Quarter to Quarter Aggressive Growth Stocks

[jackhartmann]

B) DRMD DD and CC
Rated a BUY
PR stuff
CINCINNATI, Feb. 28 /PRNewswire/ -- Duramed Pharmaceuticals, Inc. (Nasdaq: DRMD - news) announced today its results for the fourth quarter and fiscal year ended December 31, 2000. For the fourth quarter 2000, net sales were $23.8 million as compared to $15.9 million in the fourth quarter 1999. Net income for the period was $1.5 million, or 6 cents per share, compared to a net loss of $12.3 million, or 53 cents per share for the same period last year. For the full year 2000, net sales were $83.5 million, compared to $50.2 million for 1999, a 66 percent increase. Net income for the year 2000 was $164,000, or 1 cent per share, as compared to a net loss of $51.3 million, or $2.36 per share, for 1999.
E. Thomas Arington, Duramed Chairman and Chief Executive Officer said, ``The fourth quarter 2000 completed a solid year of progress for Duramed and marked the third consecutive quarter of sales and profit increases. The improvement throughout 2000 was led by solid oral dose hormone products and complemented by increased sales of other high-margin multi-source products.
``We are especially encouraged with the growing franchise that Cenestin® (synthetic conjugated estrogens, A) Tablets represent. From October 2000 through January 2001, total monthly new prescriptions were 20,000, 21,000, 26,000 and 33,000, respectively, representing growth of 65 percent. Based on 20,887 total prescriptions filled for the week ended February 16, 2001, Cenestin revenues are annualizing at approximately $22.4 million.
``We believe that the company is well-positioned for continued growth, led by currently-marketed hormone products and those that are expected to be approved in 2001 and beyond. The Cenestin family of products represents our most significant long-term growth opportunity and will require significant time and investment spending; in 2001, we intend to increase our research and development spending in order to build these products and concurrently intend to look at partnership opportunities for them.
``Turning to our ANDA (Abbreviated New Drug Application) pipeline, we now have five products filed and plan to file eight more products in 2001. We are pleased to report that we have received notification from the U.S. Food and Drug Administration (FDA) that we have first-to-file status on two hormone product applications. As evidenced by the success of our Apri(TM) (desogestrel and ethinyl estradiol) Tablets, being first to file is important in establishing market leadership.''
Fourth Quarter Results
Fourth quarter 2000 revenue of $23.8 million was split evenly between hormone products and non-hormone products. Hormone product sales for the fourth quarter of 2000 were $11.9 million, as compared to $8.4 million in the fourth quarter 1999 and $12.4 million in the third quarter 2000. The third quarter 2000 amount includes $2.0 million to recognize the final deferred revenue from the original Cenestin pipeline fill. Commencing with the fourth quarter 2000, Cenestin revenues are based on actual shipments. Cenestin shipments were $4.0 million in the fourth quarter, as compared to $2.2 million in the third quarter 2000.
For the quarter, gross profits totaled $10.2 million, representing 43 percent of net sales, an improvement of 93 percent, or $4.9 million, over fourth quarter 1999. In addition to the increase in gross profit, income for the quarter was positively impacted by the agreement reached with Solvay Pharmaceuticals whereby, effective January 1, 2000, Solvay Pharmaceuticals assumed responsibility for the Cenestin physicians' office promotion in exchange for a share of the Cenestin profits. As a result of the agreement, Duramed's brand marketing expenses in fourth quarter 2000 (which represent Solvay Pharmaceuticals' share of the Cenestin profits) were $2.7 million as compared to fourth quarter 1999 when Duramed incurred an expense of $10.2 million for the promotion of Cenestin.
Product development expenses for fourth quarter 2000 were $1.0 million, $700,000 less than fourth quarter 1999 due to the timing of biostudies and the savings realized by the consolidation of product development activities into the company's Cincinnati facility.
General and administrative expenses were $2.9 million, approximately $1.0 million less than fourth quarter 1999 due to 1999 expenses for Y2K compliance and a non-cash charge for stock options issued to non-employees.
Full Year Results
Revenue for the twelve months ended December 31, 2000, was $83.5 million with the increase over 1999 ($33 million, or 66 percent) being due primarily to Cenestin and Apri. The year 2000 marked the first full-year contribution for each of these products (as Cenestin was launched in May 1999 and Apri was launched in October 1999).
Gross profit for 2000 was $35.1 million, or 42 percent of net sales. This compares with $10.5 million in gross profit for 1999. This improvement was due primarily to increased sales of Cenestin, Apri, and other high-margin multi-source products. For the year 2000, brand marketing expenses were $10 million compared to $21 million in 1999 as a result of the aforementioned agreement with Solvay Pharmaceuticals.
Product development expenses in 2000 were $3.8 million, $3.4 million less than 1999 due to a reduction in biostudy expenses, the termination of the Tamoxifen project, and the savings realized by consolidating the company's product development activities in Cincinnati.
For the year, interest expense was $5.3 million, representing an increase of $1.7 million over 1999 interest expense of $3.6 million. This increase was due primarily to increased debt resulting from the refinancing of the company's Cincinnati manufacturing facility ($12 million of new debt) and increased borrowing on the company's revolving line of credit.
