SOURCE: Endo Pharmaceuticals

January 08, 2007 16:00 ET

Endo Pharmaceuticals Provides Financial Guidance for 2007

CHADDS FORD, PA -- (MARKET WIRE) -- January 8, 2007 -- Endo Pharmaceuticals Holdings Inc. (NASDAQ: ENDP), a market leader in pain management, today provided financial guidance for fiscal year 2007.

Commenting on the guidance, President and Chief Executive Officer Peter A. Lankau said, "We see 2007 as a major inflection point for Endo, as it represents a year of continued strong top-line growth combined with increased investment in our business to enable us to take advantage of our future growth opportunities. The earnings per share guidance in 2007 reflects significant incremental spending to support the growth of our products in development, our on-market products, notably the ongoing launches of Opana® ER, Opana® and Synera™, and our pre-launch investments for Frova® in anticipation of FDA approval of a new indication for the prevention of menstrual migraine. Additionally, our 2007 guidance reflects expenditures to enhance our infrastructure that we believe are necessary to support our expected growth through 2010."

Endo's financial guidance for 2007 is as follows:

--  Driven primarily by the ongoing success of its lead product,
    Lidoderm®, and the continuing growth of Opana® ER and Opana®, Endo
    expects its 2007 net sales to be between $1.025 billion and $1.050 billion.
--  Net sales of Lidoderm® are forecasted to be between $650 million and
    $675 million. This growth is driven by the product's proven clinical
    effectiveness combined with incremental promotional support generated by
    the expansion of Endo's sales force in 2006.
--  Combined net sales for Opana® ER and Opana® are expected to be
    between $85 million and $105 million, reflecting the impact of a full year
    of marketing and promotional activity to generate broader physician
    awareness and continued steady adoption of these products.
--  Adjusted diluted earnings per share are expected to be approximately
    $1.68 to $1.72 in 2007. This excludes estimated milestone payments to
    partners and the expensing of stock-based compensation charges.
The company's gross profit margin percentage for the full-year 2007 is expected to be essentially unchanged from 2006. Selling, general and administrative expenses will rise due to increased promotional support behind Endo's key on-market products, including the full-year impact of the expansion of the sales force that occurred in the second half of 2006, combined with continuing investments in infrastructure to support Endo's long-term growth objectives.

During 2007, Endo will direct the majority of its incremental R&D spending on the ongoing clinical trials for its development products Rapinyl™, the topical ketoprofen patch, the transdermal sufentanil patch and EN3285, its oral rinse for the treatment of oral mucositis obtained through the acquisition of RxKinetix last October. Additionally, the company plans to increase its investment in post-marketing clinical studies in support of its on-market products.

Endo's 2007 adjusted diluted earnings guidance reflects the estimated impact of the loss of revenue from the discontinuance of Endo's generic oxycodone ER product and approximately $0.05 per adjusted diluted share from incremental research and development and infrastructure expenses associated with the RxKinetix acquisition. Endo's 2007 guidance does not reflect net sales from the expected second-half launch of Frova® for the anticipated expanded indication for prevention of menstrual migraine but does include the impact of investment in pre-launch marketing and education-related expenses associated with this new indication. During the third quarter of 2006, the FDA accepted for substantive review the supplemental New Drug Application (sNDA) relating to Frova® for the short-term (six days per month) prevention of menstrual migraine (MM) and confirmed May 19, 2007 as the review completion date for this application.

The 2007 guidance also excludes non-recurring items and the potential impact of other components of the company's strategy, including possible future acquisitions or licensing opportunities. "Endo intends to be active on the business development front in 2007 as we seek to expand our commercial portfolio through product or company acquisitions in pain management or other therapeutic areas that allow us to remain focused on the specialist physician community," Lankau noted.

Other Developments

Endo also announced today the following developments:

