Taro Provides Results for September 30, 2015

Business Wire India

Taro Pharmaceutical Industries Ltd. (NYSE:TARO) (“Taro” or the “Company”) provided unaudited financial results for the three and six months ended September 30, 2015.

 

Quarter ended September 30, 2015 Highlights - compared to September 30, 2014

 

• Net sales of $212.1 million, decreased $38.8 million, or 15.5%. This net sales decline is principally due to the impact of net charges taken to meet contractual obligations associated with price adjustments and the changing U.S. market dynamics on certain products. On a pro-forma basis, adjusted for the price protection provision, net sales would have decreased 7.7%
• Gross profit of $168.8 million decreased $29.3 million; however, as a percentage of net sales, was 79.6% compared to 79.0%. Excluding the impact of the price adjustment and the impact of the $2.0 million impairment charge, the gross profit decrease would have been $8.0 million, or 4.1%
• Research and development expenses increased $4.9 million to $18.7 million
• Selling, marketing, general and administrative expenses increased $2.4 million to $24.0 million
• Operating income decreased $35.3 million to $125.0 million
• Net Income was favorably impacted by a $28.7 million increase in foreign exchange (FX) income to $34.9 million, principally the result of the strength of the U.S. vs. Canadian dollar
• Net income attributable to Taro was $133.3 million compared to $143.4 million, resulting in diluted earnings per share of $3.11 compared to $3.35

Six Months ended September 30, 2015 Highlights - compared to September 30, 2014

 

• Net sales of $427.3 million, increased $46.3 million, or 12.1%, despite an 8% volume decline as a result of changing U.S. market dynamics on certain products. On a pro-forma basis, adjusted for the previously mentioned price protection provision, the net sales increase would have been 18.5%
• Gross profit increased $57.1 million to $340.6 million and as a percentage of net sales, was 79.7% compared to 74.4%. Excluding the impact of the aforementioned price adjustment, and the impact of the $2.0 million impairment charge, the gross profit increase would have been $81.4 million, or 28.7%
• Research and development expenses increased 15.4% to $33.3 million
• Selling, marketing, general and administrative expenses increased $2.9 million to $46.9 million
• Operating income increased $44.6 million to $259.4 million
• FX income increased $29.8 million to $30.7 million
• Net income attributable to Taro was $237.0 million compared to $189.5 million, a $47.5 million increase, resulting in diluted earnings per share of $5.54 compared to $4.42

Mr. Kal Sundaram, Taro’s CEO stated, “We continue to experience pressure on our business from strong competition and the industry and customer consolidations as evidenced by the decrease in our net sales. However, our margins remain strong as the result of the cost efficiencies and benefits realized as we actively manage and remain disciplined with our spending.” Mr. Sundaram, continued, “The recent approval and launch of Keveyis, the first medicine approved by the FDA for the treatment of primary hyperkalemic and hypokalemic periodic paralysis, demonstrates our continuing commitment to R&D.”

 

Cash Flow and Balance Sheet Highlights

 

• Cash provided by operations for the period ended September 30, 2015 was $129.3 million, as compared to $96.2 million at September 30, 2014
• Cash, including marketable securities of $1.1 billion, increased $142.1 million from March 31, 2015

FDA Approvals and Filings

 

The Company currently has a thirty-four ANDAs awaiting FDA approval.

 

The Company recently received approval from the U.S. Food and Drug Administration (“FDA”) for a New Drug Application (“NDA”) Keveyis™ (dichlorphenamide) 50 mg Tablets, the first medicine approved by the FDA for the treatment of primary hyperkalemic and hypokalemic periodic paralysis and related variants. Periodic paralysis, which is a group of rare hereditary disorders that cause episodes of muscle weakness or paralysis, is estimated to affect approximately 5,000 people in the United States.

 

Taro Purchases Shares of Zalicus Pharmaceuticals Ltd.

 

On October 1, 2015, Taro entered into a Share Purchase Agreement with EPIRUS Biopharmaceuticals, Inc. (“EPIRUS”) for all of the shares of Zalicus Pharmaceuticals Ltd., and its product candidate Z944 and certain related assets, a novel, oral, T-type calcium channel modulator in development for the treatment of pain. As a result of the sale, Taro paid CAD $5.0 million in cash and a non-interest bearing, limited recourse promissory note in the amount of CAD $5.0 million with a maturity date of July 1, 2017. If Taro elects to repay the Promissory Note in cash and continue development of the