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Akorn, Inc. (AMEX:AKN) today reported net sales of
$12.5 million for the second quarter 2006, a decrease of 1% vs. second
quarter 2005 net sales of $12.6 million. Gross profit of $5.0 million
or 39.7% of second quarter 2006 net sales, represents an increase of
2% vs. gross profit of $4.9 million or 38.6% of net sales for the
second quarter 2005. Net loss available to common stockholders for the
second quarter 2006 was $(2.2) million, or $(0.03) per diluted share
vs. a $(1.0) million net loss available to common stockholders for the
second quarter 2005, which included an extraordinary gain of $1.2
million, or $(0.04) per diluted share. During the second quarter of
2006, net loss available to common stockholders was adversely impacted
by stock option expense of $0.5 million, as compared to zero in the
first quarter of 2005.
For the six months ended June 30, 2006, net sales were $42.2
million vs. $22.8 million in the comparative prior year period, an
increase of 85.4%. Gross profit was $16.7 million or 39.5% of net
sales, vs. $8.2 million or 36.0% of net sales. Net income available to
common shareholders was $0.6 million vs. a net loss of $(4.3) million.
For the first half of 2006, net income was adversely impacted by stock
option expense of $0.7 million, as compared to zero in the first half
of 2005, and a one-time non-recurring interest expense of $1.1 million
due to the early retirement of convertible debt.
Highlights since the beginning of 2006 include:
-- Four new business development agreements were signed, two with
Natco Pharma Limited, one with Fidia Farmaceutici, S.p.A., and
one with Cipla, Ltd., which add nine drugs to Akorn's product
development pipeline.
-- Two new contract manufacturing supply agreements were
announced, one with X-Gen Pharmaceuticals, Inc. and one with
Advanced Vision Research, Inc. We believe that these two
agreements will increase Contract Manufacturing sales by
approximately 50% on an annualized basis beginning in 2007.
-- Seven product approvals were received from the FDA:
Brimonidine, Inapsine(R), Orphenadrine, Sufenta(R),
Alfenta(R), Amiodarone, and Dilitiazem. Of the seven, one
product, Inapsine(R), has already been launched.
-- Eleven ANDA's have been submitted to the FDA. Seven of these
ANDA's are from Akorn-Strides, LLC, Akorn's joint venture with
Strides Arcolab Limited.
-- $21.4 million in net sales were recognized from an order with
the Department of Health and Human Services for Ca-DTPA and
Zn-DTPA, two countermeasures for a radiological or nuclear
incident.
-- Validation efforts for the lyophilization facility are on
schedule to be completed in the third quarter 2006.
-- For the first half of 2006, cash flow from operations was $2.0
million, $19.4 million in new capital was raised, $10.6
million in outstanding debt was retired, and the Series A 6.0%
Participating Convertible Preferred Stock was converted to
common stock.
Arthur S. Przybyl, President and Chief Executive Officer stated,
"We remain confident and on track to achieve our objectives for 2006.
With continued new product introductions scheduled for the second half
of the year combined with increased production volumes, we remain on
target to increase year-over-year revenues by 50% while achieving a
40% gross margin and positive net income.
"Regulatory product filings and new product approvals should
achieve our corporate objectives of twenty and ten, respectively. Our
first lyophilized exhibit batch is scheduled to occur on September 27,
2006 and will represent the completion of our lyophilization
validation efforts. We anticipate continued investment in business
development partnerships in the second half of 2006 that will expand
Akorn's product development pipeline. In order to begin clinical
development of AK-1015, an ophthalmic product with an intended
indication for ocular anesthesia, we have engaged a contract research
organization and expect to file an NDA in 2007.
"Lastly, our financial foundation remains strong. As of today, our
current cash balance is $20 million, we have access to a $10 million
line of credit, and our current asset to current liability ratio is
7:1."
Akorn Reiterates its Outlook for 2006:
-- 50% Revenue growth generated from new product introductions,
increased contract manufacturing business, and our exclusive
license for Ca-DTPA and Zn-DTPA.
-- 40% Gross Margin.
-- Positive Net Income.
-- Significant Improvement in Cash Flow from Operations.
-- Debt-free Balance Sheet.
-- Lyophilization Manufacturing Facility Fully Operational.
