Teligent, Inc. (NASDAQ: TLGT), a New Jersey-based specialty generic
pharmaceutical company, today announced its financial results for
the first quarter ended March 31, 2020.
First Quarter 2020 Highlights
- Net Revenues for the first quarter of 2020 decreased to $7.4
million compared to $13.1 million in the same quarter of the prior
year. The $5.7 million decrease was driven primarily by a $3.8
million decrease in US Teligent label products relating to lost
contract volume and incremental price erosion, a decrease of $1.6
million in Canadian revenues due to supply constraints, and a $.3
million decline in contract manufacturing sales.
- Inventory reserves increased by $1.4 million in the quarter due
to lower of cost or market and quality-related
adjustments.
- Gross profit was a loss of $1.2 million and we reported a
negative gross margin of 16% in the first quarter compared to $5.8
million and 44%, respectively, in the same quarter of the prior
year. The decline was driven by the combination of volume
reductions, supply constraints and incremental inventory reserves
mentioned above.
- Product development and research expenses decreased to $1.8
million in the first quarter of 2020, a 40% decline compared to
$3.0 million for the same quarter of the prior year mainly due to
the intentional deferral of projects.
- Selling, general and administrative expenses increased to $6.7
million in the first quarter of 2020 compared to $5.5 million
reported in the same quarter of the prior year, driven primarily by
ongoing legal fees and consulting fees associated with warning
letter remediation and pre-approval inspection readiness.
- The current and anticipated future financial performance of the
Company have been negatively impacted due to COVID-19. As a
consequence, the Company recorded an impairment charge of $8.4
million in the current quarter related to trademarks and technology
of $4.9 million and product acquisition costs of $3.5 million.
There were no impairment charges recorded in the same quarter of
the prior year.
- Net loss for the first quarter of 2020 was $26.8 million
compared to a net loss of $8.7 million in the same quarter of the
prior year. The incremental loss of $18.1 million is driven by the
$5.7 million decline in revenues, $8.4 million of impairment
charges, $2.7 million of incremental expenses, and a $1.3 million
net non-cash loss due to the change in the Company's derivative
liabilities. The net impact of $1.3 million resulted from a
non-cash loss of $5.3 million associated with the change in the
derivative liability of its Senior Credit Facilities, partially
offset by a $4.0 million non-cash gain associated with its May 2023
Series B Senior Unsecured Convertible Notes. The incremental
expenses incurred in the current quarter relate to our FDA Warning
Letter remediation efforts and our second injectable Prior Approval
Supplement submitted to the FDA.
COVID-19 Response Summary
In alignment with the directives in the state of
New Jersey, as a Pharmaceutical manufacturing facility, we are
considered "essential". We will remain open as long as permitted
and conditions remain safe for our employees in order to continue
to supply our products to the patients that need them.
Teligent has taken several preventative measures
to help ensure business continuity, while maintaining safe and
stable operations. We have directed all non-production employees to
work from home in accordance with state and local guidelines and
have implemented social distancing measures on-site at our
manufacturing facility to protect employees and our products. Our
employees are provided daily personal protective equipment upon
their arrival to our facility and we have implemented temperature
monitoring services at our newly established single point of
entrance. We have also implemented a bi-weekly sanitization process
of the facility. We have adjusted our production schedule to
concentrate on high demand or low stock product to help reduce
employee concentrations while continuing to focus on our customer
demand.
"Our first priority is the health and safety of
our employees while positioning our business to manage through
these unprecedented times," said Tim Sawyer, Teligent President
& CEO. Damian Finio, Teligent CFO added, "as a consequence of
current macro-economic factors, we have implemented a variety of
significant actions to reduce spending as a means to offset the
decline in revenues".
In order to improve the Company’s liquidity as
we manage through the impact of COVID-19 on our business we have
taken the following actions:
- Beginning May 4th our Executive Leadership Team and all
employees with annual salaries exceeding $100,000 accepted a 20%
and 15% eight-week reduction in salary, respectively.
- Over the same eight week period, we furloughed a portion of
employees at our Buena, NJ manufacturing facility.
- Initiated a company-wide effort to reduce discretionary
spending, simplify the organization, and focus on only what’s
critically important.
- We applied for and received $3.3 million of proceeds from the
U.S. Small Business Administration Paycheck Protection Program
(PPP) and plan to balance the employee-related actions previously
taken with the needs of the business to ensure the majority of the
loan will be forgiven.
Financial Guidance
Due to the uncertainties surrounding the
duration and severity of the COVID-19 pandemic and its impact on
our business, we are unable to reliably estimate our future
financial results and therefore we are not in a position to provide
guidance for the remainder of 2020.
