SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): May 14, 2001 (May 14, 2001)
ENDO PHARMACEUTICALS HOLDINGS INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 39040 13-4022871
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(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
223 Wilmington-West Chester Pike
Chadds Ford, Pennsylvania 19317
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(Address of principal executive offices) (Zip Code)
(610) 558-9800
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report)
Item 5. Other Events.
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On May 14, 2001, the Registrant issued a press release, a
copy of which is filed herewith as Exhibit 99.1 and is incorporated herein
by reference.
Item 7. Financial Statements and Exhibits.
---------------------------------
(a) Financial Statements of Business Acquired.
Not applicable
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
Exhibit Number Description
99.1 Press release issued by Endo Pharmaceuticals Holdings Inc.
on May 14, 2001
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.
ENDO PHARMACEUTICALS HOLDINGS INC.
(Registrant)
By: /s/ CAROL A. AMMON
-----------------------------------
Name: Carol A. Ammon
Title: President & Chief Executive Officer
Dated: May 14, 2001
INDEX TO EXHIBITS
Exhibit No. Description
99.1 Press release issued by Endo Pharmaceuticals Holdings Inc.
on May 14, 2001
Exhibit 99.1
Contact: Robert Siegfried/Jeremy Fielding
Kekst and Company
212-521-4800
Endo Pharmaceuticals Reports First Quarter 2001
Financial Results
-- Net Sales Increase 46% and Gross Profit Rises by 79% for the Period --
CHADDS FORD, PA, May 14,2001 -- Endo Pharmaceuticals Holdings Inc.
(Nasdaq: ENDP; ENDPW), a market leader in pain management, today reported
its financial results for the three months ended March 31, 2001. The
Company, which completed its merger with Algos Pharmaceutical Corporation
on July 17, 2000, increased net sales by 46% for the quarter ended March
31, 2001 to $39.4 million from $27.0 million in the same period in 2000.
Gross profit for the three months ended March 31, 2001 grew by 79% to $26.7
million from $14.9 million over the comparable 2000 period.
Carol A. Ammon, President and Chief Executive Officer of Endo
Pharmaceuticals, said, "Our results further underscore the continuing
development and growth of our business. In the first quarter, we deployed
our full-time dedicated contract specialty and primary care sales forces to
promote both Percocet(R) and Lidoderm(R), as well as other products in our
portfolio. We continue to significantly increase investment in Research &
Development to advance several products in the clinical development stage.
We believe that our pipeline, supported by our increased investment in
Research & Development, clinical development and education, is enhancing
Endo's position as a market leader in pain management."
First Quarter Results
Net sales for the three months ended March 31, 2001 increased by
46% to $39.4 million from $27.0 million in the comparable 2000 period. This
increase in net sales was primarily due to the increase in net sales from
several new products. In November 1999, the Company launched Percocet(R)
2.5/325, Percocet(R) 7.5/500 and Percocet(R) 10.0/650 to complement the
existing Percocet(R) 5.0/325 for the relief of moderate-to-severe pain. In
September 1999, the Company launched Lidoderm(R), the first FDA-approved
product for the treatment of the pain of post-herpetic neuralgia. In
November 1998, the Company launched Morphine Sulfate Extended Release
Tablets, the therapeutic equivalent version of MS Contin(R), for
moderate-to-severe pain.
Gross profit for the three months ended March 31, 2001 increased
by 79% to $26.7 million from $14.9 million in the comparable 2000 period.
Gross profit margins increased to 68% from 55% due to the Company's
continued focus on a more favorable mix of higher margin products both
through product launches as discussed above, and the discontinuation of
some lower margin non-core products. In addition, the increase in gross
profit margins was also due to the existing fixed cost nature of the
Company's manufacturing relationship with DuPont Pharmaceuticals, currently
the Company's most significant contract manufacturing relationship. Cash
Gross Profit (defined in the merger agreement with Algos as equal to gross
profit as determined by generally accepted accounting principles (GAAP)
excluding non-cash charges) for the three months ended March 31, 2001
increased by 61% to $29.7 million from $18.4 million in the comparable 2000
period. Cash Gross Profit margins increased to 75% from 68%. A
reconciliation of gross profit as determined by GAAP to Cash Gross Profit
is as follows:
(Unaudited)
Three Months Ended
March 31,
2001 2000
------ -----
GAAP Gross Profit $ 26,733 $ 14,938
Non-cash manufacturing charges 2,917 3,497
------ --------
Cash Gross Profit $ 29,650 $ 18,435
======== ========
Selling, general and administrative expenses for the three months
ended March 31, 2001 increased by 31% to $15.9 million from $12.1 million
in the comparable 2000 period. This increase resulted from a $2.3 million
increase in sales and promotional efforts in 2001 over the comparable 2000
period in order to support Lidoderm(R) and Percocet(R). The increase in
sales and promotional efforts was primarily due to the first quarter 2001
deployment of a dedicated contract sales force of 230 full-time
representatives comprised of 70 full-time specialty representatives and 160
full-time primary care representatives as compared to 300 part-time
representatives in the comparable 2000 period. In addition, the Company
experienced an increase in personnel-related costs in the general and
administrative functions in order to support its growth.
