23rd Consecutive Quarter of Record Sales, 13th Consecutive Quarter of Record Net Income
Highlights:
- Q3 Sales Increase to a Record $41.4 Million, a 52% Gain Over Q3 2000
- Q3 Net Income Increases 161% to a Record $7.3 Million, or $0.29 Per Diluted Share, from $2.8 Million, or $0.12 Per Diluted Share in Q3 2000
- Q3 Operating Income Before R&D Expenses Increases 79% to $14.8 Million from $8.3 Million in Q3 2000
- Q3 Gross Profit Grows 58% to $26.1 Million, or 63% of Sales
- ANDA Approval for Cardiovascular Drug in Q3
- Acquisition of Dermovate® Brand in Canada in Q3
- In October, Taro Closes Public Offering of 5,750,000 Ordinary Shares, Realizes Net Proceeds in Excess of $127 Million
Hawthorne, NY, October 18, 2001 -- Taro Pharmaceutical Industries Ltd. (NASDAQ/NMS: TARO) today reported record results for the Company's third quarter and the nine-month period ended September 30, 2001.
Third Quarter Results
The third quarter results represent the Company’s 23rd consecutive quarter of record revenues and its 13th consecutive quarter of record net income.
Third quarter 2001 net sales increased 52% to $41.4 million from $27.2 million in the third quarter of 2000. Net income for the quarter increased 161% to $7.3 million, or $0.29 per diluted share, compared with $2.8 million, or $0.12 per diluted share, for the third quarter of 2000. Per share data for the third quarter and nine-month period of 2000 are adjusted to reflect a two-for-one stock split in the form of a stock dividend paid on July 26, 2001.
Taro's gross profit increased 58% in the third quarter of 2001 to $26.1 million, or 63% of sales, up from $16.5 million, or 61% of sales, in the third quarter of the prior year. Operating income before R&D expenses increased to $14.8 million, or 36% of sales, from $8.3 million, or 31% of sales, for the third quarter of 2000.
Selling, general and administrative expenses decreased as a percentage of sales to $11.3 million, or 27% of sales, compared with $8.2 million, or 30% of sales, in the third quarter of 2000. R&D expenses increased to $4.9 million, or 12% of sales, compared with $3.8 million, or 14% of sales, for the third quarter of 2000.
"Taro’s growth reflects continuing gains across our base business, coupled with the outstanding contribution of new products,” stated Barrie Levitt, M.D., Chairman of the Company. "With the strong leverage Taro realizes on new product introductions, we believe the company will continue to reap the benefits of our investments in infrastructure and R&D.”
Nine-Month Results
For the nine-month period ended September 30, 2001, sales increased 44% to a record $106.1 million, compared with $73.8 million for the same period in 2000. Net income for the nine-month period was a record $16.2 million, or $0.64 per diluted share, compared with $6.5 million, or $0.28 per diluted share, for the same period in 2000.
Selling, general and administrative expenses for the nine-month period were $31.5 million, or 30% of sales, compared with $22.9 million, or 31% of sales, for the same period in 2000. R&D expenses increased to $13.8 million, or 13% of sales, from $10.7 million, or 15% of sales, for the same period in 2000.
Taro's gross profit for the nine-month period increased by 50% to $66.9 million, or 63% of sales, from $44.6 million, or 60% of sales, for the same period in 2000. Operating income before R&D expenses was $35.4 million, or 33% of sales, up from $21.7 million, or 29% of sales, for the same period in the prior year.
Taro Closes Public Offering of 5,750,000 Ordinary Shares
On October 5, 2001, Taro completed a public offering of 5,750,000 ordinary shares, including 3,950,000 shares sold by Taro and 1,800,000 shares sold by selling shareholders. The sale of shares by Taro resulted in net proceeds to the Company in excess of $127 million. Taro will use the proceeds to fund its research and development efforts, enhance its sales and marketing operations, expand its manufacturing facilities and for general corporate purposes. It may also use some of the net proceeds to finance acquisitions of other companies or product lines and pay down, permanently or temporarily, outstanding indebtedness.