Duramed's working capital improved substantially from $2.6 million at the end of 1999 to $24.8 million at the end of 2000. As of December 31, 2000, shareholders' equity was $6.2 million compared to a deficit of $2.3 million as of December 31, 1999. Long-term debt has increased from $31.6 million as of year end 1999 to $40.7 million as of year end 2000 due primarily to the refinancing of the company's Cincinnati manufacturing facility.
Mandatory Redeemable Convertible Preferred Stock outstanding as of December 31, 1999, was converted into 1.3 million shares of the company's common stock. Also during 2000, the company issued $10 million of Series G convertible preferred stock, which is convertible into common stock at $5.06 per share.
Common shares outstanding at December 31, 2000, increased to 26.4 million from 24.8 million at December 31, 1999, due primarily to the conversion of the preferred stock.
Pipeline
Of the five products awaiting approval at the U.S. Food and Drug Administration (FDA), two represent ANDAs for which Duramed was first to file. In 2000, the combined brand product sales for these two products was approximately $250 million.
The company's filing on Mircette(TM)(1), one of its first-to-file products, is currently under litigation. The Mircette patent is held by Biotechnology General Corp., which has filed suit for declaratory and injunctive relief claiming Duramed's product infringes its patent. Duramed is vigorously defending this lawsuit, claiming that the patent at issue is invalid and not infringed. The Waxman-Hatch Act provides that Duramed will be awarded a 180-day period of generic marketing exclusivity should it prevail in the lawsuit.
In 2001, the company expects to file five additional ANDAs for hormones, including a progestin, an estrogen, and three oral contraceptives. Duramed also anticipates filing three non-hormone ANDAs.
Further, Duramed has four products, in various stages of development, that will likely be filed as New Drug Applications (NDAs). These products, including the combination of Cenestin with a natural progesterone, if approved, will expand the Cenestin brand franchise. Evaluation of the potential for patenting the technology used to develop these extensions of the Cenestin franchise is also in-process.
Completed Cenestin Phase IV Studies
The company remains committed to educating the scientific and lay communities about the advantages of the Cenestin product. Preclinical studies of Cenestin's ability to protect neurons from toxic agents believed to play a role in the development of Alzheimer's disease have been completed very recently. Results of these studies in neuroprotection and implications for memory have been positive, and Duramed is continuing work with researchers to gain more information in this area. Studies have also recently been completed showing Cenestin's positive impact on increasing bone strength and resistance to fracture in an animal model. In human trials, Cenestin has been shown to reduce bone turnover, favorably affecting markers of bone resorption and formulation. Additionally, Cenestin has been shown to have a beneficial improvement on lipid parameters, an important factor in the reduction of cardiovascular risk. Other phase IV studies will continue as part of Duramed's efforts to display all of Cenestin's expected beneficial attributes.
2001 Outlook
For the year 2001, Duramed expects net sales to be in the range of $110 million to $130 million. The company also anticipates net income before taxes to range between $7 million and $9 million. Hormone sales are expected to account for approximately 65 percent of the company's revenue stream.
Some of the factors that may positively affect these ranges include receiving approvals on key products earlier than anticipated; capturing greater-than-anticipated market share with current products; faster-than- projected Cenestin growth; and expanding the current product line through partnership(s). Some factors that could negatively affect these ranges include significant price erosion; changes in market share; new generic competition that has not been anticipated; and/or if the company should decide to invest more heavily in its R&D pipeline.
The company will continue to leverage its formulation and production capabilities to pursue opportunities for both branded and multi-source products in the women's healthcare market, as this field offers significant profit potentials. Duramed's top priority will be to focus on solid oral dose hormone products developed in-house. The company also plans to enter into strategic partnerships, where possible, so as to expand its product development capabilities.
Such partnering may occur in order to fund clinical studies that require large financial commitments. Other R&D projects will be funded internally, and Duramed's R&D spending in 2001 is projected to be approximately $10 million as compared to $3.8 million spent in 2000.
Additional Cenestin Phase IV Studies
As evidenced above, the company has initiated a comprehensive phase IV research program to investigate the potential multiple benefits of Cenestin. Studies highlighting the benefits of the product in the central nervous system, in bone metabolism and strength, and in the cardiovascular system are critical components of this research program. These types of projects are expected to commence in 2001.
Further, Duramed has shown that the patented formulation of Cenestin and its unique state-of-the art manufacturing process result in a product that provides consistent, predictable disintegration and dissolution in an in-vitro model. Blood levels that result from Cenestin treatment have also been shown to have favorable low variation. To ascertain the clinical significance of these observations, Duramed is supporting a major independent investigation to evaluate the actual experiences of postmenopausal women who have been treated with Cenestin and other estrogen replacement therapy (ERT) products.

