Impax Laboratories Inc.’s (IPXL) shares gained 1.6% immediately after the company reported better-than-expected earnings per share in the first quarter of 2014. However, shares declined 1.3% in the following trading session. Overall, shares were up 0.3% since the company released first quarter results.
The company posted earnings of 24 cents per share in the first quarter of 2014, beating the Zacks Consensus Estimate of 13 cents per share but down 35.1% from the year-ago quarter.
Total revenues for the reported quarter were $118.7 million, down 20% from the year-ago quarter. The decrease in revenues was primarily due to the genericization of Zomig tablets and orally disintegrating tablets (:ZMT). This decline was partially offset by an increase in generic revenues resulting from a favorable product mix and sales from new generic products launched in the second half of 2013. Revenues were just shy of the Zacks Consensus Estimate of $119 million.
Global Pharmaceuticals revenues came in at $109.1 million in the first quarter, up 7.4% year over year. This increase was primarily driven by sales of the authorized generic version of TriLipix, generic Solaraze and Digoxin, but partially offset by a decline in the sales of authorized generic Adderall and fenofibrate products.
Net sales of the Impax Pharmaceuticals division were $9.6 million in the reported quarter, down 79.6% year over year. This decrease was mainly due to lower sales of Zomig tablet and ZMT products, partially offset by higher sales of Zomig nasal spray.
Last month, the U.S. Food and Drug Administration (:FDA) accepted the re-submission of the New Drug Application (:NDA) for Impax’s Rytary for the symptomatic treatment of Parkinson’s disease. A response from the agency should be out by Oct 9, 2014. The company expects to launch Rytary in the U.S. in the first quarter of 2015, if approved. Impax also intends to file for EU approval for Rytary in the second half of 2014.
Additionally, in Apr 2014, Impax launched the authorized generic version of Sanofi’s (SNY) Renvela, which should be a major contributor to revenues this year. Impax is also looking to get its own generic version of Renvela approved.
Research and development expenses for the quarter increased 10.9% to $21.7 million. Selling, general and administrative expenses decreased 14.3% to $25.5 million.
The company maintained its guidance for research and development at $82 million – $88 million. This includes generic research and development expenses of $46 million – $49 million and brand research and development expenses of $36 million – $39 million.
Impax continues to expect patent litigation expenses in the range of $11 million – $13 million. Selling, general and administrative expenses for 2014 are still expected in the range of $115 million – $120 million.
Impax is working with the FDA and expects the agency to re-inspect its Hayward manufacturing facility. The company expects Hayward facility remediation costs in the range of $25.0 million − $30.0 million in 2014.
Impax currently carries a Zacks Rank #2 (Buy). We expect investor focus to remain on the resolution of the Hayward manufacturing facility issues.
Some other stocks looking equally good in the health care sector include Mallinckrodt plc (MNK) and Dr. Reddy's Laboratories Ltd. (RDY). While Mallinckrodt carries a Zacks Rank #1 (Strong Buy), Dr. Reddy's Labs hold a Zacks Rank #2 (Buy).