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): May 9, 2019

 

Osmotica Pharmaceuticals plc

(Exact name of registrant as specified in its charter)

 

Ireland

 

001-38709

 

Not Applicable

(State or other jurisdiction of
incorporation)

 

(Commission File Number)

 

(IRS Employer
Identification No.)

 

400 Crossing Boulevard
Bridgewater, NJ

 

08807

(Address of principal executive offices)

 

(Zip Code)

 

(Registrant’s telephone number, including area code): (908) 809-1300

 

Not Applicable

(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:

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Ordinary Shares

 

OSMT

 

Nasdaq Global Select Market

 

 

 


 

Item 2.02 Results of Operations and Financial Condition.

 

On May 9, 2019, Osmotica Pharmaceuticals plc issued a press release announcing its financial results for the quarter ended March 31, 2019. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

The information contained in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit
No.

 

Description

 

 

 

99.1

 

Press Release issued by Osmotica Pharmaceuticals plc on May 9, 2019.

 

2


 

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 hereunto duly authorized.

 

 

OSMOTICA PHARMACEUTICALS PLC

 

 

 

By:

/s/ Andrew Einhorn

 

 

Andrew Einhorn

 

 

Chief Financial Officer

 

Date: May 9, 2019

 

3


Exhibit 99.1

 

 

Osmotica Pharmaceuticals plc Reports First Quarter 2019 Financial Results and
Highlights Pipeline and Business Progress

 

First quarter 2019 total revenue of $57.1 million; net loss of $6.2 million

 

Positive topline results from second Phase III clinical trials of RVL-1201 for ptosis or droopy eyelid

 

Bridgewater, NJ, May 9, 2019 — Osmotica Pharmaceuticals plc (“Osmotica” or the “Company”) (Nasdaq: OSMT), a fully integrated biopharmaceutical company, today announced business highlights and financial results for the three months ended March 31, 2019.

 

“During the first quarter, and more recently, we made significant progress in our transition to a specialty branded business. We have made advances in our pipeline and experienced month-over-month prescription growth in our newly launched products, M-72 and Osmolex ER.  Our non-promoted portfolio continued to generate meaningful cash despite the unfavorable competitive dynamics in generic markets,” said Brian Markison, Chief Executive Officer.

 

“As disclosed earlier in the week, we also completed two Phase III clinical trials for one of our late-stage pipeline products, RVL-1201 (oxymetazoline hydrochloride ophthalmic solution, 0.1%), which is in development for the treatment of acquired blepharoptosis (or droopy eyelid). We are very excited about the positive topline data from our recently completed clinical trials that provides additional evidence of the safety and efficacy of RVL-1201. We are preparing our submission to the FDA later this year, and, if approved, we could have a product on the market as soon as the second half of 2020,” added Markison.

 

First Quarter 2019 Financial Results

 

·                  Total revenues were $57.1 million, compared to $59.8 million in the first quarter of 2018;

 

·                  Net loss was $6.2 million, compared to a net loss of $4.6 million in the first quarter of 2018;

 

·                  Adjusted EBITDA(1) was $16.4 million, compared to Adjusted EBITDA of $20.5 million in the first quarter of 2018; and

 

·                  Cash and cash equivalents were $63.1 million and debt (net of deferred financing costs) was $267.9 million as of March 31, 2019.

 


(1)Adjusted EBITDA is a non-GAAP measure. Adjusted EBITDA is more fully described and reconciled from net loss determined under U.S. generally accepted accounting principles (“GAAP”) in “Presentation of Non-GAAP Measures” and the attached table “Osmotica Pharmaceuticals plc GAAP to Non-GAAP Reconciliations.”

 


 

First Quarter 2019 Financial Results

 

Total revenues were $57.1 million for the three months ended March 31, 2019, compared to $59.8 million for the three months ended March 31, 2018, primarily due to a decline in net product sales.

 

Net product sales were $56.4 million for three months ended March 31, 2019, compared to $58.8 million for the three months ended March 31, 2018, a decrease of $2.4 million. This decrease was driven by lower net sales of methylphenidate ER, (first quarter 2019 includes M-72 which was launched in the second quarter of 2018), which decreased by 26% during the quarter compared to the prior year period due to increased market competition that resulted in lower net selling prices, partially offset by higher volumes.  Net sales of VERT increased 46%, reflecting lower than estimated product returns and government rebates, partially offset by lower volumes.

