Bentley Pharmaceuticals, Inc. (NYSE: BNT), a specialty
pharmaceutical company, today reported financial results for the
fourth quarter and year ended December 31, 2007.
Fourth quarter 2007 revenues were $34.8 million, a 29% increase
(16% in constant currency) from $27.1 million reported in the fourth
quarter of 2006. Gross margins on net product sales for the quarters
ended December 31, 2007 and 2006 were 43.1% and 48.7%, respectively.
The Company noted that reduced margins resulted from the
implementation of price reductions by the Spanish government on March
1, 2007. Operating income for the fourth quarter 2007 was $0.9 million
compared with $2.9 million reported in the same quarter of the prior
year. The Company noted that the fourth quarter 2007 operating
expenses include $0.9 million of strategic consulting expenses
incurred in connection with the Company’s plan to spin off its drug
delivery business and $1.2 million of impairment charges, primarily
related to the Company’s U.S. generic pharmaceutical projects. Net
income for the fourth quarter 2007 was $0.3 million, or $0.01 per
diluted share, compared with $4.4 million, or $0.19 per diluted share,
a year ago. The Company noted that the fourth quarter of 2006 included
an income tax benefit of $2.7 million, or $0.12 per diluted share,
resulting from a litigation settlement recorded in the third quarter
of 2006. Fluctuations in foreign currency provided a benefit of $0.4
million, or $0.02 per diluted share in the fourth quarter 2007.
Bentley’s specialty generics segment’s revenue for the fourth
quarter 2007 increased 27% (13% in constant currency) to $31.5 million
from $24.8 million in the fourth quarter 2007. Specialty generics
revenue outside of Spain as a percentage of total generics revenue
increased to 31% for the fourth quarter 2007 from 23% reported in the
fourth quarter 2006. Gross margins on net product sales decreased to
43% in the fourth quarter 2007 from 49% in the fourth quarter 2006.
The decrease in gross margins primarily reflects the impact of reduced
pricing. Operating expenses increased 32% to $10.0 million from $7.6
million for the fourth quarter 2006 and were significantly impacted by
changes in foreign exchange rates. Sales and marketing cost increases
were consistent with rising revenues and included normal increases in
related compensation. General and administrative expenses also
included normal compensation increases. Net income reported for
specialty generics was $2.8 million for the fourth quarter 2007
compared to $6.0 million in the comparable quarter of 2006. The
Company notes that the fourth quarter of 2006 included an income tax
benefit of $2.7 million. Fluctuations in foreign currency provided a
benefit of $0.4 million, or $0.02 per diluted share, in the fourth
quarter 2007.
Drug delivery revenues in the fourth quarter 2007 increased by
43%, or $1.0 million, to $3.2 million compared to the fourth quarter
of 2006 due to increased royalties on sales of Testim(R). General and
administrative expenses increased 32% compared to the prior year
fourth quarter, primarily related to increased compensation and
benefits due to increased headcount. The Company noted that it
incurred $0.9 million in strategic consulting expenses in the fourth
quarter in connection with its planned spin-off. Research and
development expenses increased 23% to $2.7 million in the fourth
quarter 2007 primarily related to increased investments in
Nasulin(TM), Bentley’s intranasal insulin product candidate, and
increased compensation and benefits. Net loss reported for the fourth
quarter 2007 increased $0.9 million to $2.5 million from the
comparable quarter of 2006.
Cash, cash equivalents and marketable securities were $34.7
million at December 31, 2007, and $15.6 million at December 31, 2006.
In June 2007, Bentley’s Spanish subsidiary borrowed $14.8 million
(approximately 11 million Euros). The proceeds are being used to help
fund capital and research and development projects. The loan carries a
variable interest rate equal to the Euro Interbank Offered Rate plus
0.5%. Payments commence in December 2008 and end in December 2013.
During the fourth quarter of 2007 the Company invested $2.5 million in
fixed asset additions and $0.9 million in drug licenses. This compares
to additions of $3.2 million in fixed assets and $1.0 million in drug
licenses during the fourth quarter 2006. Bentley invested $10.0
million in fixed asset additions in 2007 compared to $15.3 million in
2006. The Company invested $2.7 million in drug licenses in 2007,
compared with $2.8 million in 2006. The Company expects to invest
between $13.0 million and $17.0 million in fixed asset and drug
license additions during 2008.
