Kos Reports Exceptional Growth in Revenue and Earnings for the Quarter and Nine-Month Period.Business Editors/Health/Medical Writers MIAMI--(BUSINESS WIRE)--Oct. 28, 2003 Kos Pharmaceuticals, Inc. (Nasdaq:KOSP): Financial Highlights -- Third quarter revenue increased 62% to $73.5 million -- Net income grew to $14.7 million and EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. to $0.37 -- Generated cash from operations of $21 million -- Cash and available credit increased to $115 million -- Nine-month revenue increased 76% to $207 million -- 2003 guidance increased to $1.40 - $1.50 EPS and $290 million in revenue Kos Pharmaceuticals, Inc. (Nasdaq:KOSP) today announced financial results for the third quarter and nine months ended September September: see month. 30, 2003. For the third quarter of 2003, revenue increased 62% to a record $73.5 million, up from $45.5 million for the third quarter of 2002. Revenue for the nine months ended September 30, 2003, was a record $206.6 million, a 76% increase from revenue of $117.7 million in the same period in 2002. The significant increase in revenue was attributable to continued adoption of Kos' cholesterol products with Niaspan(R) sales sustaining robust growth and Advicor(R) sales more than doubling. The Company reported net income of $14.7 million or $0.37 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share for the third quarter of 2003, compared to a net loss of $347,000, or $0.02 per share, for the same period in 2002. Net income for the first nine months of 2003 was $38.5 million or $1.03 per diluted share compared to a net loss of $26.9 million, or $1.31 per share, for the same period a year ago. The significant improvement in operating results for the quarter was principally attributable to better than expected growth of Kos' cholesterol franchise and continued rigorous control of operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. at the Company. The Company generated $21 million in cash from operations in the third quarter of 2003, and as of September 30, 2003, the Company had approximately $115 million of cash, marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has and available credit, of which $65 million was cash and marketable securities, including monies pledged as collateral for the Company's letters of credit. Sales of Niaspan in the third quarter of 2003 grew 48% from the third quarter of 2002, and accounted for $56.4 million of revenue, while Advicor sales accounted for $17.1 million of revenue, an increase of more than 130%. More than 910,500 total prescriptions were written for Niaspan in the third quarter, and more than 230,700 total prescriptions were written for Advicor. For the quarter, the growth rate of Kos' cholesterol franchise was nearly double the growth rate of the overall cholesterol market and at the end of September, 2003, Kos achieved a 3.5% share of new prescriptions in the overall cholesterol market, despite the introduction of two new lipid lipid Any of a diverse class of organic compounds, found in all living things, that are greasy and insoluble in water. One of the three large classes of substances in foods and living cells, lipids contain more than twice as much energy (calories) per unit of weight as the modifying drugs. "Kos continues its impressive trajectory Trajectory The curve described by a body moving through space, as of a meteor through the atmosphere, a planet around the Sun, a projectile fired from a gun, or a rocket in flight. with respect to operating performance and key strategic business milestones," said Adrian Adrian, Roman emperor Adrian, Roman emperor: see Hadrian. Adrian, city, United States Adrian, city (1990 pop. 22,097), seat of Lenawee co., SE Mich., on the Raisin River; inc. 1836. Adams Adams, town (1990 pop. 9,445), Berkshire co., NW Mass., in the Berkshires, on the Hoosic River; inc. 1778. Its manufactures include chemicals, textiles, and paper products. The Berkshire region attracts tourists year-round. , President and Chief Executive Officer. "Both of our cholesterol products continue to garner increasing acceptance in the medical community, with nearly 70,000 physicians prescribing Niaspan and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. Advicor. Additionally, from a financial perspective, there has been a dramatic EPS improvement of $2.34 when comparing the loss per share in the nine-month period in 2002 of $1.31 to the profit of $1.03 we reported for the same nine-month period in 2003. This demonstrates the significant leverage that we can derive from our vertically integrated business model." "Equally important, we continued to make progress on other key company objectives during the quarter with the completion of the recent commercialization alliance with Oryx oryx (ôr`ĭks), name for several small, horselike antelopes, genus Oryx, found in deserts and arid scrublands of Africa and Arabia. They feed on grasses and scrub and can go without water for long periods. Pharmaceuticals to market both our products in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , the initiation of the Mutual Recognition Procedure for Niaspan in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and the filing of an IND for one of the three NDA (Non Disclosure Agreement) An agreement signed between two parties that have to disclose confidential information to each other in order to do business. In general, the NDA states why the information is being divulged and stipulates that it cannot be used for any products currently in development," continued Adams. "Finally,
we complemented our already strong management team with the appointment
of two new pharmaceutical executives, Senior Vice President, General
Counsel and Senior Vice President, Research and Development, who will
