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INSYS Therapeutics Reports Fourth Quarter and Full Year 2017 Results
Foundation to become global leader in pharmaceutical cannabinoids and spray technology established in 2017 through new leadership and acceleration of product pipeline

PHOENIX, March 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 fourth quarter and full year ended Dec. 31, 2017.

OVERALL HIGHLIGHTS

  • Achieved gross revenue of $46.1 million, resulting in net revenue of $31.5 million.
  • Advanced product pipeline with total R&D investment of $16.4 million.
  • Completed pharmacokinetics (PK) study of naloxone nasal spray as investigational treatment of opioid overdose.
  • Completed FDA filing of NDA for buprenorphine sublingual spray as investigational treatment for moderate-to-severe acute pain.
  • Initiated Phase 2 clinical trial of cannabidiol (CBD) oral solution as investigational treatment for medically refractory childhood absence epilepsy.
  • Enrolled first patient in proof-of-concept study of epinephrine nasal spray as investigational treatment for anaphylaxis.
  • Received ‘Fast Track’ designation from FDA for CBD oral solution as investigational treatment for Prader-Willi syndrome.
  • Settled lawsuit with one major health insurer.

“Over the course of 2017, we implemented a series of significant changes that set the foundation for a new strategic direction for the company as a leader in pharmaceutical cannabinoids and spray technologies,” said Saeed Motahari, president and chief executive officer of INSYS Therapeutics. “This foundation was built around new leadership and elevated capabilities at all levels of the organization, which has allowed us to aggressively reposition and advance our product pipeline. Most importantly, this foundation establishes an unwavering commitment to enhance the quality of life for underserved patient populations, and we look forward to finding solutions for a number of orphan diseases through our R&D programs.”

Motahari continued, “In the fourth quarter, we continued our efforts to stabilize SUBSYS® despite the declining market for TIRF medications by securing several managed care wins that went into effect in January 2018. We also continued our controlled rollout of SYNDROS® during the period. As a result, we intend to achieve top-line stability in 2018 in parallel with our ongoing transformation of the company.”

Motahari concluded, “We believe our R&D in both pharmaceutical cannabinoids and spray technology platforms will propel INSYS to a strong market position for the coming years.”

Financial & Operating Highlights

  • Net revenue for the fourth quarter of 2017 was $31.5 million, compared to $54.9 million for the fourth quarter of 2016.
  • Gross margin was 85.4 percent for the fourth quarter of 2017, compared to 82.1 percent in the same period of 2016.
  • Sales and marketing investment was $7.1 million for the fourth quarter of 2017, compared to $13.5 million for the fourth quarter of 2016.
  • Research and development investment increased to $16.4 million for the fourth quarter of 2017, compared to $15.5 million for the same period in 2016.
  • General and administrative expense increased to $19.7 million for the fourth quarter of 2017 from $15.8 million for the fourth quarter of 2016.
  • Income tax expense was $26.8 million for the fourth quarter of 2017 and included a $7.5 million charge related to the change in tax code and $22.6 million of expense to fully reserve our deferred tax assets, compared to an expense of $0.3 million during the fourth quarter of 2016.
  • Net loss for the fourth quarter of 2017 was $47.0 million, or ($0.65) per basic and diluted share, compared to a net loss of $3.7 million, or ($0.05) per basic and diluted share, for the fourth quarter of 2016.
  • Adjusted EBITDA loss for the fourth quarter of 2017 was $11.5 million, compared to Adjusted EBITDA of $6.1 million in the prior-year quarter. The reconciliation of net income to Adjusted EBITDA is included at the end of this news release.
  • The company had $163.9 million in cash, cash equivalents, and short-term and long-term investments with no debt as of Dec. 31, 2017.

             
Webcast Information

A conference call is scheduled for 5:00 p.m. Eastern Standard Time on March 8, 2018, to discuss the financial and operational results for the fourth quarter of and full year 2017. 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.). 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 intending to address unmet medical needs and the clinical shortcomings of existing commercial products. INSYS currently markets SUBSYS® (fentanyl sublingual spray), CII, and SYNDROS® (dronabinol) oral solution, CII, a proprietary, orally administered liquid formulation of dronabinol. 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 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, 2016 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 income and Adjusted net income per diluted share, which are non-GAAP financial measures. Since Adjusted EBITDA, Adjusted net income and Adjusted net income per diluted share are not GAAP financial measures, they should not be used in isolation or as a substitute for consolidated statements of comprehensive income (loss) and cash flow data prepared in accordance with GAAP. In addition, the company's definitions of Adjusted EBITDA, Adjusted net income and Adjusted net income 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 income to GAAP net income, please see the attachments to this earnings release.

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

Net income, plus:

  • Interest income (expense), net;
  • The recorded provision for income taxes;
  • Depreciation and amortization; and
  • Non-cash expenses, such as stock compensation expense and accrual for expected litigation judgment.

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 income, as defined by the company, is calculated as follows:

Net income, plus:

  • The recorded provision for income taxes;
  • Non-cash expenses, such as stock compensation expense, non-cash interest, and non-cash other expense (i.e., accrual for expected litigation judgment); and;
  • Less an estimated cash tax provision, net of the benefit from utilizing NOL carry-forwards and windfalls from employee stock option exercises.

