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Impax Laboratories Reports Third Quarter 2012 Results

Impax Pharmaceuticals Division Information

      Three Months Ended       Nine Months Ended

(unaudited, amounts in thousands)

September 30, September 30,
2012     2011 2012     2011
Revenues:
Impax Product sales, net $ 43,327 $ - $ 71,422 $ -
Rx Partner 1,500 1,438 4,375 4,313
Research Partner 330 330 989 989
Promotional Partner   -   3,535     7,070     10,605  
Total revenues 45,157 5,303 83,856 15,907
Cost of revenues   23,454   2,999     44,522     8,840  
Gross profit   21,703   2,304     39,334     7,067  
Operating expenses:
Research and development 7,620 7,352 23,507 27,580
Selling, general and administrative   12,498   1,632     22,266     4,116  
Total operating expenses   20,118   8,984     45,773     31,696  
Income (loss) from operations $ 1,585 $ (6,680 ) $ (6,439 ) $ (24,629 )
 

Impax Pharmaceuticals Division revenues in the third quarter 2012 increased $39.9 million to $45.2 million, compared to the prior year period of $5.3 million, due to U.S. sales of Zomig ® pursuant to the AstraZeneca License Agreement for which there was no comparable amount in the prior year period. This increase was partially offset by a $3.5 million decline in Promotional Partner revenues as the Company’s detailing for Pfizer’s product Lyrica ® pursuant to the Co-Promotion Agreement ended on June 30, 2012.

Gross profit of $21.7 million increased $19.4 million in the third quarter 2012, due to U.S. Zomig ® sales, compared to the prior year period of $2.3 million. Gross margin in the third quarter 2012 increased to 48%, compared to 43% in the prior year period. The third quarter 2012 gross margin was, however, negatively impacted by the inclusion of $21.6 million in cost of revenues for amortization and acquisition-related costs due to the Zomig ® transaction.

Total brand operating expenses in the third quarter 2012 increased $11.1 million to $20.1 million, compared to the prior year period of $9.0 million, due to higher selling, general and administration expenses resulting from Zomig ® marketing costs, the expansion of the Company’s neurology focused sales force and pre-launch planning costs for Rytary TM.

Corporate and Other

      Three Months Ended       Nine Months Ended

(unaudited, amounts in thousands)

September 30, September 30,
2012     2011 2012     2011
General and administrative expenses $ 12,639   $ 10,992   $ 41,282   $ 35,398  
Loss from operations $ (12,639 ) $ (10,992 ) $ (41,282 ) $ (35,398 )
 

General and administrative expenses in the third quarter 2012 increased $1.6 million to $12.6 million, compared to the prior year period of $11.0 million, primarily due to increased consulting and personnel expenses.

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