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Pernix Therapeutics Reports Second Quarter 2016 Financial Results and Business Update

Recently Completed Reorganization of Management Team and Restructuring of Sales Force and Operations

MORRISTOWN, N.J., Aug. 11, 2016 (GLOBE NEWSWIRE) -- Pernix Therapeutics Holdings, Inc. (PTX) (“Pernix” or the “Company”), a specialty pharmaceutical company, today announced financial results for the three and six months ended June 30, 2016.

Second Quarter 2016 Financial and Product Highlights:

  • Net Revenue was $36.7 million, an increase of 13% over the first quarter and a decrease of 22% over the same period in the prior year.
  • Prescription volumes grew sequentially compared to the first quarter of 2016 for all three core brands, Treximet®, Silenor® and Zohydro ER® with BeadTekTM.
  • Gross Margin was 66.8%, an improvement of 140 basis points over the first quarter 2016 and a decrease of 380 basis points over the same prior year period.
  • Net loss was $31.1 million for the three months ended June 30, 2016 as compared to $32.2 million for the three months ended June 30, 2015.
  • Adjusted EBITDA improved to ($1.4 million) as compared with ($4.5 million) in the first quarter 2016 and decreased from $7.9 million in the prior year period.

Business Update:

  • Reorganized senior management team to improve execution and efficiency, drive profitability and position the Company for future growth
    • John Sedor appointed Chairman and Chief Executive Officer on a permanent basis
    • Dr. Graham Miao appointed President and Chief Financial Officer
  • John Sedor appointed Chairman and Chief Executive Officer on a permanent basis
  • Dr. Graham Miao appointed President and Chief Financial Officer
  • Restructured sales force and operations to optimize the Company’s resources and improve the effectiveness of its sales force
    • Reduced full-time work force by approximately 23%
    • Combined with the management reorganization above, expected to result in an estimated annualized cost savings of approximately $11 million
  • Reduced full-time work force by approximately 23%
  • Combined with the management reorganization above, expected to result in an estimated annualized cost savings of approximately $11 million
  • Issued three new Orange Book patents for Zohydro ER® with BeadTekTM strengthening intellectual property protection through 2033
  • Prioritized research and development programs
    • Focus on the development of a next-generation version of Zohydro ER
    • Discontinued the development of a new formulation of Treximet due to a delay in development timeline which significantly reduced our expected return on investment
  • Focus on the development of a next-generation version of Zohydro ER
  • Discontinued the development of a new formulation of Treximet due to a delay in development timeline which significantly reduced our expected return on investment
  • Announced positive final results from a Phase IV Study assessing the effects of nighttime administration of insomnia treatments, including Silenor® 6 mg, on arousability, gait, balance, and cognitive performance, after going to sleep, in healthy male volunteers
    • Study results demonstrated that Silenor 6 mg was statistically superior to zolpidem 10 mg on the measures studied
  • Study results demonstrated that Silenor 6 mg was statistically superior to zolpidem 10 mg on the measures studied

“We’ve addressed a number of challenges recently, and are making important progress on several fronts,” said John Sedor, Chairman and Chief Executive Officer of Pernix Therapeutics Holdings. “I strongly believe that the restructuring of our sales force and the recent management changes optimally position Pernix for future revenue growth and profitability. Importantly, our commercial team continues to drive increased usage of our three core products, Treximet, Silenor and Zohydro ER, with each showing strong prescription growth in the second quarter over the first quarter. In addition, our prescription fulfillment program, Pernix Prescriptions Direct, continues to gain increased traction each week as more patients utilize this program. Going forward, we will continue to focus on improving our financial flexibility and strengthening our balance sheet. Our objectives are to improve operating cash flow generation through the optimization of our product portfolio and cost structure, and engage with lenders to proactively restructure existing debt in a constructive manner that we believe will ultimately benefit all stakeholders”

Financial Results – Second Quarter 2016

For the three months ended June 30, 2016, net revenue was $36.7 million compared to $32.5 million for the three months ended March 31, 2016, an increase of 13%. A summary of net revenue is outlined below (dollars in millions):

Three Months Ended
June 30, March 31, Increase
2016 2016 (Decrease)
Treximet $ 17.8 $ 16.3 $ 1.5
Silenor 4.2 3.6 0.6
Zohydro ER 5.9 5.5 0.4
Other products 8.7 7.0 1.7
Net product sales 36.6 32.4 4.2
Co-promotion and other revenue 0.1 0.1 0.0
Total net revenues $ 36.7 $ 32.5 $ 4.2

Treximet net sales increased by $1.5 million, or 9%, during the three months ended June 30, 2016 compared to the three months ended March 31, 2016. The increase in Treximet net sales was due primarily to favorable gross to net and increased demand, partially offset by inventory destocking at the wholesaler level. Silenor net sales increased by $0.6 million, or 17%, during the three months ended June 30, 2016 compared to the three months ended March 31, 2016. The increase in Silenor net sales was due primarily to increased volume. Zohydro ER net sales increased by $0.4 million, or 7%, during the three months ended June 30, 2016 compared to the three months ended March 31, 2016. The increase in Zohydro ER net sales is due primarily to increased demand and favorable gross to net partially offset by inventory destocking at the wholesaler level. Other product revenue increased by $1.7 million, or 24%, primarily due to increased volume and favorable gross to net adjustments in the Company’s generic portfolio.

For the second quarter of 2016, net revenue was $36.7 million compared to $47.0 million in the second quarter of 2015. A summary of net revenue is outlined below (dollars in millions):

Three Months Ended
June 30, Increase
2016 2015 (Decrease)
Treximet $ 17.8 $ 25.5 $ (7.7 )
Silenor 4.2 6.0 (1.8 )
Zohydro ER 5.9 4.0 1.9
Other products 8.7 11.3 (2.6 )
Net product sales 36.6 46.8 (10.2 )
Co-promotion and other revenue 0.1 0.2 (0.1 )
Total net revenues $ 36.7 $ 47.0 $ (10.3 )

Treximet net sales decreased by $7.7 million, or 30%, during the three months ended June 30, 2016 compared to the three months ended June 30, 2015. Silenor net sales decreased by $1.8 million, or 30%, during the three months ended June 30, 2016 compared to the three months ended June 30, 2015. The decrease in Treximet and Silenor sales were due primarily to inventory destocking at the wholesaler level and higher revenue deductions for managed care rebates. Zohydro ER net sales increased $1.9 million, or 48%, during the three months ended June 30, 2016 compared to the three months ended June 30, 2015. This increase was due to an increase in demand as well as the impact of a full quarter of sales in the three months ended June 30, 2016 compared to two months of sales in the prior year period when Zohydro ER was acquired. Other net product sales decreased by $2.6 million, or 23%, during the three months ended June 30, 2016 compared to the three months ended June 30, 2015. This decrease was due primarily to the discontinuation of certain less profitable products, primarily generics, and certain OTC monograph seasonal cough and cold products.

Gross Margin decreased to 67% in the second...


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