`EX99.1 2 dex991.htm PRESS RELEASE
`
`Press Release
`
`Exhibit 99.1
`
`ISTA Pharmaceuticals Reports Third Quarter 2010 Financial Results
`– Net Product Revenues Increased 44% Over PriorYear Quarter to $42.0 Million –
`– ISTA Reaffirms 2010 Guidance, Aims for First Year of Profitability
`– (excluding warrant charges) –
`
`IRVINE, Calif., Nov. 2, 2010 /PRNewswireFirstCall/ — ISTA Pharmaceuticals, Inc. (Nasdaq: ISTA), today reported financial
`results for the quarter ended September 30, 2010. Third quarter 2010 net revenues were $42.0 million, an increase of 31%
`from the third quarter of 2009. Excluding the recognition of onetime license revenue in the third quarter of 2009, net
`product revenues increased 44%. Net loss for the third quarter ended September 30, 2010, was $23.5 million, or $0.70 per
`diluted share, compared to a net loss of $917,000, or $0.03 per diluted share, for the third quarter ended September 30, 2009.
`Excluding noncash warrant valuation adjustments and license revenue, net income for the third quarter of 2010 was $2.8
`million, or $0.08 per diluted share compared to a loss of $0.4 million, or $0.01 per diluted share in the third quarter of 2009.
`
`“These are exciting times at ISTA. After a strong first half of the year, the third quarter demonstrates that we are on track for an
`equally strong second half. Not only are we posting revenue growth for all four products and delivering improved operating
`profitability, we are achieving key new product pipeline milestones,” stated Vicente Anido, Jr., Ph.D., President and Chief
`Executive Officer of ISTA. “Most recently, we announced the U.S. Food and Drug Administration (FDA) approved
`BROMDAY™ (bromfenac ophthalmic solution) 0.09% (formerly known as XiDay), our oncedaily formulation of bromfenac
`sodium ophthalmic solution for the treatment of postoperative inflammation and reduction of ocular pain in patients who
`have undergone cataract extraction. We believe the introduction of the first and only oncedaily nonsteroidal anti
`inflammatory (NSAID) prescription eye drop will help with treatment compliance and benefit patients recovering from
`cataract surgery. Our sales force is ready to launch BROMDAY this month. We expect to discontinue the twicedaily
`XIBROM (bromfenac ophthalmic solution) 0.09% product in early 2011.”
`®
`
`Continued Anido, “With our newest product pipeline developments, we have proven our ability to extract significant
`additional value from our core therapeutic compounds, bromfenac and bepotastine. In addition to gaining approvals for
`BROMDAY and BEPREVE™, we initiated our REMURA™ (bromfenac ophthalmic solution for dry eye) Phase 3 clinical
`program, plus
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`released the positive results of our Phase 1/2 bepotastine besilate nasal spray study. Based upon these Phase1/2 results, we
`plan to submit an Investigational New Drug (IND) Application to the FDA for bepotastine nasal spray to initiate Phase 2
`clinical studies before the end of 2010. In addition, we expect to report the results of the REMURA Phase 3 dry eye efficacy
`study in the middle of 2011. Gaining approval for both product candidates would allow us to participate in significantly
`larger market segments than those for ISTA’s current product offerings. To complement our eye care and allergy franchises,
`we continue to evaluate acquiring both latestage drug candidates to add to our pipeline and marketed products to add to our
`sales portfolio, assets that have the potential to deliver significant value to our stakeholders for years to come.”
