ABLE LABORATORIES, INC.
Safe Harbor StatementSafe 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 Able Laboratories, Inc., are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties. For example, statements about the Company’s anticipated growth and future operations, the current or expected market size for its products, the success of current or future product offerings, the research and development efforts and the Company’s ability to file for and obtain U.S. Food and Drug Administration (FDA) approvals for future products, are forward-looking statements. Forward-looking statements are merely the Company’s current predictions of future events. The statements are inherently uncertain, and actual results could differ materially from the statements made herein. There is no assurance that the Company will achieve the sales levels that will make its operations profitable or that FDA filings and approvals will be completed and obtained as anticipated. For a description of additional risks, and uncertainties, please refer to the Company’s filings with the Securities and Exchange Commission, including its latest Annual Report on Form 10–K and its latest Quarterly Report on Form 10-Q. The Company assumes no obligation to update its forward-looking statements to reflect new information and developments.
Company Highlights
2002: Net sales - $52.9 MM vs. $19.6 MM 2001 Operating income - $10.9 MM vs. ($1.2 MM) 2001
Received 26 FDA approvals since March 2001
Robust pipeline with 15 ANDAs under review by the FDA
Generic drug manufacturer with tablet, capsule, suppository and sustained release formulation capabilities
33 products / over 40 strengths
110,000 square feet of facilities
Over 300 employees
Initial R&D StrategyInitial R&D Strategy
Focus on:
Products with $10 - $100 million of sales
Significant growth trends in price
Products with limited competition
Technical Barriers to Entry
R&D StrategyR&D Strategy
First-to-Market
Exclusive API sourcingTechnical barriers to entry
R&D StrategyR&D Strategy
First-to-Market OpportunitiesPatents expiredNo Generic competitorsSmaller markets
Technical barriers to entry Complex formulations
Exclusive API sourcingCustom syntheses
R & D Pipeline
15 ANDAs pending
23 Active projects in development
17 Products (5 pending & 12 in development) which could be first-to-market
Fiscal 2003 estimated R&D budget substantially higher than 2002 actual $6.9 million
Market Analysis
Market for current products $ 3.5 billion
Market for pending approvals $ 0.6 billion(10 Products - 15 ANDAs)
Market for products under development $ 2.9 billion(23 Products - 25 ANDAs)
First-to-Market (17 Prod. – 21 ANDAs): $300 million
5 Products pending approvals $ 80 million
12 Products in R&D $220 million
Regulatory StatusRegulatory Status
2002 Highlights:
2 cGMP and 3 pre-approval inspections with no Form 483 observations received
10 ANDA approvals received
Consent Decree dissolved February 2002
Approval Time LineApproval Time Line
Industry Average: 14 – 16 months
Able Average: 11 months
Excluding: Phentermines (18 months) delayed by API supplierBAC (22 and 21 months) delayed by API
supplier Tramadol patent issues (22 months)
Able Adjusted Average: 8 months
Sales and Marketing
Rapid expansion of customer base
5 direct sales representatives
Plans to expand salesforce
ManufacturingManufacturing
Manufacture Tablets, Capsules & SuppositoriesLicensed for all classes of controlled
substances 110,000 square feet in 4 building “campus”
Capital expenditures:2002 Actual - $6.4 million
2003 Estimated - $4.0 million
Scalable for next 12 months
3,531
5,071
7,066
9,304
12,500
15,02516,101
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2nd Qtr '01 3rd Qtr '01 4th Qtr '01 1st Qtr '02 2nd Qtr '02 3rd Qtr '02 4th Qtr '02
Net Sales ($’s in thousands)
570527
816
1,020
1,708
2,215
2,002
0
500
1,000
1,500
2,000
2,500
2nd Qtr '01 3rd Qtr '01 4th Qtr '01 1st Qtr '02 2nd Qtr '02 3rd Qtr '02 4th Qtr '02
R&D Expenditures ($’s in thousands)
(980)
194
548
1,724
2,421
3,377 3,347
(1,000)
(500)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2nd Qtr '01 3rd Qtr '01 4th Qtr '01 1st Qtr '02 2nd Qtr '02 3rd Qtr '02 4th Qtr '02
Operating Income ($’s in thousands)
(980)
570
194
527 548816
1,724
1,020
2,421
1,708
3,377
2,215
3,347
2,002
(1,300)
(800)
(300)
200
700
1,200
1,700
2,200
2,700
3,200
3,700
2nd Qtr '01 3rd Qtr '01 4th Qtr '01 1st Qtr '02 2nd Qtr '02 3rd Qtr '02 4th Qtr '02
Operating income
