Specialty pharmaceutical company Pernix Therapeutics Holdings, Inc. (PTX) has announced financial results for the fourth quarter and year ended December 31, 2012.
The Woodlands, TX based Pernix manages a portfolio of branded products, including the recently acquired Hawthorn Pharmaceuticals’ product line. The Company’s branded products for the pediatrics market include CEDAX®, an antibiotic for middle ear infections, NATROBA™, a topical treatment for head lice marketed under an exclusive co-promotion agreement with ParaPRO, LLC, and a family of treatments for cough and cold (ZUTRIPRO®, BROVEX®, ALDEX® and PEDIATEX®). The Company’s branded products for gastroenterology include OMECLAMOX-PAK®, a 10-day treatment for H. pylori infection and duodenal ulcer disease, and REZYST™, a probiotic blend to promote dietary management.
Pernix also markets the branded product, SILENOR®, for the treatment of insomnia. The Company promotes its branded pediatric and gastroenterology products through its sales force. Pernix markets its generic products through its wholly-owned subsidiaries, Cypress Pharmaceuticals and Macoven Pharmaceuticals. The Company’s wholly-owned subsidiary, Great Southern Laboratories, manufactures and packages products for the pharmaceutical industry in a wide range of dosage forms. A product candidate utilizing cough-related intellectual property is in development for the U.S. OTC market.
For the fourth quarter of 2012, net revenues were $18.2 million, compared to $21.4 million for the fourth quarter of 2011. Total net product revenues consisted of 53% revenue contribution from branded products and 47% revenue contribution from generic products in the fourth quarter of 2012.
The net loss for the fourth quarter of 2012 was approximately $(1.4) million, or $(0.05) per basic and diluted share, compared to net income of $3.9 million, or $0.15 per basic and diluted share, for the fourth quarter of 2011.
“This past year was a time for investing and building in Pernix’s continued success,” said Cooper Collins, President and Chief Executive Officer of Pernix. “Looking forward in 2013, we are focused on several key objectives that are expected to drive the Company’s future growth, which include the following: integrating Cypress and Hawthorn, re-launching Silenor by our newly-combined Pernix and Hawthorn sales forces, initiating our Phase III clinical trials for our pediatric product, launching Dr. Cocoa, an OTC chocolate flavored cough and cold product for the 2013-2014 cough and cold season, beginning the development of Silenor as an OTC product, and working toward the IND filings of two products in Hawthorn’s pipeline. We are also capitalizing on the synergies of our acquisitions, and improving efficiencies across all of our operations.”
Last week, Pernix announced completion of its acquisition of Somaxon Pharmaceuticals, Inc. (“Somaxon”) (NASDAQ: SOMX) following the approval of the transaction by stockholders of Somaxon at the special meeting held on March 6.
Somaxon’s Silenor — (doxepin) — a drug approved for the treatment of insomnia characterized by difficulty with sleep maintenance, has no abuse potential or evidence of physical dependence, and is not a controlled substance — is expected to be an important addition to Pernix’s product line. Silenor has demonstrated maintenance of sleep into the seventh and eighth hours of the night, with no meaningful evidence of next day residual effects and an overall adverse events profile comparable to that with a placebo. There is no generic Silenor.
Somaxon stockholders received 3,665,689 shares of Pernix common stock. The number of shares of Pernix common stock issued to the stockholders of Somaxon was based on the volume-weighted average price of Pernix’s common stock over the 30 day period ending on the day immediately prior to the closing on March 6, 2013. The volume-weighted average price was $6.82.”
Selling, general and administrative (SG&A) expenses in the fourth quarter of 2012 increased by approximately $4.2 to $11.1 million, compared to $6.9 million for the fourth quarter of 2011. The company reports that the increase was primarily due to the hiring of the Company’s new gastroenterology sales force, and expenses related to the development of the Company’s OTC cough and cold product candidate, operating expenses related to Pernix Manufacturing, an increase in stock compensation expense, expenses associated with the acquisitions of Cypress Pharmaceuticals, Hawthorn Pharmaceuticals, and Somaxon Pharmaceuticals, as well as an increase in corporate infrastructure costs to support the Company’s growth objectives.
