Impax laboratories credit suisse conference nov 11 2014

1. 2014 Credit Suisse Healthcare Conference
November 11, 2014

2. Impax Cautionary Statement Regarding Forward Looking Statements and Use of Non-GAAP Financial Measures
To the extent any statements made in this presentation contain information that is not historical; these statements are forward-looking in nature and express the beliefs and expectations of management. Such statements are based on current expectations and involve a number of known and unknown risks and uncertainties that could cause the Company’s future results, performance, or achievements to differ significantly from the results, performance, or achievements expressed or implied by such forward- looking statements. Such risks and uncertainties include, but are not limited to: fluctuations in revenues and operating income; the Company’s ability to promptly correct the issues raised in the warning letter and Form 483 observations received from the FDA; the Company’s ability to successfully develop and commercialize pharmaceutical products in a timely manner; reductions or loss of business with any significant customer; the impact of consolidation of the Company’s customer base; the impact of competition; the substantial portion of our total revenues derived from sales of a limited number of products; the Company’s ability to sustain profitability and positive cash flows; any delays or unanticipated expenses in connection with the operation of the Company’s manufacturing facilities; the effect of foreign economic, political, legal, and other risks on the Company’s operations abroad; the uncertainty of patent litigation and other legal proceedings; the increased government scrutiny on the Company’s agreements with brand pharmaceutical companies; product development risks and the difficulty of predicting FDA filings and approvals; consumer acceptance and demand for new pharmaceutical products; the impact of market perceptions of the Company and the safety and quality of the Company’s products; the Company’s determinations to discontinue the manufacture and distribution of certain products; the Company’s ability to achieve returns on its investments in research and development activities; the Company’s inexperience in conducting clinical trials and submitting new drug applications; the Company’s ability to successfully conduct clinical trials; the Company’s reliance on third parties to conduct clinical trials and testing; the Company’s lack of a license partner for commercialization of IPX066 outside of the United States; impact of illegal distribution and sale by third parties of counterfeits or stolen products; the availability of raw materials and impact of interruptions in the Company’s supply chain; the Company’s policies regarding returns, allowances and chargebacks; the use of controlled substances in the Company’s products; the effect of current economic conditions on our industry, business, results of operations and financial condition; disruptions or failures in the Company’s information technology systems and network infrastructure; the Company’s reliance on alliance and collaboration agreements; the Company’s reliance on licenses to proprietary technologies; the Company’s dependence on certain employees; the Company’s ability to comply with legal and regulatory requirements governing the healthcare industry; the regulatory environment; the Company’s ability to protect its intellectual property; exposure to product liability claims; risks relating to goodwill and intangibles; changes in tax regulations; the Company’s ability to manage growth, including through potential acquisitions; the Company’s ability to meet expectations regarding the timing and completion of the proposed transaction with Tower Holdings, Inc. and Lineage Therapeutics Inc.; the Company’s ability to consummate such proposed transaction; the conditions to the completion of such proposed transaction (including the receipt of the regulatory approvals required for the transaction not being obtained on the terms expected or on the anticipated schedule), the integration of the acquired business by the Company being more difficult, time-consuming or costly than expected, operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) being greater than expected following the proposed transaction, the retention of certain key employees of the acquired business being difficult, the Company’s and the acquired business’s expected or targeted future financial and operating performance and results, the combined company’s capacity to bring new products to market, and the possibility that the Company may be unable to achieve expected synergies and operating efficiencies in connection with such proposed transaction within the expected time-frames or at all and to successfully integrate the acquired business, the restrictions imposed by the Company’s credit facility; uncertainties involved in the preparation of the Company’s financial statements; the Company’s ability to maintain an effective system of internal control over financial reporting; the effect of terrorist attacks on the Company’s business; the location of the Company’s manufacturing and research and development facilities near earthquake fault lines; expansion of social media platforms and other risks described in the Company’s periodic reports filed with the Securities and Exchange Commission. Forward-looking statements speak only as to the date on which they are made, and the Company undertakes no obligation to update publicly or revise any forward-looking statement, regardless of whether new information becomes available, future developments occur or otherwise.
Trademarks referenced herein are the property of their respective owners.
©2014 Impax Laboratories, Inc. All Rights Reserved.
Use of Non-GAAP Financial Measures
This presentation contains forward-looking EBITDA, which is a non-GAAP financial measure. EBITDA is adjusted to exclude, among other things, the impact of interest income and expense, depreciation and amortization expense, and income tax expense or benefit. These items are excluded from EBITDA because they are generally outside the normal operations of a company. There are limitations in using non-GAAP financial measures, as they are not prepared in accordance with generally accepted accounting principles, and may be different than non-GAAP financial measures used by other companies. The non-GAAP financial measures included in this press release are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. It is not feasible to provide reconciliation to the most comparable projected U.S. GAAP measure because the excluded items are difficult to predict and estimate and are primarily dependent on future events.
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3. Our Dual Business Model
Unique targeted ANDAs FTF/FTM emphasis Focused on sustainable products 23 products pending at FDA 23 products under development Partnerships and M&A
Currently CNS focused Commercializing Zomig® in the US Promotion with 64 Sales Reps RYTARYTM PDUFA Jan. 9, 2015 Building a product pipeline Partnerships and M&A
Data as of November 2014. FTF= first-to-file; FTM = first-to-market; CNS = Central Nervous System 46 Generic products target over $19 billion in US brand/generic sales – IMS data as of September 2014.
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4. Focus on Four Core Areas
Focus on Quality
Maximize Dual Platform
Optimize R&D
Business Development Acceleration