Research and development expenses for the three months ended March
31, 2001 increased by 207% to $9.2 million from $3.0 million in the
comparable 2000 period. This increase was due to the Company's increased
spending on products under development that are focused in pain management,
including the products under development that had been part of the former
Algos pipeline. The results of operations of Algos have been included in
the Company's financial statements prospectively for reporting periods
beginning July 17, 2000.
Operating Loss for the three months ended March 31, 2001 decreased
to $10.7 million from $24.4 million in the comparable 2000 period. Pro
Forma Consolidated EBITDA (as defined in footnote (1) below) for the three
months ended March 31, 2001 increased to $4.6 million from a negative $1.2
million in the comparable 2000 period. A reconciliation of Operating Loss
as determined by GAAP to Pro Forma Consolidated EBITDA is as follows:
(Unaudited)
Three Months Ended
March 31,
2001 2000
------ -----
GAAP Operating Loss $ (10,730) $ (24,348)
Depreciation and amortization 12,399 2,151
Non-cash manufacturing charges 2,917 3,497
Non-cash separation benefits - 20,782
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Subtotal: Consolidated EBITDA $ 4,586 $ 2,082
Operating loss of Algos - (3,321)
Depreciation and amortization of Algos - 55
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Pro Forma Consolidated EBITDA $ 4,586 $ (1,184)
The assets acquired and liabilities assumed, results of operations
and cash flows of Algos have been included in the Company's financial
statements and Management's Discussion and Analysis of Financial Conditions
and Results of Operations prospectively for reporting periods beginning
July 17, 2000. The Company's results have fluctuated in the past, and may
continue to fluctuate. These fluctuations are primarily due to the timing
of new product launches, purchasing patterns of the Company's customers,
market acceptance of the Company's products and the impact of competitive
products and pricing. On January 3, 2001, Watson Pharmaceuticals, Inc.
announced that the Food and Drug Administration had approved Watson's
abbreviated new drug application (ANDA) for a generic equivalent to
Percocet(R) 7.5/500 and Percocet(R) 10.0/650. The launch of these generics
may have a material impact on the results of operations and cash flows of
the Company in the future.
Forward Looking Statements
This press release contains forward-looking statements, within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, as amended, that are based on management's
beliefs and assumptions, current expectations, estimates and projections.
Statements that are not historical facts, including statements which are
preceded by, followed by, or that include, the words "believes,"
"anticipates," "plans," "expects" or similar expressions and statements.
Endo's estimated or anticipated future results, product performance or
other non-historical facts are forward-looking and reflect Endo's current
perspective on existing trends and information. Many of the factors that
will determine the Company's future results are beyond the ability of the
Company to control or predict. These statements are subject to risks and
uncertainties and, therefore, actual results may differ materially from
those expressed or implied by these forward-looking statements. The reader
should not rely on any forward-looking statement. The Company undertakes no
obligations to update any forward-looking statements whether as a result of
new information, future events or otherwise. Several important factors, in
addition to the specific factors discussed in connection with these
forward-looking statements individually, could affect the future results of
the Endo and could cause those results to differ materially from those
expressed in the forward-looking statements contained herein. Important
factors that may affect future results include, but are not limited to:
market acceptance of the Company's products and the impact of competitive
products and pricing; dependence on sole source suppliers; the success of
the Company's product development activities and the timeliness with which
regulatory authorizations and product launches may be achieved; successful
compliance with extensive, costly, complex and evolving governmental
regulations and restrictions; the availability on commercially reasonable
terms of raw materials and other third party manufactured products;
exposure to product liability and other lawsuits and contingencies;
dependence on third party suppliers, distributors and collaboration
partners; the ability to timely and cost effectively integrate
acquisitions; uncertainty associated with pre-clinical studies and clinical
trials and regulatory approval; uncertainty of market acceptance of new
products; the difficulty of predicting FDA approvals; risks with respect to
technology and product development; the effect of competing products and
prices; uncertainties regarding intellectual property protection;
uncertainties as to the outcome of litigation; changes in operating
results; impact of competitive products and pricing; product development;
changes in laws and regulations; customer demand; possible future
litigation; availability of future financing and reimbursement policies of
government and private health insurers and others; and other risks and
uncertainties detailed in Endo's Registration Statement on Form S-4 filed
with the Securities and Exchange Commission on June 9, 2000, as amended.
