UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
March 2, 2015
IGI LABORATORIES, INC.
(Exact name of registrant as specified in
its charter)
|
|
|
|
|
Delaware |
|
001-08568 |
|
01-0355758 |
(State or other jurisdiction
of incorporation) |
|
(Commission File Number) |
|
(IRS Employer
Identification No.) |
105
Lincoln Avenue
Buena, New Jersey 08310
(Address of principal executive offices and zip code)
Registrant’s telephone number, including
area code: (856) 697-1441
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02. | Results of Operations and Financial Condition. |
On March 2, 2015, IGI Laboratories, Inc. (the
“Company”) issued a press release announcing the Company’s earnings for the fourth quarter and year ended
December 31, 2014 and certain other information. A copy of the press release is attached hereto as Exhibit 99.1.
The Company will conduct a conference call to
review its financial results on March 2, 2015, at 4:15 p.m., Eastern Time.
The information, including Exhibit 99.1, in
this Form 8-K is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that Section. The information in this Form 8-K shall not be incorporated
by reference into any filing under the Securities Act of 1933, except as shall otherwise be expressly set forth by specific reference
in such filing.
Item 9.01 |
Financial Statements and Exhibits. |
(d) |
The following exhibit is filed with this Report: |
Exhibit No. |
|
Description |
99.1 |
|
Press release of IGI Laboratories, Inc. dated March 2, 2015 |
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
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IGI LABORATORIES, INC. |
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|
|
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By: |
/s/ Jenniffer Collins |
|
Name: |
Jenniffer Collins |
|
Title: |
Chief Financial Officer |
Date: March 2, 2015
Exhibit 99.1
News From:
Release Date: March 2, 2015
Contact: |
Jenniffer Collins |
|
|
IGI Laboratories, Inc. |
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(856) 697-1441 |
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www.igilabs.com |
|
IGI LABORATORIES ANNOUNCES FOURTH QUARTER
and YEAR END 2014 RESULTS
BUENA, NJ - (PR NEWSWIRE) – IGI
Laboratories, Inc. (NYSE MKT: IG), a New Jersey based specialty generic pharmaceutical company, announced its financial results
for the fourth quarter and year ended December 31, 2014.
Fourth Quarter and Year to Date 2014 Highlights
| · | Total revenues of $13.7 million in the fourth quarter of 2014, an
increase of 104% over the same quarter in 2013 |
| · | Total revenues of $33.7 million for the year ended December 31, 2014,
an increase of 85% over the same period in 2013 |
| · | Total net revenues generated from the sale of IGI label generic topical
pharmaceutical products for the three and twelve months ended December 31, 2014 of $10.5 million, and $19.8 million, respectively
|
| · | Gross profit for the year ended December 31, 2014 equaled 50% as compared
to 34% in the same period of 2013 |
| · | IGI filed eleven Abbreviated New Drug Applications (ANDAs), in 2014
with the U.S. Food and Drug Administration (FDA) |
| · | Net income was $5.6 million in the fourth quarter of 2014, including
a non-cash gain of $2.3 million, compared to $0.7 million in the same period in 2013 |
| · | Net income was $5.3 million for the year ended December 31, 2014,
including a non-cash gain of $2.3 million, compared to a net loss of $0.1 million for the year ended December 31, 2013 |
IGI’s President and Chief Executive Officer,
Jason Grenfell-Gardner, stated, “This year was a critical one for our team, and I believe we have delivered. At the beginning
of 2014, we committed to increase revenue to $25.5 - $26.4 million for the year, achieve profitability, and to double our R&D
spending while filing ten ANDAs. We increased our commitment in October of 2014 to $31.0 to $33.0 million in revenue for 2014,
gross margins of approximately 50 percent, and we re-affirmed our expectation to file at least 10 ANDAs in 2014. Our team has delivered
on these promises. Revenue grew 85% compared to 2013, and while we did increase R&D spending by 150%, we filed 11 ANDAs, and
we were able to achieve $5.3 million in net income, including a non-cash gain of $2.3 million. On top of all these achievements,
we were able to make two product acquisitions at the end of September as initial drivers of our TICO strategy.” Mr. Grenfell-Gardner
continued, “In December we completed our offering of $143.75 million 3.75% Convertible Senior Notes, which net of fees and
expenses helped to strengthen our balance sheet to include over $158 million in cash at the end of December. Our balance sheet
is stronger than ever, and we are actively seeking to expand our product portfolio and manufacturing capabilities to execute on
our TICO strategy to expand our topical, injectable, complex and ophthalmic presence in the specialty generic pharmaceutical markets.
