King Pharmaceuticals, Inc. (KG)
Q1 2010 Earnings Conference Call
May 5, 2010 8:30 AM ET
Jack Howarth – VP, IR
Brian Markison – Chairman, President and CEO
Joe Squicciarino – CFO
Eric Carter – Chief Science Officer
Marc Goodman – UBS
Louise Chen – Collins Stewart
Gregg Gilbert – Bank of America Merrill Lynch
Gary Nachman – Leerink Swann
David Buck – Buckingham Research Group
Ian Sanderson – Cowen and Company
Bill Tanner – Lazard Capital Markets
Elliot Wilbur – Needham & Company
John Newman – Oppenheimer
Corey Davis – Jefferies & Company
Michael Tong – Wells Fargo Securities
Greg Waterman – Goldman Sachs
David Maris – CLSA
Bob Hazlett – BMO Capital Markets
Louise Chen – Collins Stewart
Previous Statements by KG
» King Pharmaceuticals, Inc. Q4 2009 Earnings Call Transcript
» King Pharmaceuticals, Inc. Q2 2009 Earnings Call Transcript
» King Pharmaceuticals Inc., Q1 2009 Earnings Call Transcript
Good morning ladies and gentlemen and welcome to the King Pharmaceuticals’ first quarter year 2010 financial results conference call. All lines have been placed on a listen-only mode and the floor will be opened for your questions and comments following the presentation.
At this time it is my pleasure to turn the floor over to your host Jack Howarth. Sir the floor is yours.
Thanks operator. Good morning everyone. Thanks for joining us today to discuss our financial results for the first quarter ended March 31, 2010.
Joining me on today’s call are Brian Markison, Chairman, President and Chief Executive Officer; Joe Squicciarino, Chief Financial Officer; and other members of our management team. Before we begin today’s call, I’d like to remind you that any discussion that takes place during this conference call may contain forward-looking statements that reflect management’s current view of future events and operations, including but not limited to statements pertaining to our expectations regarding our product development pipeline, the commercial potential of our products and our plans to maximize this potential, our future product sales and financial results and our strategy for long-term growth.
Forward-looking statements involve certain significant risks and uncertainties, and actual results may differ materially. Certain factors that may cause actual results to differ materially from the forward-looking statements are discussed in the company’s press release issued this morning, May 5, 2010, and in the risk factors section and other sections of the company’s Form 10-K for the year ended December 31, 2009, which is on file with the Securities and Exchange Commission.
King does not undertake to publicly update or revise any of its forward-looking statements; even if experience or future changes show that the indicated results or events will not be realized. In addition to our financial results determined in accordance with Generally Accepted Accounting Principles, known as GAAP, King also provides adjusted net earnings and adjusted diluted earnings per share results. These non-GAAP financial measures exclude the effect of amortization of intangible assets and imputed interest expense associated with the company’s $400 million convertible senior notes, in addition to those special items that do not relate to the company’s ongoing underlying business, are non-recurring or are not generally predictable.
Examples of these are listed in the About Adjusted Financial Results section of our press release issued this morning. We believe that providing adjusted financial results enhances the analysis of our company’s ongoing underlying business when comparing results to those of a previous or subsequent like period. However, it should be noted that the determination of whether to exclude an item from adjusted financial results involves judgments by King’s management.
A reconciliation of King’s adjusted financial results to reported financial results determined in accordance with GAAP for the first quarter ended March 31, 2010 and 2009 can be found in this morning’s press release. In order to give everyone an opportunity to ask questions in an orderly fashion, I’d like to ask each participant to limit questions to one each and then return to the queue for follow-up questions. Thanks in advance for your cooperation.
Now, I’ll turn the call over to Brian Markison, Brian?
Thanks Jack, good morning everyone. I’m sure by now you’ve all had a chance to review today’s earnings release. I’d like to take a minute to highlight some of our first quarter accomplishments before I turn the call over to Joe for more in-depth review of our financial performance.
First let’s start with Skelaxin. It’s important to note that the first quarter of 2010 results reflect a full quarter of branded Skelaxin sales. Sandoz and the maker of our authorized generic CorePharma entered the market at the very beginning of the second quarter.
We estimated that the two companies would split the generic market and today that seems to be the case. While we continue to fight the legal battle in order to protect and enforce our intellectual property, now is the time to look towards the future and focus on the pipeline and our promoted products.
During the first quarter of 2010, we continued to spend a great deal of time and energy on EMBEDA. In the month of March IMS report a 11,382 total prescriptions for EMBEDA, a gain of over 30% versus February and the first quarter TRx is nearly doubled as compared to the fourth quarter of last year and according to the most recent weekly data, EMBEDA was up 8.7% with just over 2900 total prescriptions and market share increased 6 basis points or roughly 9% in the long acting opioid market.
When you examine where the EMBEDA business is coming from, it appears to be a combination of both the short acting market with just under half of the prescriptions coming from here and the long acting market with prescriptions coming from Avenza, Kadian, MS Contin, OxyContin and others in that order.
During the first quarter, we also listed two patents for EMBEDA in the Orange Book that cover the brand until June 2027. And on the managed care front, we recently received formal notification of improved status on two formularies the Medco and Caremark commercial plants. These two plants will effectively add unrestricted Tier II status for an additional seven million lives.
Finally, EMBEDA is being carried in almost 14,000 retail pharmacies representing almost 80% of those stocking (inaudible) morphine products.
Although the commercialization of Schedule II drugs is always a challenge, we believe we’ve made significant progress over the last six months in pharmacy stocking and expanded formulary coverage, which has helped broaden the availability of EMBEDA. So to summarize, we are seeing continuous volume and share growth and we remain very optimistic for the long term growth prospects of EMBEDA.
While EMBEDA continues to grow and has garnered most our attention, we have been disappointed by FLECTOR’s performance. There is no doubt that the additional time spent detailing EMBEDA to primary care physicians has had an impact on FLECTOR.
Moving forward, we are placing greater emphasis on the top prescribers of FLECTOR. In addition, we are examining our total investment and resource allocation to ensure we have the optimal mix and reach for selling and marketing programs.
Turning now to the pipeline, as of today there are no changes to our Remoxy resubmission timeline. We remain on track for our fourth quarter 2010 resubmission. The gaining factor remains the collection of additional stability data so there is nothing really new on this front. And as many of you already know, on April 22nd King along with our partners at Acura Pharmaceuticals presented Acurox to an FDA Advisory Committee.