MALVERN, PA — Recro Pharma, Inc. (Nasdaq:REPH), a revenue-generating specialty pharmaceutical company focused on therapeutics for the hospital and other acute care settings, reported financial results for the three months ended March 31, 2018.
“During the first quarter of 2018, we’ve been actively preparing for commercialization of IV meloxicam, our lead product candidate for the management of moderate to severe pain, as we await the upcoming PDUFA date of May 26, 2018,” said Gerri Henwood, President and Chief Executive Officer of Recro Pharma. “In parallel, we have been presenting at scientific meetings and publishing supportive clinical data so that physicians will have access to the information following our planned product launch. Additionally, the CDMO business is off to a solid start this year generating $19.5 million in first quarter revenues.”
First Quarter 2018 and Recent Highlights
- Expanded IV Meloxicam Patent Portfolio. In May 2018, Recro announced the receipt of issue notifications from the U.S. Patent and Trademark Office (USPTO) for three new patents covering IV meloxicam, each of which will issue on May 22, 2018. The three patents relate to the reduced flake-like aggregates of the injectable nanoparticle meloxicam composition and methods of producing such compounds. Recro anticipates one of these patents to be Orange-Book listable. The patents are exclusively licensed from Alkermes Pharma Ireland Limited.
- Pre-approval Inspections Completed. During the first quarter of 2018, as previously expected, the U.S. Food and Drug Administration (FDA) completed pre-approval inspections at two sites associated with manufacturing of IV meloxicam drug product and supporting the New Drug Application (NDA) for IV meloxicam.
- Strong Gainesville Manufacturing Performance. Recro’s manufacturing business continued to perform well with revenues of $19.5 million for the first quarter ended March 31, 2018.
- Peer-Reviewed Publications. During the first quarter of 2018, the Company announced the publication of three peer-reviewed journal articles highlighting previously reported IV meloxicam clinical data, including:
- The Company’s pivotal Phase III clinical study evaluating IV meloxicam for the treatment of pain following bunionectomy surgery. The article, titled “Efficacy and Safety of Intravenous Meloxicam in Subjects with Moderate-to-Severe Pain Following Bunionectomy,” was published online in the Clinical Journal of Pain in March 2018.
- A Phase II clinical study evaluating IV meloxicam for the treatment of pain following unilateral bunionectomy surgery. The article, titled “Evaluation of the safety and efficacy of an intravenous nanocrystal formulation of meloxicam in the management of moderate-to-severe pain after bunionectomy,” was published online in the Journal of Pain Research in February 2018.
- A Phase II clinical study evaluating IV meloxicam for the treatment of pain following dental impaction surgery. The article, titled “A Randomized Double-Blind Controlled Trial of Intravenous Meloxicam in the Treatment of Pain Following Dental Impaction Surgery,” was published online in the Journal of Clinical Pharmacology in January 2018.
- Presented IV Meloxicam Data at the 43rd Annual Regional Anesthesiology and Acute Pain Medicine Meeting. In April 2018, Recro presented eight posters at the 43rd Annual Regional Anesthesiology and Acute Pain Medicine Meeting, co-hosted by the American Society of Regional Anesthesia and Pain Medicine (ASRA). The data describes previously presented results from Recro’s Phase II and Phase III clinical development programs for IV meloxicam for the management of moderate to severe pain.
- Hosted an Investor and Analyst Day. In February 2018, Recro hosted an investor and analyst day. Featuring Eugene R. Viscusi, M.D., Director, Acute Pain Management, Thomas Jefferson University and Richard Iorio, M.D., Chief of Adult Reconstruction, Recro management discussed the Company’s commercialization strategy and launch plans for IV meloxicam, upon approval, as well as a recap of key clinical data and regulatory status.
- Hosted Educational Symposiums on Challenges in Acute Pain Management and Advances in Evidence-Based Management Approaches at AAOS and ASRA. In March 2018, Recro hosted an Industry ‘Lunch and Learn’ Session on the Challenges in Acute Postsurgical Pain and Advances in the Approach to Management at the American Academy of Orthopaedic Surgeons (AAOS) 2018 Annual Meeting. In April 2018, Recro hosted an Industry ‘Lunch and Learn’ Session on the Challenges in Acute Postsurgical Pain and Advances in the Approach to Management at the 43rd Annual Regional Anesthesiology and Acute Pain Medicine Meeting, co-hosted by ASRA.
- Presented Pre-Clinical Data on Neuromuscular Blocking and Reversal Agents at AUA. In April 2018, Recro presented preclinical data for its neuromuscular blocking and reversal agents at the Association of University Anesthesiologists (AUA) 2018 Annual Meeting. The data demonstrates the effective and rapid activity of the ultra-short acting neuromuscular blocking agent in a preclinical primate model, as well as the ability of the rapid-acting reversal agent to antagonize the neuromuscular blocking molecule and induce recovery.
As of March 31, 2018, Recro had cash, cash equivalents and short-term investments of $51.3 million.
Revenues and cost of sales were $19.5 million and $10.5 million, respectively for the three months ended March 31, 2018, compared to $18.7 million and $10.5 million for the three months ended March 31, 2017. The increase of $0.8 million in revenue was primarily due to the net impact of royalties recognized from one of our commercial partners after the adoption of Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers.” Cost of sales remained constant compared to prior year.
Research and development expenses for the three months ended March 31, 2018 were $8.4 million, compared to $7.8 million for the three month period ended March 31, 2017. The increase of $0.6 million was primarily due to an increase in pre-commercialization manufacturing costs for IV meloxicam, an increase in salaries and benefits expense due to increased headcount, and a modest increase in development costs for other pipeline products. These increases in research and development costs were offset by lower IV meloxicam clinical trial expenses.
General and administrative expenses for the three months ended March 31, 2018 were $9.5 million, compared to $4.0 million for the same period in 2017. The increase of $5.5 million was primarily due to building of the commercial team and its related costs.
Amortization of intangibles for each of the three months ended March 31, 2018 and 2017 was $0.6 million, which was exclusively related to the amortization of our CDMO royalties and contract manufacturing relationships intangible asset over its estimated useful life.
Interest expense, net, was $2.0 million for the three months ended March 31, 2018, compared to $1.1 million for the three months ended March 31, 2017. The increase of $0.9 million was primarily due to the higher principal balance on our senior secured term loan with Athyrium Opportunities III Acquisition LP (Athyrium) and the amortization of the related financing costs, which was partially offset by a lower interest rate on our Athyrium senior secured term loan versus our previous loan with OrbiMed Royalties, II, LP.
Income tax benefit was $2.4 million and $0.3 million for the three months ended March 31, 2018 and 2017, respectively, related exclusively to our U.S. operations. The increase of $2.1 million was primarily due to increased losses in the United States.
For the three months ended March 31, 2018, Recro reported a net loss of $12.5 million, or $0.65 per share, compared to net loss of $8.1 million, or $0.42 per share, for the comparable period in 2017.
The Company reaffirms its 2018 CDMO guidance and believes it will generate approximately $70 million in revenue despite the anticipated unfavorable impact of the adoption of the new revenue recognition standard, and taking into consideration existing contracts and timing of customer order patterns, as well as our experience with customer’s product market estimations.
Source: Recro Pharma, Inc., 490 Lapp Road, Malvern PA 19355
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