`
`Net Revenues
`(in millions, except percentage data)
`
`
`
`
`
`Nine Months Ended
`Three Months Ended
`
`
`September 30,
`September 30,
`
`
`
`
`2010
`2009
`2010
`2009
`Change
`Change
`
`
`29%
` $29.6 $21.4
`38% $ 71.0 $55.1
` 3.9 1.2 225%
` 10.6 1.2 783%
` 5.3 5.1
`4%
`15%
` 15.0 13.0
` 3.2 1.4 129%
`
`8.8 4.0 120%
` 42.0 29.1
`44%
` 105.4 73.3
`44%
` — 2.9 —
` — 3.1 —
`
` $42.0 $32.0
`31% $105.4 $76.4
`38%
`
`
`
`
`
`XIBROM
`BEPREVE
`ISTALOL
`VITRASE
`Product sales, net
`License revenue
`Total revenues
`
`Net revenues for the third quarter ended September 30, 2010, were $42.0 million, an increase of 31% over the third quarter of
`2009. Net revenue growth was driven primarily by strong demand for XIBROM™ and BEPREVE, supported by revenue
`increases in VITRASE . In the third quarter of 2009, ISTA recognized $2.9 million of previously deferred license revenue
`®
`associated with the termination of a supply agreement. Excluding the recognition of deferred license revenue in 2009, net
`product revenues increased 44% in third quarter 2010 over third quarter 2009.
`
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`Gross margin for the third quarter ended September 30, 2010, was 77%, or $32.3 million, as compared to 77%, or $24.7
`million, for the same period in 2009. Product gross margin was 77% for the third quarter 2010 and was 75% for the third
`quarter ended September 30, 2009. Product gross margin improved due to increased sales of our higher gross margin
`products, XIBROM and BEPREVE.
`
`Research and development (R&D) expenses for the quarter ended September 30, 2010, were $7.9 million, as compared to
`$6.3 million during the corresponding period of 2009. The increase over the prioryear period was due primarily to the
`timing, initiation and completion of clinical trials. ISTA initiated its Phase 1/2 clinical program for bepotastine nasal spray in
`July and its REMURA Phase 3 clinical program for dry eye disease in September.
`
`Selling, general, and administrative, or SG&A, expenses for the quarter ended September 30, 2010, increased to $19.6 million
`from $13.2 million for the corresponding period in 2009. The increase over the prioryear period reflects the addition of
`approximately 65 new sales representatives and related corporate new hires earlier in the year, plus promotional activities
`associated with the launch of BEPREVE.
`
`Operating income for the quarter ended September 30, 2010, was $4.8 million, compared to an operating income of $5.2
`million in the corresponding quarter of 2009, which included the license revenue of $2.9 million.
`
`Other expense for the quarters ended September 30, 2010 and 2009, included noncash valuation losses of $26.3 million and
`$3.4 million, respectively, as a result of marking common stock warrants to market. Noncash warrant valuation adjustments
`are driven primarily by the change in ISTA’s stock price quarter over quarter. The noncash warrant valuation loss decreased
`reported net loss for the quarter ended September 30, 2010, to $23.5 million, or $0.70 per diluted share. Without the noncash
`warrant valuation loss, net income was $2.8 million, or $0.08 per diluted share. In the third quarter of 2009, the noncash
`warrant valuation loss for the third quarter 2009 decreased reported net loss to $917,000, or $0.03 per diluted share. Without
`the noncash warrant valuation loss, third quarter 2009 net income was $2.5 million, or $0.07 per diluted share.
`
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`At September 30, 2010, ISTA had cash of $67.2 million, which included $13 million borrowed under ISTA’s revolving line
`of credit with Silicon Valley Bank. Cash at September 30, 2010, included $16.7 million of reserved royalties on bromfenac.
`
`ISTA Reaffirms 2010 Net Revenues and Net Income Guidance
`• ISTA expects its net revenues for 2010 will be approximately in the middle of the $147 million to $165 million
`range. ISTA expects sales from XIBROM and BROMDAY combined will be at the higher end of the $95 million to
`$105 million range and anticipates sales from BEPREVE will be approximately $16 million to $20 million.
`• ISTA expects its gross margin will be at the higher end of the 74% to 76% range of net revenues.
`• ISTA expects R&D expenses will be at the lower end of the 18% to 22% range of net revenues, due to the timing of
`its clinical programs.
`• ISTA expects SG&A expenses will be at the higher end of the 48% to 52% range of net revenues due to launch
`expenses for BROMDAY. On a dollar basis, ISTA expects SG&A expenses in the fourth quarter of 2010 to be higher
`than third quarter due to BROMDAY launch costs.
