ISTA Pharmaceuticals, Inc. (NASDAQ: ISTA), today reported on recent
events and financial results for the quarter ended March 31, 2012.
Recent Events
- On March 26, 2012, ISTA entered into a definitive merger
agreement with Bausch + Lomb Incorporated, the global eye health
company, pursuant to which Bausch + Lomb will acquire ISTA for
$9.10 per share in cash, or a total of approximately $500 million.
The transaction, which has been unanimously approved by the board
of directors of both companies, is expected to close in the second
quarter of 2012. The closing of the transaction is subject to
customary closing conditions, including the approval of ISTA's
stockholders.
- ISTA and Senju Pharmaceuticals Co. Ltd (Senju) came to
agreement on disputed royalty payments for XIBROM (bromfenac
ophthalmic solution)® 0.09% and BROMDAY™ (bromfenac ophthalmic
solution) 0.09%, both for the treatment of postoperative
inflammation and reduction of ocular pain in patients who have
undergone cataract extractions. The settlement resulted in a
one-time payment of $24 million to Senju and a one-time decrease to
ISTA's cost of products sold of $9.3 million for the first quarter
of 2012. As part of the settlement, ISTA's royalty rates to be paid
on BROMDAY in 2012 and 2013 were reduced.
First Quarter 2012 Financial Highlights
Net Revenues
(in millions, except percentage data)
Quarter Ended Quarter Ended
March 31, March 31,
2012 2011 Change
------------- ------------- ------
BROMDAY / XIBROM $ 19.1 $ 23.0 -17%
BEPREVE 6.1 4.2 45%
ISTALOL 5.8 6.2 -6%
VITRASE 3.0 3.3 -9%
------------- -------------
Total net revenues $ 34.0 $ 36.7 -7%
============= =============
Net revenues were approximately $34.0 million and $36.7 million
for the three months ended March 31, 2012 and March 31, 2011,
respectively. The decrease in revenues for the three months ended
March 31, 2012 as compared to the three months ended March 31, 2011
is primarily due to lower sales of bromfenac products and higher
rebates recorded due to higher utilization under our managed care
contracts and higher return reserves for XIBROM™ in 2012
(approximately $1.1 million), offset by higher 2012 sales of
BEPREVE®. The decrease in bromfenac product sales results from
higher units shipped in 2011 as we had just launched BROMDAY and
continued to ship XIBROM prior to discontinuing the product in
February 2011.
Gross margin for the first quarter ended March 31, 2011 was
107%, or $36.3 million, as compared to 75%, or $27.5 million, for
the same period in 2011. The increase in gross margin for the first
quarter of 2012 as compared to prior year was due to the one-time
decrease of $9.3 million in cost of products sold resulting from
the Senju royalty settlement. Excluding the settlement, gross
margin for the first quarter of 2012 would have been 79%, driven by
lower royalty rates on BROMDAY and growth in revenues for
BEPREVE.
Research and development (R&D) expenses for the first
quarter ended March 31, 2012 were $9.5 million, as compared to
$10.3 million during the corresponding period of 2011 primarily due
to the timing associated with the initiation and completion of
various clinical studies. Selling, general, and administrative
(SG&A) expenses for the first quarter ended March 31, 2012
increased to $28.4 million from $26.9 million for the corresponding
period in 2011. The increase primarily reflects higher marketing,
litigation and stock-based compensation expenses. SG&A expenses
include $3.9 million of costs associated with evaluation of our
strategic options during the three months ended March 31, 2012 as
compared to $4.5 million of costs incurred in 2011 in connection
with financing and due diligence activities to pursue a potential
acquisition of a company with marketed products.
Under accounting principles generally accepted in the United
States (GAAP), the net loss for the first quarter ended March 31,
2012 was $17.8 million, or $0.43 per share, impacted primarily by a
non-cash warrant valuation adjustment of $13 million resulting
primarily from a 28% increase in the Company's stock price. On an
adjusted cash net basis, excluding non-cash interest expense,
stock-based compensation expenses, non-cash warrant and derivative
valuation adjustments and other non-recurring items such as
expenses incurred in connection with the evaluation of its
strategic options, ISTA had adjusted cash net income of $3.1
million, or $0.06 per share, based on 50.9 million fully diluted
shares outstanding.
At March 31, 2012, ISTA had cash of $54 million, which included
$15 million under ISTA's revolving line of credit with Silicon
Valley Bank. Cash decreased by $24 million due to payments made to
Senju during the quarter.
Conference Call
ISTA will not hold a conference call regarding the results for
the quarter ended March 31, 2012 and other matters referenced in
this release because of the pending acquisition of ISTA by Bausch
+Lomb.