--  Following an assessment of the status of DepoDur®, the company has
    notified SkyePharma PLC of its intent to terminate its development and
    commercialization agreement for this product. Endo expects this will result
    in the transfer of the product to SkyePharma no later than March 31, 2007.
    Endo is taking this opportunity to redeploy its hospital sales force as a
    new specialty force to enhance sales coverage in specialist physician
    offices for the continuing launch of Opana® and Opana® ER and the
    anticipated launch later this year of Frova® in the menstrual migraine
    prophylaxis indication. At the same time, these sales representatives will
    continue to promote Synera™ primarily in key pediatric institutions to
    drive awareness and increase usage of this topical local anesthetic patch.
    As a result of these developments, Endo will evaluate its intangible assets
    related to DepoDur® and Synera™ for impairment as part of the
    company's 2006 annual financial statement closing process, and it is
    reasonably possible that Endo will record impairment charges in 2006 based
    on this evaluation.
--  The projected NDA (New Drug Application) filing date for Rapinyl™,
    Endo's development product for the treatment of breakthrough cancer pain,
    has been changed from the second half of 2007 to the first half of 2008 due
    to slower than expected enrollment of patients in its two ongoing Phase III
    trials. This reflects the inherent challenges in recruiting cancer patients
    for placebo-controlled trials, as well as competition in 2006 with other
    pharmaceutical companies seeking to enroll patients in trials for the same
    indication. With the completion of many of these competing trials, the
    company expects the pace of patient recruitment to accelerate in 2007.
--  As disclosed earlier today, Endo and Penwest Pharmaceuticals Co. have
    signed an amendment to their agreement governing the companies'
    collaboration for Opana® ER.
Note to Investors

Endo will conduct a conference call with financial analysts to discuss this news release at 5:00 p.m. ET today. Investors and other interested parties may access the conference call by dialing (866) 383-8108 (domestic/Canada) or (617) 597-5343 (international). Please dial in 10 minutes prior to the scheduled start time, and reference passcode 97442356.

A replay of the call will be available from January 8, 2007 at 7:00 p.m. ET by dialing (888) 286-8010 (domestic/Canada) or (617) 801-6888 (international), passcode 92830214, and will run until 12:00 a.m. ET on January 15, 2007.

A simultaneous webcast of the call for interested investors and others may be accessed by visiting In addition, a replay of the webcast will be available until 12:00 a.m. ET on January 15, 2007. The replay can be accessed by clicking on "Events" in the Investor Relations section of the web site.

About Endo

Endo Pharmaceuticals Holdings Inc. is a fully integrated specialty pharmaceutical company with market leadership in pain management products. Through its Endo Pharmaceuticals Inc. subsidiary, the company researches, develops, produces and markets a broad product offering of branded and generic pharmaceuticals, meeting the needs of healthcare professionals and consumers alike. More information, including this and past press releases of Endo Pharmaceuticals Holdings Inc., is available online at

Forward-Looking Statements

This press release contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on management's beliefs and assumptions, current expectations, estimates and projections. Statements that are not historical facts, including statements which are preceded by, followed by, or that include, the words "believes," "anticipates," "plans," "expects" or similar expressions and statements are forward-looking statements. Endo's estimated or anticipated future results, product performance or other non-historical facts are forward-looking and reflect Endo's current perspective on existing trends and information. Many of the factors that will determine the Company's future results are beyond the ability of the Company to control or predict. These statements are subject to risks and uncertainties and, therefore, actual results may differ materially from those expressed or implied by these forward-looking statements. The reader should not rely on any forward-looking statement. The Company undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. Several important factors, in addition to the specific factors discussed in connection with these forward-looking statements individually, could affect the future results of Endo and could cause those results to differ materially from those expressed in the forward-looking statements contained in this press release. Important factors that may affect future results include, but are not limited to: market acceptance of the Company's products and the impact of competitive products and pricing; dependence on sole source suppliers; the success of the Company's product development activities and the timeliness with which regulatory authorizations and product launches may be achieved; successful compliance with extensive, costly, complex and evolving governmental regulations and restrictions; the availability on commercially reasonable terms of raw materials and other third party manufactured products; exposure to product liability and other lawsuits and contingencies; dependence on third party suppliers, distributors and collaboration partners; the ability to timely and cost effectively integrate acquisitions; uncertainty associated with pre-clinical studies and clinical trials and regulatory approval; uncertainty of market acceptance of new products; the difficulty of predicting FDA approvals; risks with respect to technology and product development; the effect of competing products and prices; uncertainties regarding intellectual property protection; uncertainties as to the outcome of litigation; changes in operating results; impact of competitive products and pricing; product development; changes in laws and regulations; customer demand; possible future litigation; availability of future financing and reimbursement policies of government and private health insurers and others; and other risks and uncertainties detailed in Endo's filings with the Securities and Exchange Commission, including its Registration Statement on Form S-3 filed with the SEC on March 21, 2006. Readers should evaluate any statement in light of these important factors.

Contact Information

    Bill Newbould
    (610) 558-9800