Management Comments
“Our generics and drug delivery businesses both performed well in
the fourth quarter,” said Bentley President John Sedor. “Generics
demand in Spain remains robust, and our subsidiaries continue to be
aggressive in launching products into the growing Spanish market. Unit
volume for our generic products in that market increased 36% from the
fourth quarter of 2006. Given the reimbursement environment and
resulting price constraints in Spain, we were pleased with our gross
margins in the generics business this quarter.”
“We have made it a strategic priority over the past few years to
expand beyond Spain and capitalize on growing demand for generic
pharmaceuticals in other European markets, and generics revenue
outside of Spain increased 72% this quarter compared with the fourth
quarter of 2006,” said Sedor. “Just last month we announced a multiple
approval through the Mutual Recognition Process to commercialize our
omeprazole capsule products in the major markets of Germany and Italy,
as well as in other EU countries. Additional European approvals for
other Bentley products are pending. We expect that commercializing
these products along with omeprazole in our new European markets will
grow our generics revenues outside of Spain by approximately 25% in
2008.”
“As previously announced, we are in the process of spinning off
our drug delivery business to be named CPEX Pharmaceuticals, Inc.,”
Sedor said. “During the fourth quarter we identified four strategic
objectives for the drug delivery business:
— growing our existing drug delivery revenue,
— building the value of Nasulin and attracting a suitable
licensing partner,
— building a product pipeline that CPEX can license or take to
market, and
— securing partners for our CPE-215 platform technology.”
“Our success in achieving the first of these objectives, to grow
our existing drug delivery revenue, is being driven by sales of Testim
- Bentley’s first licensed drug delivery product,” said Sedor. “As we
announced in January 2008, we received a new U.S. patent for Testim
that protects our intellectual property until 2025, and we recently
received our European patent and foreign filing issuances in six other
countries. Meanwhile, Testim’s share of the U.S. testosterone gel
market is more than 22% compared to approximately 19% in 2006, and
prescriptions for Testim grew nearly twice as fast as the market
during the year. As a result, Bentley’s drug delivery revenues for the
fourth quarter of 2007 grew 43% from the year-earlier quarter.”
“Our second strategic objective for the drug delivery business is
to build the value of Nasulin and attract a suitable licensing
partner,” said Sedor. “Our original clinical objective for our nasal
administration product was limited to demonstrating glucodynamic
equivalence with the injectable insulin products currently marketed.
Our Phase II results have resulted in changes to our clinical goals
for Nasulin, with the intent of demonstrating better glycemic control
and less hypoglycemia. This will require additional Phase II trials,
which we hope to complete in the first half of 2009 leading to an end
of Phase II meeting with the FDA in the second half of 2009.”
“CPEX filed a Form 10 with the SEC in late December 2007,” Sedor
said, “Completion of the proposed spin-off is subject to numerous
conditions, including the Form 10 being declared effective by the SEC
and approved by Bentley’s Board of Directors. In addition, as
previously announced, Bentley is continuing to explore strategic
opportunities for its generics business.”
For the full year 2007, Bentley’s total revenues increased 14% (5%
in constant currency) to $124.7 million from $109.5 million in 2006.
Bentley’s licensing and collaboration revenues increased by $2.8
million, or 32%, compared with 2006, primarily reflecting increased
royalties on sales of Testim. Gross profit increased to $60.7 million
in 2007 from $59.6 million in 2006. Gross margins on net product sales
decreased to 43.4% from 50.4% in 2006, primarily due to reduced
pricing in Spain. Operating expenses decreased by $1.0 million to
$53.2 million from $54.2 million in 2006. The Company noted that the
prior year operating expenses included $10.9 million of litigation
settlement expenses. The Company also noted that the current year
operating expenses include approximately $2.0 million of strategic
consulting expenses and $1.4 million of impairment charges. Net income
was $2.8 million in 2007, or $0.12 per diluted share, compared with
net income of $1.0 million, or $0.04 per share, in 2006. Fluctuations
in foreign currency provided a benefit of $0.04 per share in 2007.