ABOUT ISTA PHARMACEUTICALS
ISTA Pharmaceuticals, Inc. is the third largest branded
prescription eye care business in the United States with an
expanding focus on allergy therapeutics. ISTA currently markets
four products, including treatments for ocular inflammation and
pain post-cataract surgery, glaucoma and ocular itching associated
with allergic conjunctivitis. The Company's development pipeline
contains additional candidates in various stages of development to
treat dry eye, ocular inflammation and pain, and nasal allergies.
Headquartered in Irvine, California, ISTA generated revenues of
$160 million in 2011. For additional information about ISTA, please
visit the corporate website at www.istavision.com.
BROMDAY™ (bromfenac ophthalmic solution) 0.09%, XIBROM
(bromfenac ophthalmic solution)® 0.09%, ISTALOL® (timolol maleate
ophthalmic solution) 0.5%, VITRASE® (hyaluronidase injection)
Ovine, 200 USP Units/mL, BEPREVE® (bepotastine besilate ophthalmic
solution) 1.5%, PROLENSA™ (bromfenac ophthalmic solution), BEPOMAX™
(bepotastine besilate nasal spray) and BEPOSONE™ (bepotastine
besilate/steroid combination nasal spray) are trademarks of ISTA
Pharmaceuticals, Inc.
Full prescribing information for BROMDAY is available on ISTA
Pharmaceuticals' website at
http://www.istavision.com/pdf/BROMDAYPI101008.pdf
Full prescribing information for BEPREVE is available on ISTA
Pharmaceuticals' website at
http://www.istavision.com/pdf/Bepreve_insert.pdf
Full prescribing information for ISTALOL is available on ISTA
Pharmaceuticals' website at
http://www.istavision.com/pdf/Istalol_Full_PI-ISL274.pdf
Full prescribing information for VITRASE is available on ISTA
Pharmaceuticals' website at
http://www.istavision.com/pdf/vitrase200_package_insert.pdf
ADDITIONAL INFORMATION AND WHERE TO FIND
IT
The proposed acquisition by Bausch +Lomb will be submitted to
the stockholders of ISTA for their consideration. In connection
with the proposed transaction, ISTA filed a preliminary proxy
statement with the Securities and Exchange Commission (SEC) on
April 23, 2012. ISTA and Bausch + Lomb plan to file with the SEC
other documents regarding the proposed transaction. STOCKHOLDERS OF
ISTA ARE URGED TO READ THE PRELIMINARY PROXY STATEMENT REGARDING
THE PROPOSED TRANSACTION IN ITS ENTIRETY AND TO READ THE DEFINITIVE
PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS CAREFULLY AND IN
THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The
definitive proxy statement will be mailed to ISTA's stockholders.
You may obtain copies of all documents filed with the SEC
concerning the proposed transaction, free of charge, at the SEC's
website at www.sec.gov. In addition, stockholders may obtain free
copies of the documents filed with the SEC by ISTA by contacting
ISTA Investor Relations at 949-789-3159 or jherbert@istavision.com
or by calling proxy solicitor Georgeson Inc. toll-free at 1-(888)
293-6812.
ISTA and its directors and executive officers
may be deemed to be participants in the solicitation of proxies
from ISTA's stockholders with respect to the transactions
contemplated by the merger agreement. Information regarding ISTA's
directors and executive officers is contained in ISTA's Annual
Report on Form 10-K for the year ended December 31, 2011, its proxy
statement for its 2011 annual meeting of stockholders dated
November 1, 2011, and its Current Report on Form 8-K filed December
6, 2011, which are filed with the SEC. Additional information
regarding persons who may be deemed to be participants in the
solicitation of proxies in respect of the proposed transaction is
contained in the preliminary proxy statement filed by ISTA with the
SEC on April 23, 2012. As of March 24, 2012, ISTA's directors and
officers beneficially owned approximately 5,509,411 shares, or
13.15%, of ISTA's common stock.
FORWARD-LOOKING STATEMENTS
Any statements contained in this press release that refer to
future events or other non-historical matters are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. These forward-looking statements are intended
to qualify for the safe harbor from liability established by the
Private Securities Reform Act of 1995. Without limiting the
foregoing, but by way of example, statements contained in this
press release related to the pending transaction between Bausch +
Lomb and ISTA and the expected timetable for completing the
transaction are forward-looking statements. Except as required by
law, ISTA disclaims any intent or obligation to update any
forward-looking statements. These forward-looking statements are
based on ISTA's expectations as of the date of this press release
and are subject to risks and uncertainties that could cause actual
results to differ materially. Important factors that could cause
actual results to differ from current expectations are detailed
from time to time in ISTA's public filings with the U.S. Securities
and Exchange Commission, including but not limited to ISTA's Annual
Report on Form 10-K for the year ended December 31, 2011, as
amended.
