$INSY Reports First Quarter 2016 Results

Highlights of and subsequent to the first quarter of 2016 include:

• Total net revenue decreased to $62.0 million, compared to $70.8 million for the first quarter of 2015;
• Revenue from Subsys^® (fentanyl sublingual spray) was $62.0, down 12% compared with first quarter 2015 revenue of $70.5 million;
• Net income was $2.4 million, or $0.03 per basic and $0.03 per diluted share, compared to net income of $8.0 million, or $0.11 per basic and $0.11 per diluted share, for the first quarter of 2015;
• Cash, cash equivalents and investments were $200 million as of March 31, 2016;
• Insys enrolled the first patient in its Phase II study for the treatment of infantile spasms using pharmaceutical CBD;
• U.S. Food and Drug Administration extended the Prescription Drug User Fee Act (PDUFA) action date for Syndros^TM (dronabinol oral solution) from April 1, 2016 until July 1, 2016; and
• Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO) declined to institute an inter partes review of U.S. Patent Nos. 8,486,972, 8,835,459 and 8,835,460, which cover the fentanyl formulation of Subsys.

“While our Subsys sales were lower than expected during the first quarter, we look forward to realizing the many exciting opportunities for continued growth and long-term value for Insys shareholders through the commercialization of our pipeline,” said Dr. John N. Kapoor, Chairman, President and Chief Executive Officer, of Insys Therapeutics. “We fully expect Syndros to be the next product in our commercial portfolio and are preparing for its launch, assuming FDA approval. We expect to remain profitable and intend to advance our promising pipeline of sublingual spray products and CBD product candidates,” he concluded.

First Quarter 2016 Financial Results

Net revenue for the first quarter of 2016 was $62.0 million compared to $70.8 million for the first quarter of 2015, a decrease of 12%. The results reflect a decline in Subsys demand, as Subsys prescription volumes were down, as well as a reduction in Subsys wholesale channel inventory levels.

Gross margin was 92.5% for the first quarter of 2016 compared with 91.0% for the first quarter of 2015.

Sales and marketing expense was $19.8 million during the first quarter of 2016, or 32% of net revenue, compared to $20.9 million, or 30% of net revenue, for the first quarter of 2015.

Research and development expense increased to $20.5 million for the first quarter of 2016, compared to $10.6 million for the first quarter of 2015, largely due to incremental investment in pipeline products.

General and administrative expense increased to $14.7 million for the first quarter of 2016, compared to $13.2 million for the first quarter of 2015.

Income tax expense was $131,000 for the first quarter of 2016, compared to $3.7 million during the first quarter of 2015.

Net income for the first quarter of 2016 was $2.4 million, or $0.03 per basic and $0.03 per diluted share, compared to net income of $8.0 million, or $0.11 per basic and $0.11 per diluted share, for the first quarter of 2015. Non-GAAP adjusted net income for the first quarter of 2016 was $8.2 million, or $0.11 per diluted share, compared to non-GAAP adjusted net income of $23.5 million, or $0.31 per diluted share, in the prior year quarter. The reconciliation of net income to non-GAAP adjusted net income is included at the end of this press release.

Liquidity

The Company had $200 million in cash, restricted cash, cash equivalents, and short-term and long-term investments, no debt, and $250 million in stockholders’ equity as of March 31, 2016.

As previously disclosed, on November 5, 2015, the Insys’ Board of Directors approved the repurchase of up to $50 million of the Company’s common stock.  As of March 31, 2016, the Company had expended approximately $30 million to repurchase approximately 1.2 million shares of common stock outstanding.  Insys intends to finance the remainder of any share repurchases in this program through available cash on hand.

Conference Call

Insys management will host its first quarter 2016 conference call as follows:

Date: April 28, 2016
Time:  10:00 a.m. EDT
Toll free (U.S): (877) 349-4844
International: (262) 558-6141
Live webcast: www.insysrx.com under the “Investor Relations” section

A telephone replay will be available shortly after the completion of the call for one week by dialing (855) 859-2056 (U.S.) or (404) 537-3406 (International) and entering conference call ID number 92585062.

A live audio webcast and archive of the call will also be available at www.insysrx.com.

About Insys Therapeutics, Inc.

Insys Therapeutics is a specialty pharmaceutical company that develops and commercializes innovative drugs and novel drug delivery systems of therapeutic molecules that improve the quality of life of patients. Using proprietary sublingual spray technology and capabilities to develop pharmaceutical cannabinoids, Insys addresses the clinical shortcomings of existing commercial products. Insys currently markets one product, Subsys^® (fentanyl sublingual spray). The Company submitted a New Drug Application to the U.S. Food and Drug Administration for Syndros^TM (dronabinol oral solution), a proprietary, orally administered liquid formulation of dronabinol that Insys believes has distinct advantages over the current formulation of dronabinol in soft gel capsule. Insys is developing a pipeline of sublingual sprays, as well as pharmaceutical cannabidiol.