`• ISTA’s expectations for operating income are unchanged at approximately $8 million to $10 million.
`• ISTA expects 2010 to be its first year of profitability with net income of at least $1 million, or earnings per share of
`$0.02, excluding any noncash warrant valuation adjustments. As of September 30, 2010, ISTA’s fully diluted
`common shares, including its outstanding shares of common stock plus warrants and stock options on a treasury
`stock basis were approximately 43 million shares.
`
`
`
`
`
`
`
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`
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`• ISTA expects its yearend cash balance to be at least $70 million including amounts borrowed under its revolving
`credit facility with Silicon Valley Bank. Included in the yearend cash balance estimate is $20 million to $25
`million in reserved bromfenac royalties.
`
`ISTA Provides 2011 Net Revenues Outlook
`ISTA expects its 2011 net revenues to be in the range of $175 million to $190 million. The company will provide further
`guidance on 2011 when ISTA reports its 2010 full year results.
`
`Update on Bromfenac Patent Litigation
`On August 26, 2010, the U.S. District Court for the Central District of California, stayed the legal action filed in April 2010
`by ISTA Pharmaceuticals, Inc. (“ISTA”) against Senju Pharmaceutical, Co. Ltd. (“Senju”), in which ISTA seeks, among other
`remedies, a declaratory judgment that no further royalties are due to Senju related to XIBROM (bromfenac), following a
`relevant patent’s expiration in January 2009. Legal action was stayed pending arbitration upon Senju’s request. In September
`2010, Senju filed for arbitration. ISTA is currently preparing a response to the International Chamber of Commerce’s Court of
`Arbitration.
`
`There can be no assurances about the duration of the arbitration or appeals that may be filed before, during or after the
`arbitration process, or how the dispute might be resolved. ISTA has not paid royalties to Senju on XIBROM revenues for
`2010 but has been reserving amounts equal to the XIBROM royalties as if owed. ISTA plans to continue reserving for
`XIBROM and BROMDAY royalties as if owed until the litigation is resolved. As a result, ISTA has not taken into account
`any potential outcome of this litigation in its 2010 management guidance on expected financial results.
`
`Conference Call
`ISTA will host a conference call with a simultaneous webcast today, November 2, 2010, at 4:30 PM Eastern Time, to discuss
`its third quarter 2010 results. To access the live conference call, U.S. and Canadian participants may dial 8662021971;
`international participants may dial 6172138842. The access code for the live call is 22888741. To access the 24hour audio
`replay, U.S. and Canadian participants may dial 8882868010; international participants may dial 6178016888. The access
`code for the replay is 97091207. This conference call also will be webcast live and archived on ISTA’s website for 30 days at
`http://www.istavision.com.
`
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`ABOUT ISTA PHARMACEUTICALS
`ISTA Pharmaceuticals, Inc., is the fourth largest and fastest growing branded prescription eye care business in the United
`States, with an expanding focus on allergy therapeutics. ISTA currently markets five products, including treatments for ocular
`inflammation and pain postcataract surgery, glaucoma and ocular itching associated with allergic conjunctivitis. The
`company’s development pipeline contains additional candidates in various stages of development to treat dry eye, ocular
`inflammation and pain and nasal allergies. Headquartered in Irvine, California, the company generated 2009 revenues of
`$111 million. For additional information about ISTA Pharmaceuticals, please visit the corporate website at
`www.istavision.com.
`
`BROMDAY™ (bromfenac ophthalmic solution) 0.09%, XIBROM (bromfenac ophthalmic solution) 0.09%, ISTALOL
`®
`®
`(timolol maleate ophthalmic solution) 0.5%, VITRASE (hyaluronidase injection) Ovine, 200 USP Units/mL, BEPREVE
`®
`(bepotastine besilate ophthalmic solution) 1.5% and REMURA™ (bromfenac ophthalmic solution for dry eye) are
`trademarks of ISTA Pharmaceuticals, Inc.