CC Notes
Lisa Carlson Wilson – IR Insight Communications
Thomas Arington CEO
- Will be at SSB on March 9
- BOA March 12
- USBW late May
- Returned to profitability
- Entered into partnerships
- Strongly believe future is strong
- Tim Holt CFO
- Net 1.5M or 0.06EPS
- Solvay assumed Cenistin
- 23.8M in rev
- 4M in Cenestin sales – solely from actual shipments
- 11.9M non hormone sales due to seasonal cough cold products
- 43% GM
- Op inc 3M vs loss y2y
- Marketing 2.4M vs. 10M y2y, now Solvay markets in exchange for profits
- 1.1M in selling expenses
- GA was 2.9M or less than y2y
- 1.2M in interest expense
- 4.7M in acct rec
- 164K in net profit 0.01EPS
- 10M in marketing expenses for 2000
- 7M payment to Shine Pharmacuetical to settle lawsuit
- Tom
- Financial position improved due to Solvay and Focus on hormones, and marketing of higher margin products
- Cenestin growing fast 20K, 21K, 26K, 33K, per month since Oct2000-Jan2001. 22M in annually rev projected
- Patent protection until 2015
- Beating three other products launched at similar time
- Phase IV study will include several like cerebral blood flow.
- Focusing on women bleeding a reason why women discontinue at high doses
- 10M in R&D for 2001
- 4 applications in top FDA for hormonal products
- Will file 5 more hormonal products appl this year
- Excepts 110-130M in rev for 2001
- Net inc 9M for 2001
- 65% in hormonal rev
- q&a
- ML – nice report. High short interest. Why someone shorting it? 8 days to cover it. Any analyst coverage?
- Not sure why anyone shorting it. We must communicate our story to wall street. Three conferences in next few weeks. We will get attention of the market.
- BOA – Apri 8M in q for revenue Presales?
- A: Yes. 3.2% market share, 43% of new strips?
- Competition for Apri?
- A: None right now.
- Cenestin Solvay share was 2.7M for the fourth quarter?
- A: Yes.
- Tamoxicin was terminated. Any other projects?
- A: Tamoxicin was going to take too much investment in our corporate life. Working on bulk active material for some our product.
- When FDA approval?
- A: Optimistic on approvals and responded to all their questions. One product 100M and other is 150M if it comes.
- Cenestin studies?
- A: Dr. Ray Cline heads medical group. Feels Cenestin will impact on bone strength as estogen helps osteoporosis. Working on cognition issues with univeristy. Working on early indicators for Alheimer. Castovascular may be another. Partner with Solvay on this. Maybe 10 studies this year.
- Cenestin uptick in sales?
- A: Our story is being received well since day 1.
- Litigation?
- Not comment on it. In discovery process. The Mersat lawsuit in Discovery too.
- Update balance sheet?
- A: Keeping close watch on it. Lowering the debt is a priority.
- KC – feedback from Drs, onlabel vs. off label?
- A: no formal study, feedback from field, patients, and physicians is very positive. Patients like the product for consistent reproducibilty for blood levels.
- Hormone replacement market?
- A: There is a huge market place that is untapped due to patient’s fear of side effects with older products. Baby boomers are different. Bottom line is how people feel, when taking the drug.
- MtVA – congrats. 2001 outlook factoring Solvay. 80/20 split?
- A: We get 80% of the net after Solvay gets their money back.
- Could Cenestin be in black this year.
- A: Optismistic but no forecast.
- Gruntal, great report, Phelapromoline (PPA) scare?
- A: A lot of product had PPA in them. Some switch over as products
- Duramed coming in to chain store now.
- A: Not sure why it is happening?
- Prometrimine vs. Pervara?
- Studies publish that progestergen used makes a difference in lipid (HDL) profile.
- Does AHP have a product?
- A: not comment on their products.
- Avista prodcut vs. Eli Lily?
- A; Nothing standing out.
- Apri in demand for HMO, penalize if use other products?
- A: Please with product so far.
Duramed Pharmaceuticals, Inc. develops, manufactures, and markets a line of prescription drug products in tablet, capsule and liquid forms to customers throughout the United States. Products sold by the Company include those of its own manufacture and those it markets under arrangements with other drug manufacturers. The Company sells its products to drug store chains, drug wholesalers, private label distributors, health maintenance organizations, hospitals, nursing homes, retiree organizations, mail order distributors, other drug manufacturers, mass merchandisers and governmental agencies.

