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Impax Surpasses Earnings Estimates

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Impax Laboratories Inc.’s second-quarter 2013 adjusted earnings of 23 cents per share were above the Zacks Consensus Estimate of 4 cents but below the year-ago earnings of 61 cents per share.

Quarter in Details

Total revenue for the quarter stood at $129.6 million, down 22.2% year over year. However, second-quarter revenues were ahead of the Zacks Consensus Estimate of $121 million. The figure comprised revenues from the Global Pharmaceuticals and Impax Pharmaceuticals segments.

Global Pharmaceuticals revenues came in at $94 million in the second quarter, down 30% year over year. Revenues declined due to lower sales of Impax’s authorized generic version of Adderall XR following the entry of additional generic competition and lower sales of its generic fenofibrate products. However, this was partially mitigated by the January launch of the company’s non-AB rated Opana (oxymorphone hydrochloride) extended-release tablets.

Revenues from the Impax Pharmaceuticals division came in at $35.7 million in the reported quarter, up 6.9% year over year. Growth was driven by U.S. sales of Zomig. However, U.S. exclusivity on Zomig tablets and orally disintegrating tablets, which accounted for about 85% of Zomig product sales in the reported quarter, expired on May 14, 2013. With several generic competitors entering the market, sales of these two dosage forms have been impacted.

Total research and development expenses for the quarter decreased 21.8% to $15.5 million. Selling, general and administrative expenses increased 33.8% to $33.3 million.

During the reported quarter, Impax launched its authorized generic version of Zomig. Impax also launched the authorized generic version of TriLipix delayed release capsules, 45 mg and 135 mg.

2013 Guidance

Apart from announcing financial results, Impax announced its expense guidance for 2013. Total research and development expenses are now expected in the range of $80–$87 million compared to the old guidance of $87–$95 million. This includes generic research and development expenses of $45-$49 million (previously $49–$53 million) and brand research and development expenses of $35–$38 million (previously $38-$42 million).

Impax increased its patent litigation expenses estimates to the range of $12–$15 million compared to the old guidance of $10-$12 million.

The company lowered its selling, general and administrative expenses for 2013 to $113-$118 million from $115–$120 million.

As far as the warning letter for the Hayward facility is concerned, Impax said that product approvals will continue getting delayed until the issue is resolved. Given the lack of new product approvals, additional generic competition and Zomig share erosion, Impax expects operating losses in the second half of 2013.

Impax currently carries a Zacks Rank #3 (Hold). Companies that look attractive at present include Actelion Ltd. and Gilead Sciences Inc. (GILD - Free Report) with a Zacks Rank #1 (Strong Buy), and Jazz Pharmaceuticals Public Limited Company (JAZZ - Free Report) with a Zacks Rank #2 (Buy).

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