Our research and development team now has twenty-two ANDAs pending with the FDA. Based on December 2014 IMS Health data, the addressable
market for our pipeline of twenty-two ANDAs, pending approval by the FDA, is estimated at $579 million. We believe we are
well positioned to increase revenues to at least $55 to $57 million in 2015, which would lead to increased gross margins of between
approximately 52 to 53 percent for 2015. As we continue to invest in R&D to drive our future growth, we expect to increase
R&D expense to approximately 27 to 28 percent of total revenue in 2015, which would allow us to file at least twenty more ANDAs
in 2015. Based on the foregoing, we would anticipate Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization)
to range between $7.5 and $8.5 million in 2015.”
The Company will hold a conference call today
at 4:15 pm ET to discuss 4th quarter 2014 results.
The Company invites you to listen to the call
by dialing 1-888-346-3479. International participants should call 1-412-902-4260. Canadian participants should call 1-855-669-9657.
Participants should ask to be joined into the IGI Laboratories, Inc. call.
This call is being webcast by MultiVu (a PR
Newswire Company) and can be accessed in the Investor Relations Section of IGI's website at www.igilabs.com.
About IGI Laboratories, Inc.
IGI Laboratories is a specialty generic pharmaceutical
company. Our mission is to be a leading player in the specialty generic prescription drug market.
Forward Looking Statements
This press release includes certain "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include,
but are not limited to, plans, objectives, expectations and intentions, and other statements contained in this press release that
are not historical facts and statements identified by words such as " will," “believe,” “target,”
“estimated,” "continue" or words of similar meaning. These statements are based on our current beliefs or
expectations and are inherently subject to various risks and uncertainties, including those included from time to time in the "Risk
Factors" and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections
in our most recent Annual Report on Form 10-K, as updated by Quarterly Reports on Form 10-Q and other reports we file with the
Securities and Exchange Commission. Actual results may differ materially from these expectations. Factors that could cause actual
results to differ materially from these expectations include, but are not limited to: our inability to meet current or future regulatory
requirements in connection with existing or future ANDAs; our inability to achieve profitability; our failure to obtain FDA approvals
as anticipated; our inability to execute and implement our business plan and strategy; the potential lack of market acceptance
of our products; our inability to protect our intellectual property rights; changes in and the impact of global political, economic,
business, competitive, market, regulatory and other factors; and our inability to complete successfully future product acquisitions.
We assume no obligation to update any forward-looking statements or information, which speak as of their respective dates.
Non-GAAP Financial Measures
In addition to reporting financial information
required in accordance with U.S. generally accepted accounting principles (GAAP), IGI Labs is also presenting EBITDA and Adjusted
EBITDA which are non-GAAP financial measures. Since EBITDA and Adjusted EBITDA are non-GAAP financial measures, they should not
be used in isolation or as a substitute for consolidated statements of operations and cash flow data prepared in accordance with
GAAP. In addition, IGI's definition of Adjusted EBITDA may not be comparable to similarly titled non-GAAP financial measures reported
by other companies.