Resolve FDA issues

Fully Implement industry-best continuous improvement program

Optimize strategies related to Brand and Generic business

Accentuate similarities and taking advantage of differences

Refocus internal Brand and Generic pipeline

Identify opportunities for improvements

Evaluate/Act on opportunities for expanding Brand and Generic business

Increase efficiency of the Balance Sheet
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5. Focus on Quality

Corporate Quality Improvement Program a top priority

Remediation – providing monthly updates and ongoing dialogue with FDA

Goals:

To closeout Warning Letter at Hayward facility and remove compliance hold on product approvals

RYTARYTM approval

Future events:

RYTARYTM PDUFA – January 9, 2015

Official classification from FDA of the July 2014 Hayward inspection

Communication from FDA on the Warning Letter and its effect on future Pre- Approval Inspection’s
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6. 10
9
18
Other Solid Oral 49%
Controlled-Release Solid Oral
24%
Alternative Dosage Form 27%
GENERIC
37 Currently Marketed Products
Maximizing Generic Opportunities
6
Over $190 Million Revenue Contribution From Product Launches Since 2012

Authorized Generic (AG) RENVELA® Tablets

Ursodiol Tablets

Diclofenac Sodium Gel 3% (Generic Solaraze®)

AG Trilipix® Delayed Release Capsules

AG Zomig® Tablets

AG Zomig® Orally Disintegrating Tablets

Oxymorphone Hydrochloride ER Tablets
Source: Impax 10-K and 10-Q’s

7. Source: IMS NPA
Maximizing Brand Opportunities
7
Successfully Commercializing Zomig® Nasal Spray +70% Revenue Growth Nine Months Ended Sept. 2014 vs. Sept. 2013
Product
Nasal Triptan National Segment Prescription Share
Growth Since Impax Promotion
Aug. 2012
Sept. 2014
Zomig®
23%
30%
28%
Imitrex®
5%
5%
5%
Generic Sumatriptan
72%
65%
(9%)

8. Optimizing R&D – Identifying Opportunities for Improvement

Strengthening R&D infrastructure by reorganizing R&D operating model

Goals of reorganization

Leverage internal strengths while improving efficiencies

Combine similar functions within generic and brand operations

Prioritize corporate quality initiatives within scientific operations

Generic R&D team continues to concentrate on a refined portfolio of high- value generic products

Brand R&D team focusing on late-stage opportunities

R&D efficiency and effectiveness expected to realize cost savings

Approximately $8 million in annual cost savings beginning in 2015
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9. Matching Resources to High-Value Projects
46 Future Generic Opportunities Pending at FDA or Under Development
Represents significant potential in current U.S. Brand / Generic market (~$19 billion sales)
Note: Date as of November 2014. All product sales data included herein are derived from data published by IMS for the 12 months ended September 2014.
Pending at FDA - $12B current U.S. Brand/Generic Sales; Under Development - $8B current U.S. Brand/Generic Sales.
FDA = U.S. Food and Drug Administration MAA = Marketing Authorization Applications EMA = European Medicines Agency
8
5
13
11
6
17
4
12
16
23
23
46
Pending at FDA
Under Development
Total Pipeline
Other Solid Oral Dosage
Alternative
Dosage
Controlled-Release Solid Oral Dosage
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Brand Opportunities Pending at FDA or Under Development
Product
Status
RYTARYTM (IPX066) Parkinson’s Disease
FDA PDUFA date
Jan. 9, 2015
IPX066
Parkinson’s Disease
Filed MAA to EMA
Nov. 5, 2014
IPX239
Post-herpetic neuralgia (PHN)
Successful Phase II Evaluating clinical path forward
IPX203
Parkinson’s Disease
Filed Investigational New Drug Application