Readers should evaluate any statement in light of these important factors.
The following table presents the Company's consolidated statements of
operations for the three months ended March 31, 2001 and 2000:
Endo Pharmaceuticals Holdings Inc.
Consolidated Statements of Operations (unaudited)
(in thousands, except share and per share data)
Three Months Ended
March 31,
2001 2000
------ ----
NET SALES $39,382 $27,000
COST OF SALES 12,649 12,062
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GROSS PROFIT 26,733 14,938
COSTS AND EXPENSES:
Selling, general and administrative 15,890 12,073
Research and development 3,028
9,174
Depreciation and amortization 2,151
12,399
Separation benefits - 22,034
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OPERATING LOSS (10,730) (24,348)
INTEREST EXPENSE, Net 3,540 3,937
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LOSS BEFORE INCOME TAX BENEFIT (14,270) (28,285)
INCOME TAX BENEFIT 32 10,691
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NET LOSS $(14,238) $(17,594)
========= =========
NET LOSS PER SHARE:
Basic and Diluted $(.16) $(.25)
Weighted average shares
(Basic and Diluted) 89,138,950 71,324,957
The following table presents the Company's unaudited condensed
consolidated balance sheet data at March 31, 2001 and December 31, 2000:
Endo Pharmaceuticals Holdings Inc.
Condensed Consolidated Balance Sheet Data (unaudited)
(in thousands)
March 31, December 31,
2001 2000
---- ----
ASSETS
Total current assets $165,760 $173,054
Property and equipment, net 6,479 5,742
Goodwill and other intangibles, net 272,663 284,560
Deferred income taxes 844 736
Restricted cash 150 150
Other assets 3,050 3,598
------- -----
TOTAL ASSETS $448,946 $467,840
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $ 94,118 $100,295
Long-term debt, less current portion 158,234 162,154
Other liabilities 12,659 7,218
Total Stockholders' Equity 183,935 198,173
The following table presents the Company's unaudited net sales for
the three months ended March 31, 2001 and
2000:
Endo Pharmaceuticals Holdings Inc.
Net Sales (unaudited)
(in thousands)
Three Months Ended
March 31,
2001 2000
---- ----
Percocet(R) $20,159 $ 12,295
Lidoderm(R) 3,643 1,484
Other Brands 5,002 5,603
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Total Brands $28,804 $19,382
Total Generics $10,578 $ 7,618
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Total Net Sales $39,382 $27,000
======== =======
Endo is a fully integrated specialty pharmaceutical company with
market leadership in pain management. The company researches, develops,
produces and markets both branded and generic pharmaceutical products
primarily for the treatment of pain. Endo has a portfolio of thirteen
branded products that includes established brands such as Percocet(R) and
Percodan(R), opioid analgesics. This and past press releases of Endo
Pharmaceuticals Holdings Inc. are available at Endo's web site at
http://www.endo.com.
(1) Endo's credit facility defines Consolidated EBITDA as consolidated net
income for the applicable period plus, without duplication and to the
extent deducted from revenues in determining consolidated net income
for that period, the sum of (a) the aggregate amount of consolidated
cash interest expense for the period, (b) the aggregate amount of
letter of credit fees paid during the period, (c) the aggregate amount
of income tax expense for the period, (d) all amounts attributable to
depreciation and amortization for the period, (e) all extraordinary
charges during the period and (f) all other non-cash charges during
the period; and minus, without duplication and to the extent added to
revenues in determining consolidated net income for such period, the
sum of (i) all extraordinary gains during the period and (ii) all
other non-cash gains during such period, all as determined on a
consolidated basis with respect to Endo and subsidiaries in accordance
with generally accepted accounting principles.
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