Bentley’s results by operating segment for the fourth quarter and
2007 were as follows:
For the three month periods ended December 31:
(in thousands) 2007 2006
————————— —————————-
Specialty Drug Consol- Specialty Drug Consol-
Generics Delivery idated Generics Delivery idated
——— ——— ——- ——— ——— ——–
Revenues $31,529 $ 3,240 $34,769 $24,796 $ 2,258 $27,054
Cost of net
product sales 17,872 - 17,872 12,668 - 12,668
——— ——— ——- ——— ——— ——–
Gross profit 13,657 3,240 16,897 12,128 2,258 14,386
Operating
expenses 10,016 5,915 15,931 7,578 3,988 11,566
Loss (gain) on
sale of drug
license 111 - 111 (38) - (38)
——— ——— ——- ——— ——— ——–
Income
(loss) from
operations 3,530 (2,675) 855 4,588 (1,730) 2,858
Other income
(expenses),
net 296 190 486 (101) 132 31
——— ——— ——- ——— ——— ——–
Income
(loss)
before
income
taxes 3,826 (2,485) 1,341 4,487 (1,598) 2,889
Provision
(benefit) for
income taxes 1,025 - 1,025 (1,525) - (1,525)
——— ——— ——- ——— ——— ——–
Net income
(loss) $ 2,801 $(2,485) $ 316 $ 6,012 $(1,598) $ 4,414
========= ========= ======= ========= ========= ========
EBITDA $ 5,476 $(2,518) $ 2,958 $ 5,853 $(1,544) $ 4,309
========= ========= ======= ========= ========= ========
For the years ended December 31:
(in
thousands) 2007 2006
—————————- —————————–
Specialty Drug Consol- Specialty Drug Consol-
Generics Delivery idated Generics Delivery idated
——— ——— ——– ——— ——— ———
Revenues $ 113,560 $11,127 $124,687 $101,105 $ 8,366 $109,471
Cost of net
product
sales 64,010 - 64,010 49,850 - 49,850
——— ——— ——– ——— ——— ———
Gross
profit 49,550 11,127 60,677 51,255 8,366 59,621
Operating
expenses 32,314 20,861 53,175 37,451 16,771 54,222
Loss (gain)
on sale of
drug
license 111 - 111 (38) - (38)
——— ——— ——– ——— ——— ———
Income
(loss)
from
operations 17,125 (9,734) 7,391 13,842 (8,405) 5,437
Other income
(expenses),
net 369 559 928 (64) 683 619
——— ——— ——– ——— ——— ———
Income
(loss)
before
income
taxes 17,494 (9,175) 8,319 13,778 (7,722) 6,056
Provision
for income
taxes 5,534 - 5,534 5,082 - 5,082
——— ——— ——– ——— ——— ———
Net income
(loss) $ 11,960 $(9,175) $ 2,785 $ 8,696 $(7,722) $ 974
========= ========= ======== ========= ========= =========
EBITDA $ 23,541 $(9,004) $ 14,537 $ 18,770 $(7,727) $ 11,043
========= ========= ======== ========= ========= =========
Significant components of Bentley’s revenues for the fourth
quarter and year are summarized below:
For the year ended December 31, 2007:
Revenues Within Spain Revenues
————————– Outside
of % of
Branded Spain Total
Product Line Generics Generics Other Total Revenues
———————————————————————-
Omeprazole $1,912 $15,818 $ - $ - $17,730 14%
Enalapril 5,176 1,522 - - 6,698 5%
Simvastatin 1,022 4,866 - - 5,888 5%
Paroxetine 1,521 3,424 - - 4,945 4%
Lansoprazole 3,610 1,265 - - 4,875 4%
All other
products 12,788 13,330 466 3,409 29,993 24%
Sales to
licensees and
others - - 13,925 28,945 42,870 35%
Licensing and
collaborations - - 561 11,127 11,688 9%
———————————————————————-
Total Revenues $26,029 $40,225 $14,952 $43,481 $124,687 100%
======================================================================
% of 2007
Revenues 21% 32% 12% 35% 100%
For the year ended December 31, 2006:
Revenues Within Spain Revenues
————————– Outside
of % of
Branded Spain Total
Product Line Generics Generics Other Total Revenues
———————————————————————-
Omeprazole $2,679 $16,451 $- $- $19,130 18%
Enalapril 4,826 1,824 - - 6,650 6%
Simvastatin 1,851 5,620 - - 7,471 7%
Paroxetine 1,449 3,045 - - 4,494 4%
Lansoprazole 2,689 852 - - 3,541 3%
All other
products 10,628 11,263 795 1,763 24,449 22%
Sales to
licensees and
others - - 12,741 22,114 34,855 32%
Licensing and
collaborations - - 515 8,366 8,881 8%
———————————————————————-
Total Revenues $24,122 $39,055 $14,051 $32,243 $109,471 100%