Conference Call
Akorn will host a conference call on Wednesday July 26, 2006,
beginning at 5:00 p.m. Eastern Time to discuss second quarter 2006
operating results. Analysts, investors and other interested parties
are invited to participate by visiting the Company's website,
www.akorn.com, and clicking on the live webcast icon located on the
home page, or http://www.videonewswire.com/event.asp?id=34645. Please
plan to log on at least ten minutes prior to the designated start time
so management may begin promptly.
About Akorn, Inc.
Akorn, Inc. manufactures and markets sterile specialty
pharmaceuticals. Akorn has manufacturing facilities located in
Decatur, Illinois and Somerset, New Jersey and markets and distributes
an extensive line of hospital and ophthalmic pharmaceuticals.
Additional information is available at the Company's website at
www.akorn.com.
Materials in this press release may contain information that
includes or is based upon forward-looking statements within the
meaning of the Securities Litigation Reform Act of 1995.
Forward-looking statements give our expectations or forecasts of
future events. You can identify these statements by the fact that they
do not relate strictly to historical or current facts. They use words
such as "anticipate," "estimate," "expect," "project," "intend,"
"plan," "believe," and other words and terms of similar meaning in
connection with a discussion of future operating or financial
performance. In particular, these include statements relating to
future steps we may take, prospective products, future performance or
results of current and anticipated products, sales efforts, expenses,
the outcome of contingencies such as legal proceedings, and financial
results.
Any or all of our forward-looking statements here or in other
publications may turn out to be wrong. They can be affected by
inaccurate assumptions or by known or unknown risks and uncertainties.
Many such factors will be important in determining our actual future
results. Consequently, no forward-looking statement can be guaranteed.
Our actual results may vary materially, and there are not guarantees
about the performance of our stock.
Any forward-looking statements represent our expectations or
forecasts only as of the date they were made and should not be relied
upon as representing our expectations or forecasts as of any
subsequent date. We undertake no obligation to correct or update any
forward-looking statements, whether as a result of new information,
future events or otherwise, even if our expectations or forecasts
change. You are advised, however, to consult any further disclosures
we make on related subjects in our reports filed with the SEC. In
particular, you should read the discussion in the section entitled
"Cautionary Statement Regarding Forward-Looking Statements" in our
most recent Annual Report on Form 10-K, as it may be updated in
subsequent reports filed with the SEC. That discussion covers certain
risks, uncertainties and possibly inaccurate assumptions that could
cause our actual results to differ materially from expected and
historical results. Other factors besides those listed there could
also adversely affect our results.
-0-
*T
AKORN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
IN THOUSANDS
JUNE 30, DECEMBER 31,
2006 2005
------------- -------------
(UNAUDITED) (AUDITED)
------------- -------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 17,781 $ 791
Trade accounts receivable (less allowance
for doubtful accounts of $3 and $13,
respectively) 4,987 3,222
Inventories 10,970 10,279
Prepaid expenses and other current assets 1,780 1,402
------------- -------------
TOTAL CURRENT ASSETS 35,518 15,694
PROPERTY, PLANT AND EQUIPMENT, NET 31,515 31,071
OTHER LONG-TERM ASSETS
Intangibles, net 9,509 10,210
Other 105 120
------------- -------------
TOTAL OTHER LONG-TERM ASSETS 9,614 10,330
------------- -------------
TOTAL ASSETS $ 76,647 $ 57,095
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current installments of debt $ 380 $ 7,044
Trade accounts payable 2,732 3,046
Accrued compensation 1,168 1,519
Customer accrued liabilities 332 135
Accrued interest payable - 2,514
Accrued expenses and other liabilities 730 1,202
------------- -------------
TOTAL CURRENT LIABILITIES 5,342 15,460
LONG-TERM LIABILITIES
Long-term debt, less current installments 408 602
Product warranty 1,159 -
------------- -------------
TOTAL LONG-TERM LIABILITIES 1,567 602