Adjusted EBITDA, as defined by the Company, is calculated as
follows:
Net income, plus:
Interest expense, net
Provision for income taxes
Depreciation and amortization
Amortization of acquisition costs related to Econazole purchase
Non-cash expenses, such as share-based compensation expense, and
preferred stock dividend
Less change in the fair value of derivative liability
The Company believes that Adjusted EBITDA is
a meaningful indicator, to both Company management and investors, of the past and expected ongoing operating performance of the
Company. EBITDA is a commonly used and widely accepted measure of financial performance. Adjusted EBITDA is deemed by the Company
to be a useful performance indicator because it includes an add back of non-cash and non-recurring operating expenses which have
little to no bearing on cash flows and may be subject to uncontrollable factors not reflective of the Company's true operational
performance (i.e. fair value adjustments to the derivative liability).
While
the Company uses EBITDA and Adjusted EBITDA in managing and analyzing its business and financial condition and believes these non-GAAP
financial measures to be useful to investors in evaluating the Company's performance, it is open to certain shortcomings. EBITDA
and Adjusted EBITDA does not take into account the impact of capital expenditures on either the liquidity or the financial performance
of the Company and likewise omits share-based compensation expenses, which may vary over time and may represent a material portion
of overall compensation expense. Due to the inherent limitations of EBITDA and Adjusted EBITDA, the Company's management utilizes
comparable GAAP financial measures to evaluate the business in conjunction with EBITDA and Adjusted EBITDA and encourages investors
to do likewise.
IGI LABORATORIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(in thousands, except shares and
per share information)
| |
Three months ended December 31, | |
| |
2014 | | |
2013 | |
Revenues: | |
| | | |
| | |
Product sales, net | |
$ | 13,579 | | |
$ | 5,857 | |
Research and development income | |
| 105 | | |
| 816 | |
Licensing, royalty and other revenue | |
| 51 | | |
| 52 | |
Total revenues | |
| 13,735 | | |
| 6,725 | |
| |
| | | |
| | |
Costs and Expenses: | |
| | | |
| | |
Cost of revenues | |
| 5,345 | | |
| 4,147 | |
Selling, general and administrative expenses | |
| 2,413 | | |
| 1,406 | |
Product development and research expenses | |
| 1,864 | | |
| 620 | |
Total costs and expenses | |
| 9,622 | | |
| 6,173 | |
Operating income | |
| 4,113 | | |
| 552 | |
| |
| | | |
| | |
Other Income (Expense): | |
| | | |
| | |
Change in the fair value of derivative liability | |
| 2,300 | | |
| - | |
Interest and other expense, net | |
| (608 | ) | |
| (78 | ) |
Income before income tax expense (benefit) | |
| 5,805 | | |
| 474 | |
| |
| | | |
| | |
Income tax expense (benefit) | |
| 173 | | |
| (197 | ) |
| |
| | | |
| | |
Net income | |
| 5,632 | | |
| 671 | |
| |
| | | |
| | |
Preferred stock dividend | |
| - | | |
| (1,308 | ) |
| |
| | | |
| | |
Net income (loss) attributable to common stockholders | |
$ | 5,632 | | |
$ | (637 | ) |
| |
| | | |
| | |
Basic income (loss) per share | |
$ | 0.11 | | |
$ | (0.01 | ) |
Diluted income (loss) per share | |
$ | 0.09 | | |
$ | (0.01 | ) |
| |
| | | |
| | |