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

The company believes that Adjusted net income and Adjusted net income per diluted shares 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 income and Adjusted net income 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 income 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 income and Adjusted net income 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 December 31,   Twelve Months Ended December 31,  
      2017       2016       2017       2016    
Net revenue $   31,485     $   54,860     $   140,693     $   242,275    
Cost of revenue     4,611         9,805         20,643         25,393    
Gross profit     26,874         45,055         120,050         216,882    
                   
Operating expenses:                
  Sales and marketing     7,095         13,498         48,870         69,651    
  Research and development     16,365         15,473         62,954         73,913    
  General and administrative     19,691         15,817         67,573         62,092    
  Charges related to litigation award and government settlements     4,384         3,900         159,684         3,900    
Total operating expenses     47,535         48,688         339,081         209,556    
                   
Income (loss) from operations     (20,661 )       (3,633 )       (219,031 )       7,326    
Other income (expense),net     (1 )       15         (45 )       59    
Interest income     471         277         1,881         1,039    
Income (loss) before income taxes     (20,191 )       (3,341 )       (217,195 )       8,424    
Income tax expense     26,796         311         10,820         834    
Net income (loss) $   (46,987 )   $   (3,652 )   $   (228,015 )   $   7,590    
                   
Net income (loss) per common share:                
  Basic $   (0.65 )   $   (0.05 )   $   (3.16 )   $   0.11    
  Diluted $   (0.65 )   $   (0.05 )   $   (3.16 )   $   0.10    
                   
Shares used in computing net income per common share:                
  Basic     72,636,001         71,698,737         72,259,063         71,618,793    
  Diluted     72,636,001         73,869,081         72,259,063         74,145,918    
                   
                   
Percentage of Net revenue:                
                   
Net revenue   100.0 %     100.0 %     100.0 %     100.0 %  
Cost of revenue   14.6 %     17.9 %     14.7 %     10.5 %  
Gross profit   85.4 %     82.1 %     85.3 %     89.5 %  
                   
Operating expenses:                
  Sales and marketing   22.5 %     24.6 %     34.7 %     28.7 %  
  Research and development   52.0 %     28.2 %     44.7 %     30.5 %  
  General and administrative   62.6 %     28.8 %     48.1 %     25.6 %  
  Charges related to litigation award and government settlements   13.9 %     7.1 %     113.5 %     1.6 %  
Total operating expenses   151.0 %     88.7 %     241.0 %     86.5 %  
                   
Income (loss) from operations   -65.6 %     -6.6 %     -155.7 %     3.0 %  
Other income (expense),net   0.0 %     0.0 %     0.0 %     0.0 %  
Interest income   1.5 %     0.5 %     1.3 %     0.4 %  
Income (loss) before income taxes   -64.1 %     -6.1 %     -154.4 %     3.5 %  
Income tax expense   85.1 %     0.6 %     7.7 %     0.3 %  
Net income (loss)   -149.2 %     -6.7 %     -162.1 %     3.1 %  
                   


INSYS THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
         
    December 31,   December 31,
      2017     2016
ASSETS:      
Cash and cash equivalents $   31,999   $   104,642
Short-term investments     85,189       78,238
Accounts receivable, net     21,513       20,654
Inventories     17,408       20,414
Prepaid expenses and other current assets     19,833       5,695
Long-term investments     46,733       53,796
Other non-current assets     56,405       72,697
Total assets $   279,080   $   356,136
         
LIABILITIES AND STOCKHOLDERS' EQUITY:      
Liabilities $   215,798   $   86,547
Stockholders' equity     63,282       269,589
Total liabilities and stockholders' equity $   279,080   $   356,136
         


INSYS THERAPEUTICS, INC.
RECONCILIATION OF NET INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA
(In thousands)
(unaudited)
                   
    Three Months Ended December 31,   Twelve Months Ended December 31,  
      2017       2016       2017       2016    
Net income (loss) $   (46,987 )   $   (3,652 )   $   (228,015 )   $   7,590    
Adjustments to arrive at EBITDA:                
  Interest income     (471 )       (277 )       (1,881 )       (1,039 )  
  Income tax expense     26,796         311         10,820         834    
  Depreciation and amortization expense     1,832         1,715         7,337         6,249    
EBITDA     (18,830 )       (1,903 )       (211,739 )       13,634    
  Non-cash stock compensation expense     2,967         4,118         16,015         21,589    
  Charges related to litigation award and government settlements     4,384         3,900         159,684         3,900    
Adjusted EBITDA $   (11,479 )   $   6,115     $   (36,040 )   $   39,123    
                 


INSYS THERAPEUTICS, INC.
RECONCILIATION OF NET INCOME (LOSS) TO NON-GAAP ADJUSTED NET INCOME (LOSS)
(In thousands, except per share amounts)
(unaudited)
                 
    Three Months Ended December 31,   Twelve Months Ended December 31,
      2017       2016       2017       2016
Net income (loss) $   (46,987 )   $   (3,652 )   $   (228,015 )   $   7,590
Income tax expense     26,796         311         10,820         834
Income (loss) before income taxes     (20,191 )       (3,341 )       (217,195 )       8,424
Adjustments to arrive at Adjusted net income (loss):              
  Non-cash stock compensation expense     2,967         4,118         16,015         21,589
  Charges related to litigation award and government settlements     4,384         3,900         159,684         3,900
Adjusted income (loss) before income taxes     (12,840 )       4,677         (41,496 )       33,913
  Less: Adjusted income tax provision     31,689         2,588         13,657         5,973
Adjusted net income (loss) $   (44,529 )   $   2,089     $   (55,153 )   $   27,940
                 
Adjusted net income per diluted share (loss) $   (0.61 )   $   0.03     $   (0.76 )   $   0.38
                 

CONTACT:

Corporate Communications
Joe McGrath
INSYS Therapeutics
480-500-3101
[email protected]

Investor Relations
Jackie Marcus or Chris Hodges
Alpha IR Group
312-445-2870
[email protected]

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Insys Therapeutics, Inc.