------------- -------------
TOTAL LIABILITIES 6,909 16,062
------------- -------------
SHAREHOLDERS' EQUITY
Common stock, no par value -- 150,000,000
shares authorized; 75,285,018 and 27,618,745
shares issued and outstanding at June 30,
2006 and December 31, 2005, respectively 124,907 67,339
Series A Preferred Stock, $1.00 par value,
257,172 shares authorized and issued,
241,122 shares outstanding at December 31,
2005 - 27,232
Series B Preferred Stock, $1.00 par value,
170,000 shares authorized, 141,000 shares
issued, 82,437 outstanding at June 30, 2006
and 106,600 outstanding at December 31, 2005 8,589 10,758
Warrants to acquire common stock 13,631 13,696
Accumulated deficit (77,389) (77,992)
------------- -------------
TOTAL SHAREHOLDERS' EQUITY 69,738 41,033
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 76,647 $ 57,095
============= =============
AKORN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
IN THOUSANDS, EXCEPT PER SHARE DATA
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2006 2005 2006 2005
------------ ----------- ----------- -----------
Revenues $ 12,475 $ 12,578 $ 42,205 $ 22,759
Cost of sales 7,520 7,726 25,517 14,564
------------ ----------- ----------- -----------
GROSS PROFIT 4,955 4,852 16,688 8,195
Selling, general
and administrative
expenses 4,669 3,699 9,153 7,067
Amortization and
write-down of
intangibles 350 425 701 804
Research and
development
expenses 2,121 1,423 4,166 2,765
------------ ----------- ----------- -----------
TOTAL OPERATING
EXPENSES 7,140 5,547 14,020 10,636
------------ ----------- ----------- -----------
OPERATING INCOME
(LOSS) (2,185) (695) 2,668 (2,441)
Interest
income/(expense) -
net 234 (584) (1,085) (1,110)
Debt Retirement
Gain/(Expense) - 1,212 (391) 1,212
Other Expense (12) - (29) -
------------ ----------- ----------- -----------
INCOME/(LOSS)
BEFORE INCOME
TAXES (1,963) (67) 1,163 (2,339)
Income tax
provision - - 15
------------ ----------- ----------- -----------
NET INCOME/(LOSS) (1,963) (67) 1,163 (2,354)
Preferred stock
dividends and
adjustments (234) (915) (560) (1,976)
------------ ----------- ----------- -----------
NET INCOME/(LOSS)
AVAILABLE TO
COMMON
STOCKHOLDERS $ (2,197) $ (982) $ 603 $ (4,330)
============ =========== =========== ===========
NET INCOME/(LOSS)
PER SHARE:
BASIC $ (0.03) $ (0.04) $ 0.01 $ (0.17)
============ =========== =========== ===========
DILUTED $ (0.03) $ (0.04) $ 0.01 $ (0.17)
============ =========== =========== ===========
SHARES USED IN COMPUTING NET
INCOME (LOSS) PER SHARE:
BASIC 74,853 25,961 68,321 25,601
============ =========== =========== ===========
DILUTED 74,853 25,961 76,481 25,601
============ =========== =========== ===========
AKORN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
IN THOUSANDS
(UNAUDITED)
SIX MONTHS
ENDED JUNE 30
---------------------
2006 2005
---------- ----------
OPERATING ACTIVITIES
Net income (loss) $ 1,163 $ (2,354)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Depreciation and amortization 1,645 3,413
Amortization of debt discounts 1,059 553
Advances to Strides Arcolab Limited - (1,500)
Gain on Retirement of Debt - (1,212)
Non-cash stock compensation expense 978 150
Changes in operating assets and liabilities:
Trade accounts receivable (1,765) 849
Inventories (691) (227)
Prepaid expenses and other current assets (363) 365
Trade accounts payable (314) (2,382)
Product warranty 1,159
Accrued customer liability 197 -
Accrued expenses and other liabilities (1,039) 227
---------- ----------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 2,029 (2,118)
INVESTING ACTIVITIES
Purchases of property, plant and equipment (1,388) (357)
Purchase of intangible assets - (75)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (1,388) (432)
FINANCING ACTIVITIES
Repayment of long-term debt (2,917) (167)
Repayment of NeoPharm Debt - (2,500)
Net borrowings under lines of credit - 663
Proceeds from common stock and warrant offering 18,078 -
Proceeds from warrants exercised 888 37
Proceeds under stock option and stock purchase
plans 300 444
---------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 16,349 (1,523)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 16,990 (4,073)
Cash and cash equivalents at beginning of period 791 4,110
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 17,781 $ 37
========== ==========
Amount paid for interest (net of capitalized
interest) 561 365
Amount paid/(refunded) for income taxes $ 2 $ 72
*T