Weighted average shares of common stock outstanding: | |
| | | |
| | |
Basic | |
| 52,784,635 | | |
| 44,519,326 | |
Diluted | |
| 67,167,566 | | |
| 44,519,326 | |
IGI LABORATORIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
For the years ended December 31,
2014 and 2013
(in thousands, except shares and
per share information)
| |
2014 | | |
2013 | |
Revenues: | |
| | | |
| | |
Product sales, net | |
$ | 32,104 | | |
$ | 16,981 | |
Research and development income | |
| 1,490 | | |
| 1,094 | |
Licensing, royalty and other revenue | |
| 146 | | |
| 149 | |
Total revenues | |
| 33,740 | | |
| 18,224 | |
| |
| | | |
| | |
Costs and Expenses: | |
| | | |
| | |
Cost of revenues | |
| 16,948 | | |
| 12,079 | |
Selling, general and administrative expenses | |
| 5,976 | | |
| 3,484 | |
Product development and research expenses | |
| 6,910 | | |
| 2,743 | |
Total costs and expenses | |
| 29,834 | | |
| 18,306 | |
Operating income (loss) | |
| 3,906 | | |
| (82 | ) |
| |
| | | |
| | |
Other Income (Expense): | |
| | | |
| | |
Change in the fair value of derivative liability | |
| 2,300 | | |
| - | |
Interest and other expense, net | |
| (782 | ) | |
| (199 | ) |
Income (loss) before income tax expense (benefit) | |
| 5,424 | | |
| (281 | ) |
| |
| | | |
| | |
Income tax expense (benefit) | |
| 173 | | |
| (197 | ) |
| |
| | | |
| | |
Net income (loss) | |
| 5,251 | | |
| (84 | ) |
| |
| | | |
| | |
Preferred stock dividend | |
| - | | |
| (1,308 | ) |
| |
| | | |
| | |
Net income (loss) attributable to common stockholders | |
$ | 5,251 | | |
$ | (1,392 | ) |
| |
| | | |
| | |
Basic income (loss) per share | |
$ | 0.11 | | |
$ | (0.03 | ) |
Diluted income (loss) per share | |
$ | 0.09 | | |
$ | (0.03 | ) |
| |
| | | |
| | |
Weighted average shares of common stock outstanding: | |
| | | |
| | |
Basic | |
| 49,817,721 | | |
| 43,517,640 | |
Diluted | |
| 64,207,190 | | |
| 43,517,640 | |
IGI LABORATORIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
For the years ended December 31,
2014 and 2013
(in thousands)
| |
December 31, | | |
December 31, | |
| |
2014 | | |
2013 | |
Cash flows from operating activities: | |
| | | |
| | |
Net income (loss) | |
$ | 5,251 | | |
$ | (84 | ) |
Non-cash (income) expenses | |
| (72 | ) | |
| 1,212 | |
Changes in operating assets and liabilities | |
| (8,976 | ) | |
| (1,746 | ) |
| |
| | | |
| | |
Net cash used in operating activities | |
| (3,797 | ) | |
| (618 | ) |
| |
| | | |
| | |
Net cash used in investing activities | |
| (3,792 | ) | |
| (2,113 | ) |
| |
| | | |
| | |
Net cash provided by financing activities | |
| 164,371 | | |
| 2,296 | |
| |
| | | |
| | |
Net increase (decrease) in cash and cash equivalents | |
| 156,782 | | |
| (435 | ) |
Cash and cash equivalents at beginning of year | |
| 2,101 | | |
| 2,536 | |
| |
| | | |
| | |
Cash and cash equivalents at end of year | |
$ | 158,883 | | |
$ | 2,101 | |
IGI LABORATORIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share and
per share information)
| |
December 31, 2014 | | |
December 31, 2013 | |
ASSETS | |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash and cash equivalents | |
$ | 158,883 | | |
$ | 2,101 | |
Accounts receivable, net | |
| 14,366 | | |
| 4,947 | |
Inventories | |
| 2,784 | | |
| 2,869 | |
Prepaid expenses and other receivables | |
| 1,185 | | |
| 641 | |
Total current assets | |
