Par Pharmaceutical Companies Reports Fourth Quarter and Full-Year Results for 2010

WOODCLIFF LAKE, N.J., Feb. 24, 2011 /PRNewswire/ -- Par Pharmaceutical Companies, Inc. (NYSE: PRX) today reported results for the fourth quarter and full year ended December 31, 2010.

For the fourth quarter ended December 31, 2010, the Company reported total revenues of $227 million and income from continuing operations of $17.6 million, or $0.48 per diluted share, which includes a net $2.7 million charge related to the settlement of litigation and changes in estimates for loss contingencies.  Excluding these items, adjusted income from continuing operations (non-GAAP measure) was $19.3 million.  On an adjusted cash basis (non-GAAP measure), which excludes amortization expenses, income from continuing operations was $22.3 million, or $0.61 per diluted share for the fourth quarter 2010.  This is compared to reported revenues of $290.3 million and income from continuing operations of $10.8 million, or $0.31 per diluted share for the same period in 2009, which included several one-time items. On an adjusted cash basis, income from continuing operations was $25.8 million, or $0.74 per diluted share for the fourth quarter 2009.  

For the full year ended December 31, 2010, total revenue was $1.0 billion with income from continuing operations of $92.8 million, or $2.60 per diluted share. On an adjusted cash basis (non-GAAP measure), which excludes amortization expenses and certain items as detailed in the attached reconciliation, income from continuing operations was $105.0 million, or $2.95 per diluted share.  This compares to reported revenues of $1.2 billion and income from continuing operations of $77.6 million, or $2.27 per diluted share, for 2009.  On an adjusted cash basis, income from continuing operations for the full year 2009 was $100.2 million, or $2.93 per diluted share.

Fourth Quarter Highlights  

Key Product Sales (Net sales comparisons at the product level are to third quarter 2010)

• Metoprolol:  For the quarter ended December 31, 2010, net sales of metoprolol succinate were $73.0 million, a decrease from the third quarter 2010.  The decrease was driven by a decline in volume and price due to competition on all strengths.  Net sales for the full year 2010 were $473.2 million.  Par Pharmaceutical, the Company's generic drug division, is the authorized generic for all strengths of AstraZeneca's Toprol XL®.

• Sumatriptan: Net sales of sumatriptan succinate were $19.9 million in the fourth quarter compared to $18.3 million in the prior quarter.  The increase is due to additional volume driven by customer buying patterns.  Net sales for the full year 2010 were $73.0 million. Par Pharmaceutical remained the exclusive supplier of generic Imitrex® 4mg and 6mg starter kits and 4mg prefilled cartridges and had one competitor in the 6mg prefilled cartridges throughout the fourth quarter.

• Hydrocodone polistirex and chlorpheniramine polistirex: Net sales of hydrocodone and chlorpheniramine ER oral suspension were $17.5 million in the fourth quarter.  Par Pharmaceutical launched the product in October 2010.

• Omeprazole sodium bicarbonate capsules: Net sales were $4.4 million for the fourth quarter 2010 compared to $13.5 million for the third quarter.  The decrease was due to higher trade inventories for the initial launch phase, which occurred in the third quarter.

• Clonidine:  Net sales for the fourth quarter were $8.7 million compared to $7.8 million in the third quarter.  The increase was due to additional volume driven by customer buying patterns.  Net sales for the full year were $61.3 million.

• Meclizine: Net sales for fourth quarter were $5.4 million compared to $6.2 million in the previous quarter.  The decrease was driven by a decline in volume and price due to competition.  Net sales for the full year were $31.2 million.

• Tramadol ER:  Net sales for the fourth quarter 2010 were $6.1 compared to $5.5 million in the prior quarter.  Net sales for the full year were $22.6 million. Par Pharmaceutical remains one of only two suppliers of tramadol ER since its launch in November 2009.

• Other generic products:  For the fourth quarter 2010, net sales from all other generic products were $68.2 million. When adjusted for certain events, fourth quarter net sales were $57.2 million. This compares to adjusted third quarter net sales of $62.2 million.  

• Megace® ES:  Net sales were $14.8 million for the fourth quarter compared to $16.8 million in the third quarter.  The decrease was due to a decrease in volume and an increase in returns.  Net sales for the full year were $60.9 million.

• Nascobal® B12 Nasal Spray:  Net sales were $4.8 million for the three months ended December 31, 2010 compared to $4.9 million in the third quarter.  Net sales for the full year were $17.7 million.

Total net revenues for the three months ended December 31, 2010, were $227.0 million compared to $290.3 million from prior year, principally driven by additional competition in metoprolol, meclizine, and clonidine.

Gross margin for the fourth quarter 2010 increased compared to the prior year due primarily to the launches of omeprazole, diazepam, and hydrocodone polistirex and chlorpheniramine polistirex, as well as increases in other generic products.  These gains were partially offset by lower metroprolol, clonidine and meclizine sales and the impact of U.S. healthcare reform enacted in 2010.