10. •
Founded in 1998, CorePharma develops, manufactures and markets high-quality, targeted, generic prescription pharmaceuticals across a variety of dosage forms and therapeutic categories
•
Six facilities in Middlesex, New Jersey
•
Amedra Pharmaceuticals focuses on offering high value branded prescription products in the United States
•
Lineage Therapeutics focuses on offering generic products in the United States
Business Development Acceleration
Tower Holdings subsidiary
Tower Holdings subsidiary
Impax proposed acquisition of:
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11. COMPELLING FINANCIAL BENEFITS

Immediately accretive to earnings per diluted share by approximately $0.90 in 2015

Assumes transaction closes within six months of announcement

Diversifies and enlarges revenue and earnings base

Approx. $215MM-$225MM in 2014E revenues

Approx. $80MM-$85MM in 2014E EBITDA

> $10MM+ of synergy opportunity

Reduced SG&A

R&D optimization of combined portfolio

Gross margins comparable to current Impax margin profile

Continued balance sheet flexibility
COMPELLING STRATEGIC BENEFITS

Provides portfolio of growing, high-margin, complex branded and generic products

4 branded products:

Albenza®: Niche Anthelmintic

Daraprim®: Antiparasitic

Dexedrine® ER: ADHD & Narcolepsy

Adrenaclick®: Anaphylaxis

3 high value AG’s

Epinephrine auto-injector

Metaxalone

Dextroamphetamine ER

5 complementary generic products

Generic pipeline with near-term opportunities

Diversifies and expands manufacturing and supply chain infrastructure
AG = Authorized Generic
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Acquisition Adds Growth and Provides Strategic and Financial Benefits

12. 
Albenza (albendazole) is indicated for the treatment of invasive tapeworm infections

The leading treatment for this indication

Established safety profile

Strong managed care coverage

Long-term opportunity via life cycle management strategies

Addition of this new therapeutic area allows Impax to more efficiently utilize its brand commercial infrastructure and provides upside growth potential
Niche Product with Strong Growth, Attractive Margins, with Lifecycle Management Strategies
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26,133
75,384
139,656
102,944
2011
2012
2013
(Jan-Sept)
2014
Albenza Annual Prescription Volume
Source: Sales figures IMS National Prescription Audit; Prescription numbers in thousands.
Albenza® Franchise: Leading Treatment with Significant Upside Opportunities

13. 
Large and growing market driven by increase in prevalence of people suffering from allergies

Launched two epinephrine auto-injector products in 2013:

Branded version (Adrenaclick®)

Authorized Generic to Adrenaclick®

Competitively priced products

Opportunity for continued growth
1,416
1,551
1,656
1,918
2,187
3,421
3,772
4,101
5,036
5,783
2009
2010
2011
2012
2013
US Epinephrine Auto-injector sales(1)
0.15MG
0.30MG
4,837
5,757
5,323
6,953
7,971
(‘000s of auto-injectors)
(1) Source: Sales figure IMS National Sales Perspective Audit
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Epinephrine Auto-Injector: High Growth Potential in an Attractive Market

14. 
FDA approved and DEA licensed manufacturing facility

Successful implementation of a Quality Improvement Program with proven results

Lead Brand in a new therapeutic area

High value Generic product line with 5+ near term new product launches

Focus on late stage & life cycle management Brand projects

Significant near-term Generic opportunities

Opportunity for optimization of combined R&D portfolio

Strategic M&A transaction intended to enhance Shareholder value

Balance sheet remains flexible for additional opportunities
Acquisition Delivers in Our Primary Areas of Focus
Focus on Quality
Maximize Dual Platform
Optimize R&D
Business Development Acceleration
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15. Positioned for Future Growth
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Established Core Competencies
Strong and Flexible Financial Profile
Targeting Sustainable Generic and Specialized Brand Markets