======================================================================
% of 2006
Revenues 22% 36% 13% 29% 100%
For the three months ended December 31, 2007:
Revenues Within Spain Revenues
————————- Outside
of % of
Branded Spain Total
Product Line Generics Generics Other Total Revenues
———————————————————————-
Omeprazole $545 $3,902 $- $- $4,447 13%
Enalapril 1,398 410 - - 1,808 5%
Simvastatin 299 1,235 - - 1,534 4%
Lansoprazole 1,039 370 - - 1,409 4%
Paroxetine 409 939 - - 1,348 4%
All other products 3,824 3,506 (6) 869 8,193 24%
Sales to licensees
and others - - 3,863 8,799 12,662 36%
Licensing and
collaborations - - 128 3,240 3,368 10%
———————————————————————-
Total Revenues $7,514 $10,362 $3,985 $12,908 $34,769 100%
======================================================================
% of Q4 2007
Revenues 20% 34% 12% 34% 100%
For the three months ended December 31, 2006:
Revenues Within Spain Revenue
————————- Outside
of % of
Branded Spain Total
Product Line Generics Generics Other Total Revenues
———————————————————————-
Omeprazole $667 $3,862 $- $- $4,529 17%
Enalapril 1,288 347 - - 1,635 6%
Simvastatin 468 1,286 - - 1,754 6%
Lansoprazole 731 181 - - 912 3%
Paroxetine 355 656 - - 1,011 4%
All other products 2,935 3,091 13 663 6,702 25%
Sales to licensees
and others - - 3,188 4,959 8,147 30%
Licensing and
collaborations - - 106 2,258 2,364 9%
———————————————————————-
Total Revenues $6,444 $9,423 $3,307 $7,880 $27,054 100%
======================================================================
% of Q4 2006
Revenues 24% 35% 12% 29% 100%
Bentley uses both GAAP and certain non-GAAP measures to assess
performance. The Company’s management believes the non-GAAP measure of
EBITDA may also provide useful supplemental information to investors
in order that they may evaluate Bentley’s financial performance using
the same measures as management. The Company’s management believes
that with this supplemental information investors are afforded greater
transparency in assessing the Company’s financial performance. This
non-GAAP financial measure should not be considered as a substitute
for, nor superior to, measures of financial performance prepared in
accordance with GAAP.
Set forth below is a reconciliation of “EBITDA” to net income, the
most directly comparable financial measure calculated and presented in
accordance with GAAP.
(in For the year ended December 31,
thousands)
———————————————————
2007 2006
—————————- —————————-
Specialty Drug Consol- Specialty Drug Consol-
Generics Delivery idated Generics Delivery idated
——— ——— ——– ——— ——— ——–
Net income
(loss) $ 11,960 $(9,175) $ 2,785 $ 8,698 $(7,724) $ 974
Provision
(benefit)
for income
taxes 5,534 - 5,534 5,082 - 5,082
Interest
expense
(income) 87 (581) (494) 99 (682) (583)
Depreciation
&
amortization 5,960 752 6,712 4,891 679 5,570
——— ——— ——– ——— ——— ——–
EBITDA $ 23,541 $(9,004) $14,537 $ 18,770 $(7,727) $11,043
========= ========= ======== ========= ========= ========(in thousands) For the three months ended December 31,
——————————————————–
2007 2006
————————— —————————-
Specialty Drug Consol- Specialty Drug Consol-
Generics Delivery idated Generics Delivery idated
——— ——— ——- ——— ——— ——–
Net income
(loss) $2,801 $(2,485) $ 316 $ 6,012 $(1,598) $ 4,414
Provision
(benefit) for
income taxes 1,025 - 1,025 (1,525) - (1,525)
Interest
expense
(income) 71 (207) (136) 19 (131) (112)
Depreciation &
amortization 1,579 174 1,753 1,347 185 1,532
——— ——— ——- ——— ——— ——–
EBITDA $5,476 $(2,518) $2,958 $ 5,853 $(1,544) $ 4,309
========= ========= ======= ========= ========= ========
EBITDA is calculated as earnings before interest, income taxes,
depreciation and amortization. The Company uses EBITDA as a
supplemental financial measure of its operational performance.