Research and development expenses were $12.9 million in the fourth quarter of 2010 compared to $19.7 million in the fourth quarter 2009.  The decrease was due primarily to the non-recurrence of an amendment with MonoSol Rx in the fourth quarter 2009.

Selling, general and administrative expenses for the fourth quarter 2010 increased to $52.1 million compared to $42.8 million in the fourth quarter of 2009.  This increase primarily reflects on-going direct expenditures supporting Strativa sales and marketing, driven primarily by an increase in the field force and other activities related to the 2010 launches of Oravig and Zuplenz, as well as higher legal fees and severance charges.

Cash and cash equivalents and marketable securities aggregate balance as of December 31, 2010 was $246.5 million and includes significant one-time cash outflows from the repayment of the outstanding balance of the Company's Senior Subordinated Convertible Notes in the amount of $47.0 million and $63.0 million in payments to development partners.

Product and Pipeline Update

Strativa Pharmaceuticals launched Oravig^® and Zuplenz^™ (ondansetron) in the second half of 2010 and records revenues on an as-prescribed basis.

In November 2010, Par Pharmaceutical began shipping 10mg and 20mg strengths of a generic version of AstraZeneca's Accolate^® (zafirlukast) tablets. Par is the authorized generic for all strengths of AstraZeneca's Accolate.  According to IMS Health data, annual sales in the U.S. for Accolate are approximately $50 million.

On January 3, 2011, Par Pharmaceutical successfully launched all strengths of amlodipine besylate and benazepril hydrochloride capsules, the generic version of Novartis' Lotrel^®.  Par has been awarded 180 days of marketing exclusivity for the 5/40mg and 10/40mg strengths, commencing at launch, for being the first to file an ANDA containing a paragraph IV certification for the product.  According to IMS Health data, annual sales in the U.S. for these two strengths of Lotrel are approximately $361 million.

On January 3, 2011, Par Pharmaceutical successfully launched the 225mg, 325mg, and 425mg strengths of propafenone SR capsules, the generic version of GlaxoSmithKline's Rythmol SR^®.  Par Pharmaceutical has been awarded 180 days of marketing exclusivity, commencing at launch, for being the first to file an ANDA containing a paragraph IV certification for the product.  According to IMS Health data, annual sales in the U.S. of Rythmol are approximately $121 million.

Par Pharmaceutical along with third-party partners currently have approximately 29 ANDAs pending with the FDA, 11 of which it believes to be first-to-file opportunities with a brand value of approximately $8.0 billion.

Conference Call

Par Pharmaceutical Companies, Inc has scheduled a conference call for Thursday, February 24 at 9:00 am EST to discuss results for the fourth quarter and full year 2010.  The Company invites investors and the general public to listen to a webcast of the conference call.  

Access to the live webcast can be made via the Company's website at www.parpharm.com.

A replay of the conference call will be available for two weeks approximately one hour after the call.

Non-GAAP Measures

Par Pharmaceutical Companies, Inc. ("the Company") believes it prepared its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) and pursuant to accounting requirements of the Securities and Exchange Commission.  In an effort to provide investors with additional information regarding the Company's results and to provide a meaningful period-over-period comparison of the Company's financial performance, the Company sometimes uses non-GAAP financial measures as defined by the Securities and Exchange Commission.  The differences between the U.S. GAAP and non-GAAP financial measures are reconciled in an attached schedule.  In presenting comparable results, the Company discloses non-GAAP financial measures when it believes such measures will be useful to investors in evaluating the Company's underlying business performance.  Management uses the non-GAAP financial measures to evaluate the Company's financial performance against internal budgets and targets.  In addition, management internally reviews the Company's results excluding the impact of certain items, as it believes that these non-GAAP financial measures are useful for evaluating the Company's core operating results and facilitating comparison across reporting periods.  Importantly, the Company believes non-GAAP financial measures should be considered in addition to, and not in lieu of, U.S. GAAP financial measures.  The Company's non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.

About Par Pharmaceutical Companies, Inc.

Par Pharmaceutical Companies, Inc. is a US-based specialty pharmaceutical company.  Through its wholly-owned subsidiary's two operating divisions, Par Pharmaceutical and Strativa Pharmaceuticals, it develops, manufactures and markets higher-barrier-to-entry generic drugs and niche, innovative proprietary pharmaceuticals. For press release and other company information, visit www.parpharm.com.

Safe Harbor Statement

Certain statements in this news release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  To the extent any statements made in this news release contain information that is not historical, these statements are essentially forward-looking and, as such, are subject to known and unknown risks, uncertainties and contingencies, many of which are beyond the control of the Company, which could cause actual results and outcomes to differ materially from those expressed herein.  Risk factors that might affect such forward-looking statements include those set forth in Item 1A of the Company's most recent Annual Report on Form 10-K, in other of the Company's filings with the SEC from time to time, including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and on general industry and economic conditions.  Any forward-looking statements included in this news release are made as of the date hereof only, based on information available to the Company as of the date hereof, and, subject to any applicable law to the contrary, the Company assumes no obligation to update any forward-looking statements.

SOURCE Par Pharmaceutical Companies, Inc.