52-Week Low on 28-Dec-2000 $2.875
Recent Price $5.875
52-Week High on 13-Mar-2000 $11.375
Market Capitalization $154.6M
Shares Outstanding 26.3M
Float 18.2M
Price/Book (mrq) 24.62
Price/Earnings N/A
Price/Sales (ttm) 1.89
EBITDA (ttm) $6.01M
Debt/Equity (mrq) 6.53
Total Cash N/A
Short Interest As of 8-Feb-2001
Shares Short 1.02M Percent of Float 5.6% Shares Short (Prior Month) 921.0K

Cardinal to sell Duramed drug

Cenestin sales force to be built
3/2/01
BY RANDY TUCKER
The Cincinnati Enquirer
Duramed Pharmaceuticals said Tuesday that it has signed a contract with Cardinal Health Inc. of suburban Columbus to sell and distribute Duramed's estrogen-replacement drug, Cenestin.
News of the three-year contract came less than a week after the U.S. Food and Drug Administration (FDA) approved Cenestin for the treatment of menopause symptoms, driving Pleasant Ridge-based Dura_med's share price up as much as 59 percent.
Under terms of the new agreement, Cardinal Marketforce — a subsidiary of Cardinal Health — will recruit and train a sales force to market Duramed's product directly to doctors and pharmacists during what's known in the industry as “detail” visits.
Cardinal, which distributes pharmaceuticals to hospitals and drug stores, is a Fortune 200 company whose Marketforce management team has built a number of contract sales forces in the past, ranging in size from 25 to 400 people, the company said.
“The selection of Cardinal ... as our marketing and distribution partner will accelerate the rate at which women and their physicians learn about this important new treatment option,” said E. Thomas Arington, Duramed chairman and chief executive.
The contract calls for Dura_med to pay Cardinal a flat-rate, monthly fee for its services, unlike many sales and distribution agreements that give the distributor a percentage of total sales.
Jeff Kern, director or brand marketing for Duramed, said the deal with Cardinal will benefit the company in the long run.
“We believe we're going to be able to retain more income by having a flat-rate deal than we would by giving somebody a percentage of total sales,” Mr. Kern said.
Duramed is projecting sales for Cenestin — the first branded product for which the company has received FDA approval — to reach $100 million within its first 15 to 18 months on the market.
Mr. Kern said Duramed has several other products in the pipeline that the company plans to market under its new contract with Cardinal.
“For us, what Cardinal is doing is building a sales force and management team that will be dedicated to Dura_med,” Mr. Kern said. “Initially it will focus on Cenestin, but we'll also be able to sell other products with that sales force, leveraging the investment of that monthly fee over many products.”
http://enquirer.com/editions/1999/03/31/fin_cardinal_to_sell.html