 

Selling, general and administrative expenses increased to $21.7 million in the three months ended March 31, 2019, compared to $17.2 million in the three months ended March 31, 2018. The increase reflects additions to our field force headcount and marketing costs associated with the launch of Osmolex ER, which began in the fourth quarter of 2018, together with share-compensation expense and higher costs associated with being a public company.

 

Research and development expenses were $9.8 million in the three months ended March 31, 2019, compared to $10.2 million in the three months ended March 31, 2018. The decrease reflects the completion of the Phase III clinical trial of arbaclofen ER during the quarter, partially offset by the higher clinical trial expenses related to RVL-1201, additional developmental batch expenses and share-compensation expense.

 

Net loss for the first quarter of 2019 was $6.2 million, compared to net loss of $4.6 million in the first quarter of 2018.

 

Adjusted EBITDA for the first quarter of 2019 was $16.4 million, compared to Adjusted EBITDA of $20.5 million in the first quarter of 2018.

 

For a reconciliation of Adjusted EBITDA to net loss (income), the most comparable GAAP financial measure, please see the “Osmotica Pharmaceuticals plc GAAP to Non-GAAP Reconciliations” table at the end of this press release.

 

Liquidity

 

As of March 31, 2019, Osmotica had cash and cash equivalents of $63.1 million and $267.9 million in debt (net of deferred financing costs). The Company had $50.0 million of unused borrowing capacity available under its revolving credit facility as of March 31, 2019.

 


 

Presentation of Non-GAAP Measures

 

In addition to the results provided in accordance with GAAP throughout this press release, the Company has presented Adjusted EBITDA, which is a non-GAAP measurement.  Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization adjusted for (i) non-operating income or expense, and (ii) the impact of certain non-cash, nonrecurring or other items that are included in net loss and EBITDA that we do not consider indicative of our ongoing operating performance. Adjusted EBITDA excludes, share-based compensation expense, management fees, IPO expenses, severance expenses. We use Adjusted EBITDA for business planning purposes, in assessing our performance and determining the compensation of substantially all of our employees, including our executive officers, and in measuring our performance relative to that of our competitors.  We also believe that Adjusted EBITDA provides investors with useful information to understand our operating results and analyze financial and business trends on a period-to-period basis.  Adjusted EBITDA has important limitations as an analytical tool, however, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.  Adjusted EBITDA is not intended to replace, and should not be considered superior to, the presentation of our financial results in accordance with GAAP.  Our definition of Adjusted EBITDA may differ from similar measures reported by other companies and may not be comparable to other similarly titled measures.  Adjusted EBITDA is reconciled from the net loss as determined under GAAP in the attached table “Osmotica Pharmaceuticals plc GAAP to Non-GAAP Reconciliations.”

 

Forward Looking Statements

 

This press release includes statements that express the Company’s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.” The Company’s actual results may vary significantly from the results anticipated in these forward-looking statements, which can generally be identified by the use of forward-looking terminology, including the terms “believes,” “expects,” “may,” “will,” “should,” “seeks,” “projects,” “approximately,” “intends,” “plans,” “estimates” or “anticipates,” or, in each case, their negatives or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They include statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, financial guidance, growth plan, strategies, trends and other events, particularly relating to sales of current products and the development, approval and introduction of new products, FDA and other regulatory applications, approvals and actions, the continuation of historical trends, our ability to operate our business under our new capital and operating structure, and the sufficiency of our cash balances and cash generated from operating and financing activities for future liquidity and capital resource needs.  By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We may not achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place significant reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make.  Important factors that could cause actual results and events to differ materially from those indicated in the forward-looking statements include the following: our ability to successfully develop or commercialize

 


