Record Quarterly Revenue of $40.2 Million Driven by Continued Growth in Subsys Net Revenue
Board of Directors Approves Three-for-Two Stock Split of Its Common Stock to Be Effected Through a Stock Dividend
PHOENIX, AZ–(Marketwired – Mar 4, 2014) – Insys Therapeutics, Inc. (NASDAQ:INSY), a specialty pharmaceutical company with a focus on supportive care products for cancer patients, today announced its financial results for the three- and twelve- month periods ended December 31, 2013. Fourth quarter 2013 highlights include:
- Total net revenue increased to $40.2 million versus $5.2 million for the fourth quarter of 2012;
- Revenues from Subsys® (fentanyl sublingual spray) were $39.2 million, up 719% over fourth quarter of 2012 levels and up 38% as compared with $28.4 million in the third quarter of 2013;
- Net income of $24.1 million, or $1.01 per diluted share, compared to a net loss of $7.1 million, or ($0.76) per basic and diluted share, for the fourth quarter of 2012. The 2013 period includes the impact of a $9.7 million income tax benefit due to the reversal of deferred tax asset valuation allowance;
- Non-GAAP adjusted net income, which excludes the $9.7 million income tax benefit, was $17.1 million, or $0.71 per diluted share; and,
- Advanced a robust pipeline focused on innovative supportive care and therapy products; Insys expects to file at least one New Drug Application (NDA) and at least four Investigational New Drug (IND) applications in 2014.
“Our solid results for the quarter and year were driven by strong growth in Subsys prescriptions to alleviate breakthrough pain for cancer patients,” said Michael L. Babich, President and Chief Executive Officer. “In December 2013, Subsys was the most prescribed branded transmucosal immediate-release fentanyl (TIRF) product. We believe that its simple, one-step administration system and rapid onset will enable further growth of our market share for and net revenue from this unique product.”
Fourth Quarter 2013 Financial Results
Total net revenue for the fourth quarter of 2013 was $40.2 million, an increase of $35.0 million as compared to $5.2 million for the fourth quarter of 2012. On a sequential basis, fourth quarter 2013 net revenue increased by $11.0 million from third quarter 2013 net revenue of $29.2 million. A summary of total revenue is outlined below (in millions):
| Three Months Ended December 31, |
Increase | |||||||||||
| 2013 | 2012 | (Decrease) | ||||||||||
| Product sales, net | ||||||||||||
| Subsys | $ | 39.2 | $ | 4.8 | $ | 34.4 | ||||||
| Dronabinol SG Capsule | 1.0 | 0.4 | 0.6 | |||||||||
| Total net revenue | $ | 40. 2 | $ | 5.2 | $ | 35.0 | ||||||
Gross margin was 87% for the fourth quarter of 2013 compared with 60% for the fourth quarter of 2012. The increase in gross margin was due primarily to a shift in sales mix toward Subsys, which has higher margins than Dronabinol SG Capsule.
Sales and marketing expense was $10.5 million during the fourth quarter of 2013, compared to $3.2 million for the fourth quarter of 2012. The increase was a result of higher sales compensation expenses associated with the increase in sales of Subsys and increased marketing expenses during the fourth quarter of 2013.
Research and development expense increased to $3.2 million for the fourth quarter of 2013, compared to $0.7 million for the fourth quarter of 2012, primarily as a result of new product development programs begun in the second quarter of 2013.
General and administrative expense increased to $7.0 million for the fourth quarter of 2013, compared to $2.6 million for the fourth quarter of 2012, primarily resulting from costs incurred in connection with increased administrative infrastructure to support the growth of Subsys sales combined with corporate costs associated with becoming a public company.
Net income for the fourth quarter of 2013 was $24.1 million, or $1.11 per basic share and $1.01 per diluted share, compared to a net loss of $7.1 million, or ($0.76) per basic and diluted share, for the fourth quarter of 2012. Non-GAAP adjusted net income for the fourth quarter of 2013 was $17.1 million, or $0.71 per diluted share, compared to non-GAAP adjusted net loss of $5.5 million, or ($0.59) per diluted share, in the prior year quarter. The reconciliation of net income (loss) to Non-GAAP adjusted net income (loss) is included at the end of this press release.