help us continue to build shareholder value."With the continued strong operating performance for the third quarter of 2003, Kos now expects 2003 full year revenue to increase to about $290 million and expects increased earnings per diluted share of $1.40 to $1.50. Kos' senior management will host a conference call at 10:30 a.m. ET to discuss the Company's quarterly results. There will be slides associated with our conference call remarks and press release, available on our Q3 2003 webcast. The conference call will be available live via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the by accessing Kos' website at http://www.kospharm.com. Please go to the website at least fifteen minutes prior to the call to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. For those who cannot access the webcast, you can dial into the conference call at 719-867-0660 domestic or international, conference passcode 693212. A replay will also be available on the website at http://www.kospharm.com or by calling 719-457-0820 domestic or international, and entering 693212 from 1:00 PM ET on Tuesday Tuesday: see week. , October October: see month. 28, 2003 until 12:00 AM ET on Thursday Thursday: see week. , October 30, 2003. Kos Pharmaceuticals, Inc. is a fully integrated specialty pharmaceutical company engaged in developing, commercializing, manufacturing and marketing proprietary prescription products for the treatment of chronic diseases. The Company's principal product development strategy is to reformulate Verb 1. reformulate - formulate or develop again, of an improved theory or hypothesis redevelop formulate, explicate, develop - elaborate, as of theories and hypotheses; "Could you develop the ideas in your thesis" existing pharmaceutical products with large market potential to improve safety, efficacy, or patient compliance. The Company currently markets Niaspan and Advicor for the treatment of cholesterol disorders. Kos is developing additional products and has proprietary drug delivery technologies in solid-dose and aerosol aerosol (âr`əsōl,–sŏl): see colloid. aerosol System of tiny liquid or solid particles evenly distributed in a finely divided state through a gas, usually air. metered-dose inhalation inhalation /in·ha·la·tion/ (in?hah-la´shun) 1. the drawing of air or other substances into the lungs.inhala´tional 2. the drawing of an aerosolized drug into the lungs with the breath. 3. administration. Certain statements in this press release, including statements regarding the expected growth in the number of prescriptions written for Niaspan and Advicor, the expected growth in sales of Niaspan and Advicor, our expectations regarding revenue and earnings per share in future periods, our ability to continue to garner acceptance among physicians for Niaspan and Advicor, our ability to market our products in Canada, our ability to achieve approval under the Mutual Recognition Procedure in Europe, our ability to obtain regulatory approval for products under development and our ability to continue to benefit from our business model are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and are subject to risks and uncertainties. These risks and uncertainties include the continued market acceptance of the Advicor and Niaspan products, the expected continued growth in sales of the Niaspan and Advicor products, the Company's ability to successfully commercialize Niaspan and Advicor in other countries, the ability of the Company to obtain regulatory approvals, the ability of Kos to build awareness for Advicor within the medical community, the Company's ability to continue to develop new products, the Company's ability to attract and retain sales professionals, the Company's ability to grow revenue and control expenses, the Company's ability to meet the conditions necessary to obtain funding under its funding arrangements, the protection afforded by the Company's patents, the effect of conditions in the pharmaceutical industry and the economy in general, as well as certain other risks. A more detailed discussion of risks attendant ATTENDANT. One who owes a duty or service to another, or in some sort depends upon him. Termes de la Ley, h.t. As to attendant terms, see Powell on Morts. Index, tit. Attendant term; Park on Dower, c. 1 7. to the forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. included in this press release are set forth in the "Forward-Looking Information: Certain Cautionary Statements" section of the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 2002, filed with the Securities and Exchange Commission, and in other documents already filed with the SEC.
Kos Pharmaceuticals, Inc. and Subsidiaries
SELECTED FINANCIAL INFORMATION
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2003 2002 2003 2002
-------- ----------- --------- ---------
(unaudited) (unaudited)
Condensed Consolidated Statement of Operations
(in thousands, except per share data)
Revenues $73,506 $45,536 $206,632 $117,677
Cost of Sales 5,144 4,445 13,854 11,594
-------- ----------- --------- ---------
68,362 41,091 192,778 106,083
-------- ----------- --------- ---------
Operating
Expenses:
Research and
development 12,384 9,765 35,847 33,756
Selling,
general and
administrative 39,790 30,594 114,600 96,234
-------- ----------- --------- ---------
Total operating
expenses 52,174 40,359 150,447 129,990
-------- ----------- --------- ---------
Income (Loss)
from Operations 16,188 732 42,331 (23,907)
Other, net 1,482 1,079 3,819 2,998
-------- ----------- --------- ---------
Net Income
(Loss) $14,706 $(347) $38,512 $(26,905)
======== =========== ========= =========
Net Income
(Loss) per
Share:
Basic $0.68 $(0.02) $1.82 $(1.31)
Diluted 0.37 (I) (0.02) 1.03 (I) (1.31)
Shares Used in Computing
Net Income (Loss) per
Share:
Basic 21,590 20,626 21,141 20,577
Diluted 41,775 20,626 39,903 20,577
September 30, December 31,
2003 2002
----------- ---------
Condensed Consolidated (unaudited)
Balance Sheet
(in thousands)
Cash and
Marketable
Securities $65,002 (II) $19,572 (II)
Accounts
Receivable, net 26,624 24,088
Other Current
Assets 11,542 11,821
Fixed Assets,
net of
depreciation 18,061 12,528
Other Assets 1,074 1,432
----------- ---------
Total assets $122,303 $69,441
=========== =========
Current
Liabilities $113,354 $110,125
Long-term Debt 30,000 34,025
Shareholders'
Deficit (21,051) (74,709)
----------- ---------
Total liabilities
and shareholders'
deficit $122,303 $69,441
=========== =========
-----
(I) Calculation of fully diluted EPS reflects net income minus
$818,000 and $2,533,000 in interest expense for the third
quarter 2003 and for the nine months ended September 30, 2003,
respectively, associated with the Company's convertible debt
facilities.
(II) Includes $17.1 million of cash pledged as collateral
under the Company's letters of credit facility.
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