ISTA PHARMACEUTICALS, INC.
Unaudited Statement of Operations
(in thousands, except per share data)
Three Months Ended March 31,
----------------------------
2012 2011
------------- -------------
Revenues:
Product sales, net $ 34,012 $ 36,720
------------- -------------
Total revenues 34,012 36,720
Cost of products sold (including one-time
adjustment of $9,312 for royalty settlement
for the three months ended March 31, 2012) (2,264) 9,216
------------- -------------
Gross profit 36,276 27,504
Costs and expenses:
Research and development 9,491 10,344
Selling, general and administrative 28,396 26,931
------------- -------------
Total costs and expenses 37,887 37,275
------------- -------------
Loss from operations (1,611) (9,771)
Other expense :
Interest expense (1,440) (2,068)
Loss on derivative valuation (1,745) -
Loss on warrant valuation (13,009) (72,234)
------------- -------------
Total other expense (16,194) (74,302)
------------- -------------
Net loss $ (17,805) $ (84,073)
============= =============
Net loss per common share, basic and diluted $ (0.43) $ (2.49)
============= =============
Shares used in computing net loss per common
share, basic and diluted 41,786 33,715
============= =============
ISTA PHARMACEUTICALS INC.
Unaudited Summary of Balance Sheet Data
(in thousands)
March 31, December 31,
2012 2011
------------- -------------
Cash and cash equivalents $ 53,692 $ 71,593
Working capital 2,154 2,265
Total assets 124,736 153,091
Current portion of Facility Agreement 21,450 21,450
Facility Agreement, net of current portion and
unamortized discounts and derivatives 24,220 21,975
Warrant Liability 53,139 40,130
Total liabilities 189,571 202,164
Total stockholders' deficit (64,835) (49,073)
Non-GAAP Financial Measures
ISTA believes the metric "adjusted cash net income (loss) and
adjusted cash EPS excluding non-cash interest expense, stock option
expense, non-cash warrant and derivative valuation adjustments and
other non-recurring items," are useful financial measures for
investors in evaluating the Company's performance for the periods
presented. ISTA's management believes the presentation of these
non-GAAP financial measures provides useful information to the
Company and to investors regarding ISTA's results of operations as
these non-GAAP financial measures allow better evaluation of
ongoing business performance. These metrics, however, are not a
measure of financial performance under accounting principles
generally accepted in the United States (GAAP) and should not be
considered a substitute for net income (loss) or EPS in accordance
with GAAP and may not be comparable to similarly titled measures
reported by other companies. For a reconciliation of net loss to
adjusted cash net income (loss), see the table below.
ISTA PHARMACEUTICALS, INC.
Reconciliation of GAAP Net Loss to Adjusted Cash Net Income (Loss)
(in thousands)
Three Months Ended March 31,
----------------------------
2012 2011
------------- -------------
Net loss $ (17,805) $ (84,073)
Add:
Stock-based compensation costs 1,534 1,017
Amortization of deferred financing costs 188 267
Amortization of discounts on Facility
Agreement 500 712
Change in value of warrants related to
Facility Agreement 13,009 72,234
Change in value of derivative related to
Facility Agreement 1,745 -
------------- -------------
Cash net loss (829) (9,843)
Add:
Costs associated with strategic review process 3,934 -
Costs associated with attempted acquisition - 4,506
------------- -------------
Adjusted cash net income (loss) $ 3,105 $ (5,537)
============= =============
Net loss per share - basic and diluted $ (0.43) $ (2.49)
============= =============
Adjusted cash net income (loss) per share -
basic $ 0.07 $ (0.16)
============= =============
Adjusted cash net income (loss) per share -
diluted $ 0.06 $ (0.16)
============= =============
Shares used in computing adjusted cash net
loss per common share, basic 41,786 33,715
============= =============
Shares used in computing adjusted cash net
loss per common share, diluted 50,899 33,715
============= =============
For Investor Relations: Lauren Silvernail 949-788-5302
lsilvernail@istavision.com Jeanie Herbert 949-789-3159
jherbert@istavision.com Kathy Galante Burns McClellan 212-213-0006
kgalante@burnsmc.com For General Media: Justin Jackson Burns
McClellan 212-213-0006 jjackson@burnsmc.com For Trade Media: Tad
Heitmann BioComm Network 714-273-2937 theitmann@BioCommNetwork.com
Web Site: http://www.istavision.com
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