SG&A expenses in the year ended December 31, 2012 increased by approximately $12.9 million to $35.4 million, compared to $22.5 million for the prior year period. As previously noted, the increase was primarily due to hiring and training of the Company’s new gastroenterology sales force, launch expenses associated with Omeclamox-Pak®, development of the Company’s OTC cough and cold product, an increase in stock compensation expense and operating expenses related to Great Southern Laboratories, expenses associated with acquisitions of Great Southern Laboratories, Cypress Pharmaceuticals, Hawthorn Pharmaceuticals and Somaxon Pharmaceuticals as well as an increase in corporate infrastructure costs to support the Company’s growth objectives.
Dr. Cocoa OTC Chocolate Flavored Cough and Cold Product Launch
The Company expects to launch Dr. Cocoa, an OTC chocolate flavored cough and cold product, in time for the 2013-2014 cough and cold season. The Dr. Cocoa line of pediatric cough-cold products includes daytime, nighttime, cough, cold and fever formulations, and was recently honored with a “Best Product” designation by retail buyers attending ECRM’s Cough/Cold, Analgesics & Allergy EPPS at Destin, Florida.
Acquisition of Cypress Pharmaceuticals and Hawthorn Pharmaceuticals Completed
On December 28, 2012, Pernix completed its acquisition of Cypress Pharmaceuticals, Inc. (“Cypress”), a privately-owned generic pharmaceutical company, and Hawthorn Pharmaceuticals, Inc. (“Hawthorn”), a privately-owned branded pharmaceutical company. Under the terms of the definitive agreement announced on November 14, 2012 and as amended on December 28, 2012, Pernix will pay up to $102 million, including an up-front payment of $52.0 million in cash and $34.3 million in equity (approximately 4,427,084 shares of the Company’s common stock) at closing as well as up to $11 million payable in December 2013 and an additional $5 million in a milestone payment. In connection with the closing of the acquisition, the Company entered into a $42 million credit facility with Midcap Funding V, LLC and other lending parties.
New Product Approvals
On February 28, 2013, the Company announced that its subsidiary, Hawthorn Pharmaceuticals, Inc., received U.S. Food and Drug Administration (FDA) approval of a new drug application (NDA) for VITUZ® Oral Solution (hydrocodone bitartrate and chlorpheniramine maleate). VITUZ is indicated for the relief of cough and symptoms associated with upper respiratory allergies or a common cold in adults 18 years of age and older. The product is expected to launch prior to the fall of the current year. Hawthorn has a well-recognized and highly prescribed portfolio of core marketed products in the Allergy, Iron Deficiency, Nephrology, Oral Steroid, Pain Management, and Respiratory categories.
On February 28, 2013, the Company announced that its subsidiary, Cypress Pharmaceuticals, Inc., was granted final approval by the FDA for an abbreviated new drug application (ANDA) for Mefenamic Acid Capsules USP, 250 mg. This product is the generic version of Ponstel Capsules, 250 mg, and is indicated for relief of mild-to-moderate pain in patients 14 years of age and older and the treatment of primary dysmenorrhea. The Company expects to launch the product in the second quarter of 2013, joining the diversified Cypress product portfolio of more than 150 pharmaceutical products available for a broad range of therapeutic categories including:
• Nutritional Supplements
• Fluorides/Dental Health
• Urinary Tract Products
• Women’s Health/Prenatal Vitamins • Pediatrics
Financial Position and Guidance
As of December 31, 2012, the Company had $23.0 million of cash and cash equivalents and working capital of $42.0 million. Pernix had $42 million outstanding on its $42 million term loan facility as of December 31, 2012.
The Company expects net revenues of Pernix, with the addition of the Cypress, Hawthorn and Somaxon acquisitions to be in the range of $125-$135 million for the full year 2013.