During the fourth quarter of 2014, the method of revenue recognition on sales of Subsys was modified to record revenue at the time of product shipment to the wholesale pharmaceutical distributor. This change resulted in incremental Subsys revenue and gross profit of $1.5 million and $0.9 million, respectively. Also during the fourth quarter of 2014, an income tax benefit of $9.7 million was recorded as a result of the reversal of deferred tax asset valuation allowances.
2013 Financial Results
Total net revenue for the year ended December 31, 2013, was $99.3 million, an increase of $83.8 million as compared to $15.5 million for the year ended December 31, 2012. A summary of total revenue is outlined below (in millions):
| Twelve Months Ended December 31, |
Increase | ||||||||||
| 2013 | 2012 | (Decrease) | |||||||||
| Product sales, net | |||||||||||
| Subsys | $ | 95.8 | $ | 8.6 | $ | 87.2 | |||||
| Dronabinol SG Capsule | 3.5 | 6.9 | (3.4 | ) | |||||||
| Total net revenue | $ | 99. 3 | $ | 15.5 | $ | 83.8 | |||||
Gross margin for 2013 was 87%, compared with 51% for 2012. The increase in gross margin was due primarily to a shift in sales mix toward Subsys, which has higher margins than Dronabinol SG Capsule.
Sales and marketing expense was $29.2 million during 2013, compared to $11.4 million for 2012. The increase was a result of higher sales compensation expenses associated with the increase in sales of Subsys.
Research and development expense increased to $8.5 million for 2013, compared to $6.3 million for 2012, primarily as a result of an increased in research and development staff in 2013 to support development of the Company’s pipeline, including its proprietary Dronabinol Oral Solution candidate and six preclinical sublingual spray candidates.
General and administrative expense increased to $16.4 million for 2013, compared to $8.2 million for the prior year, primarily resulting from costs incurred in connection with increased administrative infrastructure to support the growth of Subsys sales combined with increased costs associated with becoming a public company; the Company completed its initial public offering in May 2013.
Net income for 2013 was $40.4 million, or $2.34 per basic share and $2.11 per diluted share, compared to a net loss of $24.4 million, or ($2.62) per basic and diluted share, for 2012. Non-GAAP adjusted net income was $38.3 million, or $2.00 per diluted share, compared to non-GAAP adjusted net loss of $18.8 million, or ($2.02) per diluted share, in the prior year. The reconciliation of net income (loss) to Non-GAAP adjusted net income (loss) is included at the end of this press release.
Liquidity
The Company had $45.8 million in cash, cash equivalents and restricted cash, $15.3 million in working capital (excluding cash and cash equivalents), no debt, and $79.5 million in stockholders’ equity as of December 31, 2013.
Subsequent Events
Three-for-two Stock Split
The Company’s Board of Directors has approved a three-for-two stock split of its common stock to be effected through a stock dividend. The record date for the stock split is the close of business on March 17, 2014, with share distribution scheduled for March 28, 2014. As a result of the dividend, shareholders will receive one additional share of Insys Therapeutics, Inc. common stock, par value $0.0002145, for each two shares they hold as of the record date. Total shares outstanding will increase from approximately 22.3 million to 33.4 million shares.
Pipeline Developments
The Company announces the submission and approval of a clinical study protocol that will evaluate the use of Subsys in a pre-procedural setting. The study will enroll opioid naive and tolerant patients undergoing interventional procedures in a monitored, controlled setting to determine if Subsys can be used in place of intramuscular or intravenous administration of fentanyl for this patient population.
Additions to Management Team
The Company strengthened its management team with the addition of Franc Del Fosse as General Counsel and Chris Homrich as Senior Vice President of Operations.
Mr. Del Fosse joins Insys from private practice, where he regularly advised public company boards, management and in-house counsel on the critical issues affecting their businesses. He was most recently a partner at Snell & Wilmer LLP, prior to which he was an associate at Shearman & Sterling LLP. Mr. Del Fosse holds a J.D. degree from Columbia University School of Law and an undergraduate degree from Arizona State University. He is a member of the State Bar of California and Arizona.
Mr. Homrich has extensive experience in operations, finance and accounting, and risk management. He has held executive and leadership positions at public and private companies including Stryker Corporation, Ingram Industries, Inc., and NCR Corporation. Mr. Homrich holds M.B.A. and B.A. degrees from Michigan State University.
Read more at www.insysrx.com/investors/