However, given the recent relaxing of
shelter-in-place guidelines in various states and the actions taken
to reduce spending, we anticipate improved top and bottom line
financial performance in the second quarter in comparison to the
first quarter of 2020.
Notice of Anticipated Reverse Split
Nasdaq issued File Number SR-NASDAQ-2020-021 permitting a longer
period of time for companies to regain compliance. This
notification deferred our previously communicated deadline of June
1, 2020. However, the Company intends to effectuate a reverse stock
split in the ratio of 10:1 in order to remove the uncertainty that
a potential de-listing presents to current and future investors. We
anticipate the reverse split will be effectuated on May 28,
2020.
About Teligent, Inc.
Teligent is a specialty generic pharmaceutical
company. Our mission is to be a leading player in the specialty
generic prescription drug market. Learn more on our website
www.teligent.com.
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 “plan,” “believe,” “continue,” “should”
or words of similar meaning. 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 global political,
economic, business, competitive, market and regulatory factors; and
our inability to successfully complete future product acquisitions.
These statements are based on our current beliefs or expectations
and are inherently subject to various risks and uncertainties,
including those set forth under the caption “Risk Factors” in
Teligent, Inc.’s most recent Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and other periodic reports we file with the
Securities and Exchange Commission. Teligent, Inc. does not
undertake any obligation to update any forward-looking statements
contained in this document as a result of new information, future
events or otherwise, except as required by law.
Non-GAAP Financial Measures
In addition to reporting financial information
required in accordance with U.S. generally accepted accounting
principles (GAAP), Teligent is also presenting EBITDA, Adjusted
EBITDA and Adjusted EBITDA before product development and research
which are non-GAAP financial measures. Since EBITDA, Adjusted
EBITDA and Adjusted EBITDA before product development and research
costs 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, Teligent's definition of Adjusted EBITDA and adjusted net
loss 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 loss, plus:
Depreciation expense
Amortization of intangibles
Interest expense and other expenses, net
Amortization of debt issuance costs, debt discounts and debt
extinguishment
Impairment charges
Provision for income taxes
Foreign currency exchange loss
Changes in the fair value of derivatives
Non-cash stock-based compensation expense
The Company believes that Adjusted EBITDA is a
meaningful indicator, to both 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 adds back non-cash and
non-recurring operating expenses which have little to no bearing on
the Company's cash flows, may subject to uncontrollable factors and
not reflective of the Company's true operational performance.
The Company uses EBITDA, Adjusted EBITDA, and
Adjusted EBITDA before product development and research costs in
managing and analyzing its business and financial condition. Even
though it believes that these financial measurements are useful to
investors in evaluating the Company's performance, it also believes
these financial measurements are subject to certain shortcomings.
EBITDA or Adjusted EBITDA does not take into account the impact of
capital expenditures on either the liquidity or the financial
performance of the Company or omitting share-based compensation
expenses that may vary over time but represent a material portion
of the overall compensation expense. Due to the inherent
limitations of EBITDA, Adjusted EBITDA, and Adjusted EBITDA before
product development and research costs, the Company's management
utilizes comparable GAAP financial measures to evaluate the
business in conjunction with EBITDA, Adjusted EBITDA and Adjusted
EBITDA before product, development and research costs and
encourages investors to do likewise.
The Company also presents a non-GAAP financial
measures of adjusted net income/(loss) and adjusted net
income/(loss) per diluted share, to show the adjusted net
income/(loss) when EBITDA adjustments are added back or subtracted
out of the traditional GAAP reported net income/(loss). Adjusted
diluted earnings per share, as defined by the Company, is
equal to adjusted net income/(loss) divided by the actual or
anticipated diluted share count for the applicable period.
