjusted income tax provision (2,261) (1,095)
Adjusted net loss$(14,028) $(6,763)
Adjusted net loss per diluted share$(0.19) $(0.09)

CONTACT:Corporate CommunicationsInvestor Relations
Joe McGrathJackie Marcus or Chris Hodges
INSYS TherapeuticsAlpha IR Group
480-500-3101312-445-2870
jmcgrath@insysrx.comINSY@alpha-ir.com

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Source: Insys Therapeutics, Inc.

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