Management believes EBITDA to be an important measure as it excludes
the effects of items which primarily reflect the impact of long-term
investment decisions, rather than the performance of the Company’s
day-to-day operations. The Company believes that this measurement is
useful to measure a company’s ability to service debt and to meet
other payment obligations or as a valuation measurement. As compared
to net income according to GAAP, this measure is more limited in scope
because it does not reflect the periodic costs of certain capitalized
tangible and intangible assets used in generating revenues in the
company’s business. Management evaluates those items through other
financial measures such as capital expenditures and cash flow provided
by operating activities.
Management will host a conference call at 10:00 A.M. EST on March
13, 2008 to discuss Bentley’s fourth quarter and full year 2007
results. To participate on the live call, please dial (888) 332-7254
from the U.S. and Canada or, for international callers, please dial
(973) 582-2856 (access code 33823748), approximately 10 minutes prior
to the scheduled start time. A telephone replay will be available for
30 days by dialing (800) 642-1687 from the U.S. and Canada or (706)
645-9291 for international callers (please reference reservation
number 33823748). The conference call will also be broadcast live on
the Internet and may be accessed via Bentley’s website,
www.bentleypharm.com. Please go to the Company’s website approximately
10 minutes prior to the scheduled start time to register. A replay of
the conference will also be available on Bentley’s website for 90
days.
Bentley Pharmaceuticals, Inc. is a specialty pharmaceutical
company focused on advanced drug delivery technologies and generic
pharmaceutical products. Bentley’s proprietary drug delivery
technologies enhance the absorption of pharmaceutical compounds across
various membranes. Bentley manufactures and markets a growing
portfolio of generic and branded generic pharmaceuticals in Europe for
the treatment of cardiovascular, gastrointestinal, infectious and
central nervous system diseases through its subsidiaries –
Laboratorios Belmac, Laboratorios Davur, Laboratorios Rimafar and
Bentley Pharmaceuticals Ireland. Bentley also manufactures and markets
active pharmaceutical ingredients through its subsidiary, Bentley API.
Additional information regarding Bentley Pharmaceuticals may be
obtained through Bentley’s website at www.bentleypharm.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: This press release contains forward looking
statements, including without limitation statements regarding
Bentley’s plans for separating its drug delivery and specialty
generics businesses and exploring strategic alternatives for its
specialty generics business, future prospects for the two businesses
as independent companies, anticipated completion of clinical trials,
the application of the Company’s CPE-215 technology to complex
molecules in addition to testosterone, growth prospects for the
Company’s drug delivery and specialty generics businesses, and
Bentley’s plans to continue increased spending on research and
development in 2008. These forward-looking statements are subject to a
number of risks and uncertainties that could cause actual results to
differ materially from future results expressed or implied by such
statements. Factors that may cause such differences include, but are
not limited to, risks associated with the following: clinical trials,
the timing and nature of regulatory approvals, changes in third-party
reimbursement and government mandates that impact pharmaceutical
pricing, development and commercialization of Bentley’s proprietary
products and formulations, competition from other manufacturers of
generic and proprietary pharmaceuticals, intellectual property
litigation, the efficacy and safety of Bentley’s products, the
unpredictability of patent protection, international operations, and
other uncertainties detailed under “Risk Factors” in Bentley’s most
recent Annual Report on Form 10-K and its other subsequent periodic
reports filed with the Securities and Exchange Commission. Bentley
cautions investors not to place undue reliance on the forward-looking
statements contained in this release. These statements speak only as
of the date of this document, and Bentley undertakes no obligation to
update or revise the statements, except as may be required by law.