TELIGENT, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(in thousands, except shares and per
share information)
|
Three months ended March 31, |
|
2020 |
|
2019 |
|
|
|
|
Revenue, net |
$ |
7,447 |
|
|
$ |
13,122 |
|
|
|
|
|
Costs and Expenses: |
|
|
|
Cost of revenues |
8,610 |
|
|
7,360 |
|
Selling, general and administrative expenses |
6,717 |
|
|
5,513 |
|
Impairment charges |
8,373 |
|
|
— |
|
Product development and research expenses |
1,800 |
|
|
2,989 |
|
Total costs and expenses |
25,500 |
|
|
15,862 |
|
Operating loss |
(18,053 |
) |
|
(2,740 |
) |
|
|
|
|
Other Expense: |
|
|
|
Foreign currency exchange loss |
(1,597 |
) |
|
(844 |
) |
Debt partial extinguishment of 2019 Notes |
— |
|
|
(185 |
) |
Interest and other expense, net |
(5,876 |
) |
|
(4,947 |
) |
Change in the fair value of derivatives |
(1,258 |
) |
|
— |
|
Loss before income tax
expense |
(26,784 |
) |
|
(8,716 |
) |
|
|
|
|
Income tax expense |
52 |
|
|
8 |
|
|
|
|
|
Net loss |
$ |
(26,836 |
) |
|
$ |
(8,724 |
) |
|
|
|
|
Basic and diluted loss per share |
$ |
(0.50 |
) |
|
$ |
(0.16 |
) |
|
|
|
|
Weighted average shares of
common stock outstanding: |
|
|
|
Basic and diluted shares |
53,879,333 |
|
|
53,805,983 |
|
TELIGENT, INC. AND
SUBSIDIARIESGROSS TO NET
DEDUCTIONS(in thousands)
|
Three months ended March 31, |
|
2020 |
|
2019 |
|
|
|
|
Gross product sales |
$ |
23,166 |
|
$ |
27,414 |
|
|
|
|
Reduction to gross product
sales: |
|
|
|
Chargebacks and billbacks |
11,955 |
|
10,886 |
Wholesaler fees for service |
1,142 |
|
1,766 |
Sales discounts and other allowances |
2,930 |
|
2,267 |
Total reduction to gross
product sales |
16,027 |
|
14,919 |
|
|
|
|
Product sales, net |
7,139 |
|
12,495 |
|
|
|
|
Contract manufacturing product
sales |
197 |
|
542 |
|
|
|
|
Research and development
services and other income |
111 |
|
85 |
|
|
|
|
Total product sales, net |
$ |
7,447 |
|
$ |
13,122 |
TELIGENT, INC. AND
SUBSIDIARIESRECONCILIATION OF NON-GAAP
MEASURES(in thousands)
|
Three months ended March 31, |
|
2020 |
|
2019 |
|
|
|
|
Net loss |
$ |
(26,836 |
) |
|
$ |
(8,724 |
) |
|
|
|
|
Depreciation |
985 |
|
|
876 |
|
Amortization of
intangibles |
741 |
|
|
756 |
|
Impairment charges |
8,373 |
|
|
|
Interest expense (1) |
4,172 |
|
|
3,424 |
|
Amortization of debt issuance
costs, debt discounts and debt extinguishment |
1,704 |
|
|
1,708 |
|
Provision for income
taxes |
52 |
|
|
8 |
|
EBITDA |
(10,809 |
) |
|
(1,952 |
) |
|
|
|
|
Foreign currency exchange
loss |
1,597 |
|
|
844 |
|
EBITDA after foreign currency
exchange loss |
(9,212 |
) |
|
(1,108 |
) |
Non-cash stock-based
compensation expense |
491 |
|
|
368 |
|
Change in the fair value of
derivatives |
1,258 |
|
|
— |
|
Adjusted EBITDA (2) |
(7,463 |
) |
|
(740 |
) |
|
|
|
|
Product development and
research expenses |
1,593 |
|
|
2,666 |
|
|
|
|
|
Adjusted EBITDA before product
development and research expenses |
$ |
(5,870 |
) |
|
$ |
1,926 |
|
(1) Includes $2.0 million of payment-in-kind
interest during the three months ended March 31, 2020 and 2019,
respectively.
(2) Adjusted EBITDA excludes certain add backs
available to the Company in calculating Consolidated Adjusted
EBITDA under the terms of the Ares Loan Agreement used for
determining covenant compliance.
TELIGENT, INC. AND
SUBSIDIARIESRECONCILIATION OF NON-GAAP ADJUSTED
NET LOSS(in thousands, except share and per share
information)
|
Three months ended March 31, |
|
2020 |
|
2019 |
|
|
|
|
Net loss |
$ |
(26,836 |
) |
|
$ |
(8,724 |
) |
|
|
|
|
Amortization of debt issuance
costs, debt discounts and debt extinguishment |
1,704 |
|
|
1,708 |
|
Provision for income
taxes |
52 |
|
|
8 |
|
Amortization of
intangibles |
741 |
|
|
756 |
|
Impairment charges |
8,373 |
|
|
— |
|
Foreign currency exchange
loss |
1,597 |
|
|
844 |
|
Non-cash stock-based
compensation expense |
491 |
|
|
368 |
|
Change in the fair value of
derivatives |
1,258 |
|
|
— |
|
Adjusted net loss |
$ |
(12,620 |
) |
|
$ |
(5,040 |
) |
|
|
|
|
Non-GAAP adjusted net loss per
basic and diluted share |
$ |
(0.23 |
) |
|
$ |
(0.09 |
) |
|
|
|
|
Contact: |
Damian Finio Teligent, Inc.(856)
336-9117www.teligent.com |
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