The exercise of nonqualified options in conjunction with the offering resulted in a tax deduction to the Company of approximately $86 million, which will substantially reduce its tax liabilities for 1999, 2000 and 2001; entitle Taro to a tax refund of approximately $1.2 million; and enable Taro to carry forward a deduction of approximately $83 million, which may be used to reduce tax liabilities for up to 20 tax years.
The impact of the offering, which was completed in October, is not reflected in the third quarter financial statements.
Balance Sheet
At September 30, 2001, total assets were $152.0 million, compared with $120.4 million at the end of fiscal 2000. Cash and cash equivalents were $15.9 million, compared with $7.2 million at the end of fiscal 2000. Shareholder’s equity at September 30, 2001 was $66.4 million, compared with $50.2 million at the end of fiscal 2000.
New Cardiovascular Product Approved
During the third quarter, Taro received approval from the U.S. Food and Drug Administration (FDA) for its Abbreviated New Drug Application (ANDA) for Enalapril Maleate and Hydrochlorothiazide Tablets, USP (Enalapril HCTZ) in strengths of 5/12.5 mg and 10/25 mg.
Enalapril HCTZ is bioequivalent to Merck & Company’s Vaseretic® Tablets and is used in the treatment of hypertension. Taro also manufactures and markets Enalapril Maleate Tablets, USP in four strengths. Taro’s Enalapril Maleate Tablets are bioequivalent to Merck’s Vasotec® and are used in treating hypertension, heart failure, and other cardiac conditions. The two Enalapril products are important additions to Taro’s growing line of solid dosage products for heart disease, neurological disorders, and other conditions.
Taro Acquires Dermovate® Brand in Canada
In October 2001, the Company announced that its Canadian subsidiary, Taro Pharmaceuticals Inc., acquired the Canadian rights to Dermovate® (clobetasol propionate 0.05%) Cream, Ointment, and Topical Solution from GlaxoSmithKline. Dermovate® is an ultra-high potency topical corticosteroid used in treating dermatological conditions such as psoriasis and eczema.
The Canadian market size of Dermovate® and generic clobetasol propionate products is estimated to be approximately CDN$5.9 million, according to industry sources. Taro’s professional dermatology field-sales force will begin detailing Dermovate® in the fourth quarter of 2001.
Proprietary Research
Taro’s proprietary research program includes NonSpil™, a patented, spill-resistant liquid delivery system which has potential applications in a wide variety of both prescription and over-the-counter pharmaceutical products. Taro is continuing to evaluate NonSpil™ products in advance of possible market introduction. The Company holds several patents relating to this unique delivery system and has additional patents pending in the U.S. and worldwide.
The Company also continues development of T2000, its patented novel anticonvulsant. Taro is currently in Phase I clinical testing for T2000, a non-sedating, long-acting barbiturate that may require less frequent administration than other commonly used treatments for epilepsy and seizure disorders. While there can be no assurances of successful development of T2000, this new class of barbiturates has not produced toxicity in animals or humans during the Phase I testing to date.
Outlook
“Management expects to maintain Taro’s long and short-term growth by continuing our investment in the company’s infrastructure and targeted R&D programs, broadening our product lines in the U.S. and by increasing penetration of other attractive markets,” said Dr. Levitt. "Moreover, the strong cash position achieved through our recent public offering enables the company to acquire products or operations within our core disciplines.”
The Company has multiple regulatory filings in Canada and Israel, and eleven current submissions to the FDA.
Taro Pharmaceutical Industries Ltd. is a multinational, science-based pharmaceutical company dedicated to meeting the needs of its customers through the discovery, development, manufacturing and marketing of the highest quality healthcare products.
Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Taro Pharmaceutical Industries Ltd. believes the expectations reflected in such forward-looking statements to be based on reasonable assumptions, it can give no assurances that its expectations will be attained. Factors that could cause actual results to differ include industry and market conditions, slower than anticipated penetration of new markets, changes in the Company's financial position, regulatory actions, and other risks detailed from time to time in the Company's SEC reports, including its Prospectus, dated October 1, 2001.