 

new products, or do so on a timely or cost effective basis; our dependence on a limited number of products; failures of or delays in clinical trials or other delays in obtaining regulatory approval or commencing product sales for new products; the impact of legal proceedings; our ability to service our substantial debt; our ability to raise additional capital; the impact of competition from both brand and generic companies; any interruption at our manufacturing facility, our warehouses or at facilities operated by third parties that we rely on for our products; our dependence on our major customers; our ability to develop and maintain our sales capabilities; the impact of any litigation related to allegations of infringement of intellectual property; any changes to the coverage and reimbursement levels for our products by governmental authorities and other third-party payors as a result of healthcare reform or otherwise; the impact of any changes in the extensive governmental regulation that we face; manufacturing or quality control issues that we may face; and other risks and uncertainties more fully described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2018 and other filings that the Company makes with the Securities and Exchange Commission. These forward-looking statements speak only as of the time of this release and we do not undertake to publicly update or revise them, whether as a result of new information, future events or otherwise, except as required by law.

 

Conference Call

 

As previously announced, Osmotica management will host its first quarter 2019 conference call as follows:

 

Date

Thursday, May 9, 2019

 

 

Time

4:30 p.m. EDT

 

 

Toll free (U.S.)

(866) 672-5029

 

 

International

(409) 217-8312

 

 

Webcast (live and replay)

www.osmotica.com, under the “Investor & News” section

 

 

Conference call ID

2984053

 

The webcast will be archived for 30 days at the aforementioned URL.

 

About Osmotica Pharmaceuticals plc
Osmotica Pharmaceuticals plc is a fully integrated biopharmaceutical company focused on the development and commercialization of specialty products that target markets with underserved patient populations. Our diversified product portfolio in the specialty neurology and women’s health therapeutic areas, together with our non-promoted complex formulations of generic drugs, form the foundation of our unwavering commitment to improve patients’ lives.

 


 

Osmotica has a late-stage development pipeline highlighted by two NDA candidates in Phase III clinical trials: arbaclofen extended-release tablets for spasticity in multiple sclerosis patients and RVL-1201 (oxymetazoline hydrochloride ophthalmic solution, 0.1%) for the treatment of blepharoptosis, or droopy eyelid.

 

Osmotica has operations in the United States, Argentina, and Hungary.

 

Investor and Media Relations for Osmotica Pharmaceuticals plc

Lisa M. Wilson

In-Site Communications, Inc.

T: 212-452-2793

E: lwilson@insitecony.com

 

-Financial tables follow-

 


 

Osmotica Pharmaceuticals plc

Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

March 31, 2019

 

 

 

 

 

(Unaudited)

 

December 31, 2018

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

63,062

 

$

70,834

 

Trade accounts receivable, net

 

56,887

 

56,424

 

Inventories, net

 

27,815

 

24,383

 

Prepaid expenses and other current assets

 

16,198

 

20,744

 

Total current assets

 

163,962

 

172,385

 

Property, plant and equipment, net

 

30,738

 

31,263

 

Operating lease assets

 

6,365

 

 

Intangibles, net

 

473,522

 

490,390

 

Goodwill

 

100,855

 

100,855

 

Other non-current assets

 

705

 

752

 

Total assets

 

$

776,147

 

$

795,645

 

 

 

 

 

 

 

Liabilities and Shareholders Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Trade accounts payable

 

$

20,591

 

$

24,870

 

Accrued liabilities

 

72,477

 

87,236

 

Current portion of long-term debt, net of deferred financing costs

 

795

 

1,774

 

Current portion of lease liability

 

2,007

 

 

Current portion of obligation under finance leases

 

125

 

119

 

Income taxes payable - current portion

 

496

 

394

 

Total current liabilities

 

96,491

 

114,393

 

Long-term debt, net of non-current deferred financing costs

 

267,080

 

266,803

 

Long-term portion of obligation under finance leases

 

120

 

138

 

Long-term portion of lease liability

 

4,577

 

 

Income taxes payable

 

1,804

 

1,804

 

Deferred taxes

 

24,837

 

26,238

 

Total liabilities

 

394,909

 

409,376

 

Commitments and contingencies

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

Ordinary shares

 

525

 

525

 

Additional paid in capital

 

491,119

 

489,950

 

Accumulated deficit

 

(108,560

)

(102,360

)

Accumulated other comprehensive loss

 

(1,846

)