`
`®
`
`Full prescribing information for BROMDAY is available on ISTA Pharmaceuticals’ website at
`www.istavision.com/pdf/BROMDAYPI101008.pdf
`
`Full prescribing information for XIBROM is available on ISTA Pharmaceuticals’ website at www.istavision.com/pdf/XIB590
`July2010.pdf
`
`Full prescribing information for ISTALOL is available on ISTA Pharmaceuticals’ website at
`www.istavision.com/pdf/ISTALOL_Full_PIISL274.pdf
`
`Full prescribing information for VITRASE is available on ISTA Pharmaceuticals’ website at
`www.istavision.com/pdf/VITRASE200_package_insert.pdf
`
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`Full prescribing information for BEPREVE is available on ISTA Pharmaceuticals’ website at
`www.istavision.com/pdf/Bepreve_insert.pdf
`
`FORWARDLOOKING STATEMENTS
`Any statements contained in this press release that refer to future events or other nonhistorical matters are forwardlooking
`statements. Without limiting the foregoing, but by way of example, statements contained in this press release relating to
`ISTA’s 2010 and 2011 expected financial results, the successful launch of oncedaily BROMDAY, filing of the IND and
`initiation of a Phase 2 bepotastine nasal spray study before the end of 2010, completion of the REMURA Phase 3 efficacy
`and safety studies and reporting of efficacy results in the middle of 2011, the successful growth of BEPREVE, the continued
`growth of ISTA’s XIBROM/BROMDAY franchise, timing and outcome of the royalty litigation between ISTA and Senju and
`ISTA’s prospects for its longterm financial growth are forwardlooking statements. Except as required by law, ISTA disclaims
`any intent or obligation to update any forwardlooking statements. These forwardlooking statements are based on ISTA’s
`expectations as of the date of this press release and are subject to risks and uncertainties that could cause actual results to
`differ materially. These risks and uncertainties include, among other things, risks associated with: timely receipt and
`maintenance of regulatory approvals for ISTA’s products and product candidates, and continued compliance with the FDA
`and/or other governmental regulations applicable to ISTA’s facilities, products and/or business; successful and timely
`completion of clinical trials and other research and development efforts for ISTA’s product candidates; successful
`implementation of any product acquisition or inlicensing transactions that ISTA might pursue and close; generic
`manufacturers’ receipt of approval for generic versions of ISTA’s products; market acceptance of and demand for ISTA’s
`approved products and the impact of competitive products and pricing; ISTA’s ability to manage its anticipated growth;
`ISTA’s ability to raise capital on favorable terms in the future, if required; unpredictable and unstable changes in economic
`conditions; continued compliance with thirdparty borrowing arrangements; timely performance by ISTA’s strategic partners
`of their respective obligations under existing collaborations and licensing arrangements; the continued availability of third
`party sourced products and raw materials on commercially reasonable terms, or at all; the continued availability of thirdparty
`reimbursement; the scope, validity, and enforceability of patents related to ISTA’s products and technologies and the impact
`of patents and other intellectual property rights held by third parties; and such other risks and uncertainties as detailed from
`time to time in ISTA’s public filings with the U. S. Securities and Exchange Commission, including but not limited to ISTA’s
`Annual Report on Form 10K for the year ended December 31, 2009, and Form 10Q for the second quarter ended June 30,
`2010.
`
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`NonGAAP Financial Measures
`ISTA believes the metric “net income excluding noncash warrant valuation adjustments and license revenue” is a useful
`financial measure for investors in evaluating the company’s performance for the periods presented. This metric, however, is
`not a measure of financial performance under accounting principles generally accepted in the United States (GAAP) and
`should not be considered a substitute for net income (loss) in accordance with GAAP and may not be comparable to similarly
`titled measures reported by other companies. For a reconciliation of net income (loss) to net income excluding noncash
`warrant valuation adjustments and license revenue, see the table below.
`
`ISTA Pharmaceuticals, Inc.
`Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income (Loss)
`(In thousands)
`(unaudited)
`
`Three Months Ended
`September 30,
`
`
`2010
`2009
`
`
`
` $(23,516)
`$ (917)
` (26,338)
` (3,396)
`
`
`—
` 2,917
`
` $ 2,822
`$ (438)
`
`Nine Months Ended
`September 30,
`
`2010
`2009
`
`
`$ 3,127
`$(57,175)
` 7,159
` (50,703)
` —
`
`3,055
`$(4,032)
`$ (9,527)
`
`8
`
`
`
`
`Net (loss) income
`Gain (loss) on warrant valuation
`License revenue
`Adjusted net (loss) income
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`ISTA Pharmaceuticals, Inc.
`Condensed Statements of Operations
`(In thousands, except per share data)
`(unaudited)
`
`
`
`
`Nine Months Ended
`Three Months Ended
`September 30,
`September 30,
`
`
`2010
`2009
`2010
`2009
`
`
`
`
`
`
`
`
` $ 42,020 $29,080 $105,393 $ 73,309
`
`
`3,055
`
`—
` 2,917
`—
` 42,020
` 31,997
` 105,393
` 76,364
`
`9,678
` 7,304
` 25,171
` 18,647
` 32,342
` 24,693
` 80,222
` 57,717
`
`
`
`
`
`7,945
` 6,257
` 17,779
` 19,614
` 13,187
` 60,383
` 27,559
` 19,444
` 78,162
`
`4,783
` 5,249
`
`2,060
`
`
`
`
`(6,494)
`
`
`
`(2,081)
` (2,779)
`(6,225)
`1,158
`
`
`
`117
`
`319
`130
` (50,703)
`
` (26,338)
` (3,396)
`7,159
`
`(336)
`
`
`3
`
`(310)
`3
` (56,375)
`
` (28,299)
` (6,166)
`1,067
` $(23,516) $
`(917) $
`3,127 $(57,175)
` $
`(0.70) $ (0.03) $
`(1.72)
`0.09 $
` 33,483
` 33,251
` 33,418
` 33,210
` $
`(0.70) $ (0.03) $
`0.07 $
`(1.72)
` 33,483
` 33,251
` 42,939
` 33,210
`
` 19,643
` 38,874
` 58,517
`
`(800)
`
`
`
`
`Revenues:
`Product sales, net
`License revenue
`Total revenues
`Cost of products sold
`Gross profit margin
`Costs and expenses:
`Research and development
`Selling, general and administrative
`Total costs and expenses
`Income (loss) from operations
`Other (expense) income:
`Interest expense
`Gain on derivative valuation
`Gain (loss) on warrant valuation
`Other, net
`Total other (expense) income, net
`Net (loss) income
`Net (loss) income per common share, basic
`Shares used in computing net (loss) income per common share, basic
`Net (loss) income per common share, diluted
`Shares used in computing net (loss) income per common share, diluted
`
`
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`September 30,
`2010
`
`67,213
`$
`
`8,808
` 112,175
`
`21,450
`
`37,994
`
`(71,838)
`
`
`
`
`
`
`
`
`
`December 31,
`2009
`
`$ 53,702
`
`29,113
`
`89,144
`
`—
`
`57,438
`
`(78,028)
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`ISTA Pharmaceuticals, Inc.
`Summary of Balance Sheet Data
`(In thousands)
`(unaudited)
`
`10
`
`
`
`Cash
`Working capital
`Total assets
`Current portion of Facility Agreement
`Facility Agreement, net of current portion
`Total stockholders’ deficit
`
`SOURCE: ISTA Pharmaceuticals, Inc.
`
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`CONTACTS
`Investor Relations:
`Lauren Silvernail
`9497885302
`lsilvernail@istavision.com
`
`Jeanie Herbert
`9497893159
`jherbert@istavision.com
`
`Juliane Snowden
`Burns McClellan
`2122130006
`jsnowden@burnsmc.com
`
`General Media:
`Justin Jackson
`Burns McClellan
`2122130006
`jjackson@burnsmc.com
`
`Trade Media:
`Tad Heitmann
`BioComm Network
`9494943140
`theitmann@BioCommNetwork.com
`
`Web Site: http://www.istavision.com
`
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