| 177,218 | | |
| 10,558 | |
Property, plant and equipment, net | |
| 3,262 | | |
| 2,623 | |
Product acquisition costs, net | |
| 10,604 | | |
| 1,766 | |
Debt issuance costs, net | |
| 5,132 | | |
| 69 | |
Other | |
| 862 | | |
| 411 | |
Total assets | |
$ | 197,078 | | |
$ | 15,427 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable | |
$ | 1,643 | | |
$ | 1,523 | |
Accrued expenses | |
| 5,141 | | |
| 2,915 | |
Payable for product acquisition costs | |
| 6,000 | | |
| - | |
Deferred income, current | |
| 87 | | |
| 768 | |
Capital lease obligation, current | |
| 131 | | |
| 15 | |
Total current liabilities | |
| 13,002 | | |
| 5,221 | |
| |
| | | |
| | |
Convertible 3.75% senior notes, net of debt discount (face of $143,750) | |
| 100,311 | | |
| - | |
Fair value of derivative liability - convertible 3.75% senior notes | |
| 41,400 | | |
| - | |
Note payable, bank | |
| 3,160 | | |
| 3,000 | |
Other long term liabilities | |
| 71 | | |
| 15 | |
Total liabilities | |
| 157,944 | | |
| 8,236 | |
| |
| | | |
| | |
Stockholders’ equity: | |
| | | |
| | |
Series A Convertible Preferred stock, $0.01 par value, 100 shares authorized; 0 shares issued and outstanding as of December 31, 2014 and 2013, respectively | |
| - | | |
| - | |
Series C Convertible Preferred stock, $0.01 par value, 1,550 shares authorized; 0 shares issued and outstanding as of December 31, 2014 and 2013, respectively | |
| - | | |
| - | |
Common stock, $0.01 par value, 60,000,000 shares authorized; 52,819,787 and 46,748,575 shares issued and outstanding as of December 31, 2014 and December 31, 2013, respectively | |
| 548 | | |
| 487 | |
Additional paid-in capital | |
| 78,172 | | |
| 51,541 | |
Accumulated deficit | |
| (39,586 | ) | |
| (44,837 | ) |
Total stockholders’ equity | |
| 39,134 | | |
| 7,191 | |
Total liabilities and stockholders' equity | |
$ | 197,078 | | |
$ | 15,427 | |
IGI LABORATORIES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except shares and per share
information)
| |
Three Months Ended | | |
Year Ended | |
| |
December 31, | | |
December 31, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| |
| | |
| | |
| | |
| |
Net income (loss) attributable to common stockholders | |
$ | 5,632 | | |
$ | (637 | ) | |
$ | 5,251 | | |
$ | (1,392 | ) |
| |
| | | |
| | | |
| | | |
| | |
ADJUSTMENTS TO ARRIVE AT EBITDA: | |
| | | |
| | | |
| | | |
| | |
Depreciation and amortization expense | |
| 216 | | |
| 103 | | |
| 532 | | |
| 407 | |
Interest expense, net | |
| 268 | | |
| 70 | | |
| 406 | | |
| 167 | |
Non-cash interest expense | |
| 261 | | |
| - | | |
| 261 | | |
| - | |
Income tax expense (benefit) | |
| 173 | | |
| (197 | ) | |
| 173 | | |
| (197 | ) |
EBITDA | |
| 6,550 | | |
| (661 | ) | |
| 6,623 | | |
| (1,015 | ) |
| |
| | | |
| | | |
| | | |
| | |
ADJUSTMENTS TO ARRIVE AT ADJUSTED EBITDA: | |
| | | |
| | | |
| | | |
| | |
Amortization of product acquisition costs | |
| 30 | | |
| 30 | | |
| 120 | | |
| 60 | |
Stock-based compensation expense | |
| 520 | | |
| 367 | | |
| 1,170 | | |
| 536 | |
Prefered stock dividend | |
| - | | |
| 1,308 | | |
| - | | |
| 1,308 | |
Change in the fair value of derivative liability | |
| (2,300 | ) | |
| - | | |
| (2,300 | ) | |
| - | |
ADJUSTED EBITDA | |
$ | 4,800 | | |
$ | 1,044 | | |
$ | 5,613 | | |
$ | 889 | |
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