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Impax Earnings Fall on Lower Revenues

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Impax Laboratories Inc.’s third-quarter 2013 adjusted earnings of 25 cents per share compared favorably with the Zacks Consensus Estimate of a loss of 6 cents. Earnings in the third quarter of 2013 were however below the year-ago figure of 48 cents per share.

Quarterly Highlights

Total revenues for the quarter stood at $132.6 million, down 8.9% year over year. However, third-quarter revenues were ahead of the Zacks Consensus Estimate of $109 million. The company operates through the Global Pharmaceuticals and Impax Pharmaceuticals segments.

Global Pharmaceuticals revenues came in at $115.7 million in the third quarter, up 15.3% year over year. Revenues increased due to sales of new generic products launched this year, partially offset by lower sales of Impax’ authorized generic version of Shire’s (SHPG - Free Report) attention deficit hyperactivity disorder (ADHD) product, Adderall XR.

Revenues from the Impax Pharmaceuticals division came in at $16.6 million in the reported quarter, down 61.8% year over year. Sales were hurt by lower demand for Zomig tablets and ZMT products due to generic competition. Zomig and Zomig-ZMT are indicated for the treatment of migraine headaches. U.S. exclusivity of the products expired on May 14, 2013.

Total research and development expenses for the quarter decreased 20% to $16.1 million. Selling, general and administrative expenses decreased 3.3% to $28 million.

2013 Guidance

Apart from announcing financial results, Impax modified its expense guidance for 2013. Total research and development expenses are now expected in the range of $70–$72 million compared to the earlier guidance of $80–$87 million. This includes generic research and development expenses of $43–$44 million (previously $45–$49 million) and brand research and development expenses of $27–$28 million (previously $35–$38 million).

Impax increased its patent litigation expenses forecast to the range of $15–$16 million from the prior projection of $12–$15 million.

The company reduced the upper end of its selling, general and administrative expenses for 2013 to $113–$115 million from $113–$118 million.

Other Details

Impax provided an update on its Hayward manufacturing facility. At the regulatory meeting with representatives from the U.S. Food and Drug Administration (FDA) in late Oct 2013, Impax provided additional information and clarifications on the responses and updates related to the Form 483 issued earlier in the year on the facility. Impax will carry out a satisfactory re-inspection of Hayward facility with the objective of resolving the issue.

Impax has an interesting pipeline candidate, Rytary, under branded division. Impax is working with the FDA regarding a new drug application (NDA) for Rytary. Additionally, in the second half of 2014, it is likely to file in Europe.

Impax currently carries a Zacks Rank #3 (Hold). Currently, companies like AMAG Pharmaceuticals Inc. (AMAG - Free Report) and Actelion Ltd. look well-positioned with a Zacks Rank #1 (Strong Buy).

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