Bentley Pharmaceuticals, Inc. and Subsidiaries
Consolidated Income Statements
(Unaudited)
(in thousands, except per share For the Three For the Year
data) Months Ended Ended
December 31, December 31,
————— —————–
2007 2006 2007 2006
——- ——- ——– ——–
Revenues:
Net product sales $31,401 $24,690 $112,999 $100,590
Licensing and collaboration
revenues 3,368 2,364 11,688 8,881
——- ——- ——– ——–
Total revenues 34,769 27,054 124,687 109,471
Cost of net product sales 17,872 12,668 64,010 49,850
——- ——- ——– ——–
Gross profit 16,897 14,386 60,677 59,621
Operating expenses:
Selling and marketing 5,185 4,277 18,523 16,153
General and administrative 4,957 3,481 16,973 14,801
Research and development 4,406 2,609 13,600 10,459
Litigation settlement — 645 — 10,914
Separation costs 867 — 2,020 –
Depreciation and amortization 516 554 2,059 1,895
——- ——- ——– ——–
Total operating expenses 15,931 11,566 53,175 54,222
——- ——- ——– ——–
(Loss) gain on sale of drug license (111) 38 (111) 38
——- ——- ——– ——–
Income from operations 855 2,858 7,391 5,437
——- ——- ——– ——–
Other income (expenses):
Interest income 386 159 1,092 820
Interest expense (250) (49) (598) (158)
Other, net 350 (79) 434 (43)
——- ——- ——– ——–
Income before income taxes 1,341 2,889 8,319 6,056
Provision (benefit) for income
taxes 1,025 (1,525) 5,534 5,082
——- ——- ——– ——–
Net income $ 316 $ 4,414 $ 2,785 $ 974
======= ======= ======== ========
Net income per common share:
Basic $ 0.01 $ 0.20 $ 0.12 $ 0.04
======= ======= ======== ========
Diluted $ 0.01 $ 0.19 $ 0.12 $ 0.04
======= ======= ======== ========
Weighted average common shares
outstanding:
Basic 22,391 22,242 22,339 22,141
======= ======= ======== ========
Diluted 23,322 22,735 22,957 23,068
======= ======= ======== ======== Bentley Pharmaceuticals, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(in thousands, except per share data) December 31, December 31,
2007 2006
———— ————
Assets
Current assets:
Cash and cash equivalents $ 33,706 $ 12,424
Marketable securities 1,010 3,177
Receivables, net 39,324 32,963
Inventories 17,658 16,279
Deferred taxes 1,067 1,049
Prepaid expenses and other 2,015 1,798
———— ————
Total current assets 94,780 67,690
———— ————
Non-current assets:
Fixed assets, net 59,191 48,556
Drug licenses and related costs, net 16,624 16,026
Restricted cash 1,000 1,000
Deferred taxes 676 240
Other 925 844
———— ————
Total non-current assets 78,416 66,666
———— ————
Total assets $173,196 $134,356
============ ============
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 19,413 $ 14,566
Accrued expenses 10,019 9,704
Short-term borrowings 116 247
Current portion of long-term debt 608 307
Deferred income 1,186 1,045
Other current liabilities 1,137 1,518
———— ————
Total current liabilities 32,479 27,387
———— ————
Non-current liabilities:
Long-term debt 15,595 –
Deferred income 5,976 3,899
Other 3,074 2,739
———— ————
Total non-current liabilities 24,645 6,638
———— ————
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $1.00 par value,
authorized 2,000 shares,
issued and outstanding, none — –
Common stock, $0.02 par value, authorized
100,000 shares,
issued and outstanding, 22,376 and 22,262
shares 447 445
Additional paid-in capital 143,269 140,030
Accumulated deficit (46,636) (49,016)
Accumulated other comprehensive income 18,992 8,872
———— ————
Total stockholders’ equity 116,072 100,331
———— ————
Total liabilities and stockholders’
equity $173,196 $134,356
============ ============
*T