(1,846

)

Total shareholders’ equity

 

381,238

 

386,269

 

Total liabilities and shareholders’ equity

 

$

776,147

 

$

795,645

 

 


 

Osmotica Pharmaceuticals plc

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share data)

 

 

 

Three Months Ended March 31,

 

 

 

2019

 

2018

 

 

 

 

 

 

 

Net product sales

 

$

56,400

 

$

58,834

 

Royalty revenue

 

721

 

963

 

Licensing and contract revenue

 

5

 

4

 

Total revenues

 

57,126

 

59,801

 

Cost of good sold (inclusive of amortization of intangibles)

 

29,203

 

33,562

 

Gross profit

 

27,923

 

26,239

 

Selling, general and administrative expenses

 

21,656

 

17,162

 

Research and development expenses

 

9,764

 

10,174

 

Total operating expenses

 

31,420

 

27,336

 

Operating loss

 

(3,497

)

(1,097

)

Interest expense and amortization of debt discount

 

4,501

 

4,843

 

Other non-operating income, net

 

(557

)

(137

)

Total other non-operating expense, net

 

3,944

 

4,706

 

Loss before income taxes

 

(7,441

)

(5,803

)

Income tax benefit

 

1,240

 

1,195

 

Net loss

 

$

(6,200

)

$

(4,607

)

 

 

 

 

 

 

Loss per share attributable to shareholders

 

 

 

 

 

Basic and diluted

 

$

(0.12

)

(0.11

)

Weighted average shares basic and diluted

 

 

 

 

 

Basic and diluted

 

52,519

 

42,856

 

 


 

Osmotica Pharmaceuticals plc

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2019

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

Net loss

 

$

(6,200

)

$

(4,607

)

Adjustments to reconcile net loss to cash (used in) provided by operating activities

 

 

 

 

 

Depreciation and amortization

 

17,993

 

20,414

 

Share compensation

 

1,169

 

 

Loss on sale of fixed assets

 

53

 

 

Deferred income tax benefit

 

(1,401

)

(3,296

)

Bad debt provision

 

(84

)

(100

)

Amortization of deferred financing and loan origination fees

 

323

 

415

 

Change in operating assets and liabilities

 

 

 

 

Trade accounts receivable, net

 

(378

)

(23,251

)

Inventories, net

 

(3,432

)

(6,604

)

Prepaid expenses and other current assets

 

4,545

 

3,100

 

Other non-current assets

 

 

(272

)

Trade accounts payable

 

(4,279

)

32,183

 

Accrued and other current liabilities

 

(14,436

)

(10,880

)

Net cash (used in) provided by operating activities

 

(6,128

)

7,102

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Purchase of property, plant and equipment

 

(635

)

(1,437

)

Net cash used in investing activities

 

(635

)

(1,437

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Payments to affiliates

 

 

(2

)

Payments on finance lease obligations

 

(31

)

(27

)

Repayment of insurance financing loan

 

(979

)

 

Debt repayment

 

 

(2,047

)

Net cash used in financing activities

 

(1,010

)

(2,076

)

Net change in cash and cash equivalents

 

(7,773

)

3,589

 

Effect on cash of change in exchange rate

 

 

(138

)

Cash and cash equivalents, beginning of period

 

70,834

 

34,743

 

Cash and cash equivalents, end of period

 

$

63,062

 

$

38,194

 

 


 

Osmotica Pharmaceuticals plc

GAAP to Non-GAAP Reconciliations

Adjusted EBITDA (Unaudited)

(in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2019

 

2018

 

 

 

 

 

 

 

Net Loss

 

$

(6,200

)

$

(4,607

)

Interest expense and amortization of debt discount

 

4,501

 

4,843

 

Income tax benefit

 

(1,240

)

(1,195

)

Depreciation and Amortization Expense

 

17,993

 

20,414

 

 

 

 

 

 

 

EBITDA

 

15,053

 

19,455

 

 

 

 

 

 

 

Management Fees

 

(43

)

250

 

IPO expenses

 

 

 

396

 

Severance expenses

 

182

 

445

 

Share compensation expense

 

1,169

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

16,361

 

$

20,545