Duramed thrives on new drugs

Focuses on women's health
2/3/2001
By Tim Bonfield
The Cincinnati Enquirer
The whirring tablet-press at the Duramed Pharmaceuticals plant in Pleasant Ridge spins so fast it can pump out more than 160,000 pills an hour. With growing sales of the hormone replacement drug Cenestin, and other products in the pipeline, Duramed executives predict their tablet press will be getting a lot busier in 2001.
After several years of struggle, executives at Duramed Pharmaceuticals say 2001 could be a break- through year. Even as the economy appears to be slowing on many fronts, Duramed plans to hire more workers and buy more equipment, including installing a high-tech automated packaging system by August.
“We didn't build all this capacity just to make Cenestin,” said E. Thomas Arington, Duramed's chairman and chief executive. “We already have five hormone products on the market. We have four we hope will be approved this year and 19 more in development.”
After several years of fits and starts, Duramed appears closer than ever to realizing its goal of becoming a force in women's health products, from birth control pills to various hormone replacement therapies.
The company told investors last month that it could post a small profit for 2000.
Three straight profitable quarters have reversed a string of losses that have punished its stock.
Cenestin sales remain far short of its goal of $100 million a year, but are picking up. Total weekly prescriptions were up 40 percent in December compared to three months before. New weekly prescriptions were up 55 percent in the same period, the company reports.
In 1999, Cenestin posted about $3.8 million in sales compared to more than $1 billion for competitor Premarin. In 2000, Cenestin sales tripled through the first nine months, but the company now reports Cenestin sales along with its Apri birth control pill and three other hormone products.
As a group, Duramed's five hormone products grew from $2.2 million in sales through nine months of 1999 to $28.7 million through nine months of 2000, the most recent figures available.
New directions
Improving sales reflect a company that has changed directions in several ways since forming 19 years ago.
Duramed was incorporated in 1982. It started production in Long Island, N.Y., in 1983, primarily making generic cough, cold and pain relief products.
In addition to Cenestin, the company produces more than 30 products including birth control pills, cancer drugs, blood pressure pills, pain relievers and a variety of cough and cold remedies.
Duramed moved to Cincinnati in 1985 and soon set its sights on the growing market for women's health products, especially hormone replacement drugs.
The company retooled in 1995 as it waged a prolonged effort to win FDA approval for Cenestin. The drug was originally envisioned as a generic equivalent to Premarin, the market leader. However, fierce opposition from Wyeth-Ayerst, maker of Premarin, blocked approval of the generic drug.
Duramed responded by seeking new-product approval for Cenestin, which was granted in March 1999. All the while, Duramed has been quietly building its production capacity.
What's inside
Inside a low building partly visible from the Norwood Lateral, production rooms are separated by air locks while temperature and humidity are carefully controlled.
Drug making at Duramed starts with mechanical arms lifting kegs of ingredients into a two-story-tall mixing machine. Products move on to a second blending room, then to a tablet press, a pill-coating machine and a packaging line.
A surprising aspect of pharmaceutical production is the smallness of the process.
A container of ingredients about the size of a beer keg can produce 800,000 to 4 million pills. In the tablet press room, a machine that can spit out 160,000 pills an hour isn't much bigger around than a home refrigerator.
At many points in the process, computer controls have replaced human operators, resulting in more precisely made medication and less risk of contamination, said Allen Marko, vice president of production.
To further minimize contamination from human contact, workers in “hot zones” of exposed materials wear full environmental suits. In other areas, workers don't wear clean suits but use glove boxes to run tests and make adjustments to avoid touching ingredients.
“We're a small company. But some of the top companies in the pharmaceutical business don't have this kind of technology,” Mr. Marko said.
The environmental controls are so strict that it required about three months of planning to set up a tour Jan. 26 for about 50 doctors, company staff and journalists, Mr. Marko said. Plant managers worked the production schedule so that the tour would coincide with a maintenance and cleaning day.
Duramed has room to expand production within its building and has land that could allow a two-story, 160,000-square-foot expansion that could triple production capability.
No date on building such an expansion has been set, but the company is gearing up for production increases.
Come August, Duramed plans to install a new packaging line that will transform an operation that takes 20 people to complete about 15 packages a minute into one that requires eight people to produce 140 packages a minute. Along the way, the updated equipment will allow better tracking of lot numbers, bar codes and product labels.
The increased automation means that some people likely will be moved from packaging to other parts of the plant. But the overall increase in production will require hiring more people, Mr. Arington said.
Seeing results
Only now are the results of investing millions into all that new equipment starting to show, Mr. Arington said.
Since 1985, Duramed has grown from employing about 200 people making products that generated $20 million a year in revenue to employing about 375 people making products producing closer to $80 million a year.
In September, Duramed continued its bitter battle with Wyeth-Ayerst by filing an antitrust lawsuit in U.S. District Court in Cincinnati. Duramed accuses Wyeth-Ayerst of illegally coercing managed health-care organizations to enter into exclusive contracts for Premarin. A Wyeth-Ayerst spokesman declined to discuss the allegation, saying the company does not comment on pending litigation.
But Mr. Arington said the company's main focus is building its women's health business.
“You can't fully get past your history, but we don't have people here looking back and talking about multimillion-dollar losses,” Mr. Arington said. “We believe we can now move ahead and become a major player in the woman's health care business.”
http://enquirer.com/editions/2001/02/03/fin_duramed_thrives_on.html

Summary:
Huge debt, but a product that is growing. I like the story and the conference may push the price up some. Also, my pharmacist says female hormone drugs are moving the best after amoxicillin and equivalents. I don’t have a biotech and this looks strong.

Jack