R&D
Operating Income & R&D($’s in thousands)
2002 Balance Sheet Highlights2002 Balance Sheet Highlights
Year End:Cash $ 1.8 millionNet working capital $15.3 millionDeferred tax asset $17.6 millionLong-term debt $ 6.1 millionStockholders’ equity $34.7 million
Deferred Tax AssetCapitalized 2002NOL’s exceed $50 million, no impairment
Current CapitalizationCurrent Capitalization
Common stock outstanding 12.9 million
Series Q Preferred Stock
($4.9 Million Face Value) 2.8 million
Employee options
(Price Range $3.75 - $8.30) 2.3 million
Total “fully-issuable” shares 18.0 million
Total fully-diluted shares 17.1 million
Investment HighlightsInvestment Highlights
Rapid expansion of customer base
Growing net sales and operating income
Niche products generate above average margins
Aggressive R&D program and pipeline
Excellent track record with FDA
Highly talented and experienced management team
Thank YouThank You
Income Statements 2002 & 2001Income Statements 2002 & 2001($’s in thousands)($’s in thousands)
2002 2001Net sales $52,930 $19,594Cost of goods sold 27,362 12,533Gross profit 25,568 7,061 Gross margin 48.3% 36.0%
SG&A expenses 7,754 5,909 % of net sales 14.7% 30.2%Research & development expenses 6,945 2,352 % of net sales 13.1% 12.0%
Operating income 10,869 (1,201) % of net sales 20.5% NMOther expenses, net 2,553 3,272
Income (loss) before income taxes 8,316 (4,473)Income tax benefit, net 15,130 ------
Net income (loss) before preferred div. $23,446 ($4,473)
Balance Sheets 2002 & 2001Balance Sheets 2002 & 2001($’s in thousands)($’s in thousands)
2002 2001Current assets: Cash & equivalents $1,801 $1,155Accounts receivable, net 7,874 4,646Inventory 12,904 4,719Other current assets 123 784
Total current assets 22,702 11,304Property & equipment, net 9,932 4,496Deferred income tax & other assets 18,494 1,838
$51,128 $17,638Current liabilities:Notes payable and current portion LTD $890 $587Accounts payable and accrued exp. 9,736 4,568
Total current liabilities 10,626 5,155Long-term debt, net of current portion 5,810 2,290Other liabilities ------- 1,297
Total liabilities 16,436 8,742Total stockholders’ equity 34,692 8,896
$51,128 $17,638
2002 Financial Analysis 2002 Financial Analysis ($ in 000’s except per share data)($ in 000’s except per share data)
Pro-forma information for one-time items:
Q4 Year
Net income before preferred dividend $16,388 $23,446
Add: Asset write-off $1,993 $1,993
Less: NOL tax benefit ($15,130) ($15,130)
Adjusted net income for fully-diluted comp. $3,251 $10,309
Fully-diluted average shares outstanding 16,728 16,322
Pro-forma fully-diluted earnings per share $0.19 $0.63
Reported fully-diluted earnings per share $0.98 $1.44
PersonnelPersonnel
2001 2002 March 2003
Production 63 135 145
Quality 56 100 93
R & D 11 18 21
Sales & Admin. 16 32 34
Total 146 285 305
Generic Name Brand Name Sales (Brand/
Generic) MM Indication(s) Major Generic Competitiors
Acetaminophen & Codeine Tylenol w/ Cod #3 & #4 200 Mild relief of severe painTeva, Barr, Purepac, Mallinckrodt, Ranbaxy, Watson
Butalbital /APAP/ Caffeine Fioricet 103 Headache Westward, Qualitest, Inwood, Watson
Butalbital /APAP/ Caffeine Esgic Plus 16 Headache Forest, Novartis
Carisoprodol Soma 322 Muscle Relaxant Schein, Watson, Qualitest
Clorazepate Dipotassium Tranxene 134 Anxiety Mylan, Watson, Taro
Diphenoxylate w/atr Lomotil 43 Anti-diarrhea Mylan, IVAX
Hydrocodone w/APAP Family Vicodin Family 948 Pain Watson, Mallinkrodt, Qualitest
Hydrocortisone Acetate Anusol HC 14 Hemorrhoids Paddock, G & W,
Indomethacin ER Indocin SR 50 Rheumatoid Arthritis Eon
Lithium Carbonate IR Eskalith 33 Bi-polar Disorder Roxane
Methocarbamol Robaxin 65 Musculoskeletal Pain Geneva, Watson, Westward
ProductsProducts
Products, continuedProducts, continued
Generic Name Brand Name Sales (Brand/
Generic) MM Indication(s) Major Generic Competitiors
Methylphenidate SR Ritalin SR 180 Attention disorder Medeva, Schein, Geneva
Nitroglycerin Nitrostat 32 Anti-angina Ethex
Phenazopyridine Phyridium 28 Urinary Tract Amide, Vintage
Phentermine Adipex P 86 Obesity Purepac, Amide
Phentermine Beads 38 Obesity Eon
Phentermine Caps Fastin 29 Obesity Eon, Purepac, Amide
Prochlorperazine Compazine 19 Nausea G&W Paddock
Promethazine Phenergan 7 Nausea, Vomiting, other G&W
Propoxyphene Napsylate Darvocet 539 Pain Mylan, IVAX, Teva, Purepac
Tramadol Ultram 550 Pain Partnered with IVAX
TOTAL 3.5 Billion
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