Lannett — Investor Presentation (February 2009)
27 slides from Lannett's investor presentation, February 2009
Slide 1: Investor Presentation February 2009
Arthur P. Bedrosian, Chief Executive Officer Brian Kearns, Chief Financial Officer Investor Presentation February 2009
Slide 2: Safe Harbor Statement
Safe Harbor Statement Except for historical facts, the statements in this presentation, as well as oral statements or other written statements made or to be made by Lannett Company, Inc., are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and in
Slide 3: Our Business
Our Business Lannett Company develops, manufactures and markets generic pharmaceutical products in tablet, capsule, topical, injectable, ophthalmic and oral liquid forms. 2
Slide 4: At a Glance
At a Glance • Founded in 1942, a pioneer in the generic drug industry • Revenues: $72.4 million (fiscal 2008) • Market Cap: ~ $125 million • Headquarters: Philadelphia, PA • NYSE Alternext: LCI • Employees: ~ 233 • Poised to enter pain management sector • State-of-the-art manufacturing facilities •
Slide 5: Strong Industry Fundamentals
Strong Industry Fundamentals • Demographics are favorable – Generic drug utilization increasing globally – Managed care focused on generic drugs • Generic pharma is an attractive place to invest – Pressure to contain costs - ~55% of scripts consumed – ~92% of drug therapy dollars spent at retail – I
Slide 6: State of the Industry
State of the Industry • Competitive environment (the number of generic manufacturers approved by FDA to market drugs doubled between 1995 and 2005) • Customer consolidation increasing rapidly • Generics represent 65% of all scripts in the US • 75% of Orange Book drugs available as generic • Pricing
Slide 7: Recent Company News
Recent Company News • Receives FDA Approval for Ursodiol, Dec. 08 • Launches Two Products, Dec. 08 • Receives Patent Approval for Method of Manufacturing, Oct. 08 • Announces Positive Results of Facilities Inspection, Oct. 08 • Receives FDA Approval for Doxycycline Tablets, Aug. 08 • Granted Import
Slide 8: Growth Strategies
Growth Strategies • Increase market penetration of existing products; launch recently approved products • Commercialize products in pipeline • Accelerate development of pain management business • Increase strategic relationships: – Drug development agreements – Marketing/distribution alliances • Dev
Slide 9: Growth Opportunity: Strategic Relationships
Growth Opportunity: Strategic Relationships Formed six drug development and/or marketing alliances (India, Israel, Switzerland) since January 2007, which: • Increase revenues, income • Expand product pipeline • Diversify product offering, add dosage forms • Complement internal drug development effor
Slide 10: Growth Opportunity: Vertical Integration
Growth Opportunity: Vertical Integration Acquisition of API supplier provides: • Access to custom synthesized raw materials, including certain difficult to source pharmaceutical ingredients • Capability to manufacture additional dosage forms (topical, oral solutions) • Enhanced margins, lower manufa
Slide 11: Pipeline Review / Product Development Strategy
Pipeline Review / Product Development Strategy
Slide 12: Selection Criteria
Selection Criteria • Rigorous process to select product development projects • Specific considerations include: – Pricing and expected margins – Overall market opportunity (small/medium) – Competitive landscape (# and nature of players) – Access to raw materials (API sourcing) – Required dosage form
Slide 13: Products in Development
Products in Development • 13 ANDAs pending at FDA • More than 42 additional products in various stages of development, including products being developed: – internally – through collaborations • Multiple dosage forms: Immediate release tablets, capsules, injectables, ophthalmics, gels, extended rele
Slide 14: Currently Marketed Products
Currently Marketed Products Currently marketing 64 products, 39 of which are produced in- house, including: • Acetazolamide Tablets • Hydrochlorothiazide Tablets • Amantadine HCl • Hydromorphone HCl Tablets • Baclofen Tablets • Levothyroxine Sodium Tablets • Bethanechol Chloride Tablets • Morphine S
Slide 15: Manufacturing
Manufacturing
Slide 16: Manufacturing
Manufacturing • Produce 200 million capsules and tablets per year • Facility expansion – 4 facilities (230,000 sq ft) housing R&D, QC lab, warehouse, admin, APIs, and an offshore stability laboratory • Capital expenditures: – FY 2006 - $ 5.1 million – FY 2007 - $ 2.5 million – FY 2008 - $ 2.3 millio
Slide 17: Sales and Marketing
Sales and Marketing
Slide 18: Sales and Marketing
Sales and Marketing • Deep relationships with customers, built over many years • Experienced team of direct sales representatives • Exploring new markets Approximate breakdown by revenue is as follows: Mail Order Pharmacies 7% Distributors/ Wholesalers 42% Chain Pharmacies 51% Distributors/Wholesale
Slide 19: Financial Review
Financial Review
Slide 20: Annual Net Sales
Annual Net Sales $109.6 $82.6 $72.4 $63.8 $64.1 $42.5 $44.9 FY03 FY04 FY05 FY06 FY07 FY08 FY09E* * First six months of fiscal 2009 annualized 19
Slide 21: Net Income/Loss
Net Income/loss ($ millions) $13.2 $11.7 $5.0 ($32.8)* ($6.9)** ($2.3) FY03 FY04 FY05 FY06 FY07 FY08 *Fiscal 2005 net loss includes non-cash impairment charge of $46.1 million. **Fiscal 2007 net loss includes write down of debt associated with acquisition in April 2007 of a bulk raw materials suppli
Slide 22: Fiscal 2009 Second Quarter
Fiscal 2009 Second Quarter ($ millions) $29.2 Revenue Net Income/Loss $17.5 $1.6 ($0.7) Q2-FY08 Q2-FY09 Q2-FY08 Q2-FY09 *Includes costs associated with operating recently acquired raw material supplier. 21
Slide 23: Balance Sheet Highlights
Balance Sheet Highlights at December 31, 2008 • Cash, marketable securities $12.8 million • Working capital $31.6 million • Long-term debt $ 8.0 million • Shareholders’ equity $73.2 million • Deferred tax asset $17.1 million 22
Slide 24: Management Team
Management Team • Management tenure with Company averages ~6 years • 200+ years of pharmaceutical/healthcare industry experience in aggregate Management Experience Name Position Company Industry Arthur P. Bedrosian President CEO 7 40 Brian Kearns Chief Financial Officer 4 21 Kevin Smith Vice Preside
Slide 25: Current Capitalization
Current Capitalization William Farber stock ownership 8.6 million Farber Properties Group ownership 5.2 million JSP ownership 4.0 million Other 6.8 million Total shares outstanding 24.6 million Employee options (Common Share Equivalents) 0.1 million Total fully-diluted shares 24.7 million 24
Slide 26: Investment Highlights
Investment Highlights • Track record of receiving product approvals • Deep pipeline • Vertical integration strategy; acquired raw material supplier • Established several drug development/marketing agreements • Compelling industry fundamentals • Improved financial performance; strong balance sheet •
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