GlobeNewswire Inc | Nov 9, 2020 07:00AM EST

November 09, 2020

DALLAS and FORT WORTH, Texas, Nov. 09, 2020 (GLOBE NEWSWIRE) -- Neos Therapeutics, Inc. (Nasdaq: NEOS), a commercial-stage pharmaceutical company developing and manufacturing central nervous system-focused products, today reported financial results for the third quarter ended September 30, 2020 and provided a business update.

During the third quarter, we saw Neos ADHD prescription volumes and the overall ADHD market begin to rebound from the profound impact of the COVID-19 pandemic in the second quarter of 2020, with continued prescription volume strength for the adult segment and a gradual recovery of the pediatric segment. We are pleased with the market rebound, and I am happy to report that, compared to the second quarter, third quarter prescription growth for Neos ADHD medications was nearly double the overall ADHD market, said Jerry McLaughlin, President and Chief Executive Officer. In addition, we are seeing continued sequential growth of Neos commercial ADHD prescriptions being filled through Neos RxConnect, our best in class patient support program.

ADHD Commercial Portfolio

-- Neos brands outperforming the ADHD market: During the third quarter of 2020, the ADHD market saw sequential growth of 4.1% following the immediate and elongated impact of the ongoing COVID-19 pandemic, which began during the second quarter of 2020. Over this same period, Neos brands outperformed the overall market, with Adzenys XR-ODT growing by 9.9% and Cotempla XR-ODT growing by 6.5%. -- Neos RxConnect program continues to support prescription growth: During the third quarter of 2020, Neos commercial ADHD prescriptions filled through the Neos RxConnect pharmacy network grew sequentially by 17.7% and made up more than 40% of total Neos prescriptions filled. The program, which aims to simplify the process of gaining access to Neos ADHD medicines for both patients and healthcare providers, continues to be a key long-term growth driver for the Neos ADHD franchise. -- New strategy targeting adults with ADHD driving Adzenys XR-ODT growth: During the third quarter of 2020, Neos deployed new strategies for Adzenys XR-ODT focused on adults with ADHD. As a result, adult prescriptions for Adzenys XR-ODT grew sequentially by 10.7%. Overall ADHD market adult prescriptions grew by 4.1% during this same time period.

Development Pipeline

-- NT0502 Phase 1 single ascending and multiple ascending dose trial plans to initiate in 1H2021: The Company now plans to initiate a Phase 1 clinical trial for NT0502, for the treatment of sialorrhea in patients with neurological conditions in the first half of 2021. The multi-part study includes single ascending and multiple ascending dose cohorts.

Financial Highlights and Select Third Quarter 2020 Financial Results

-- Total product revenues were $12.5 million for the three months ended September 30, 2020, compared to $17.5 million for the three months ended September 30, 2019.

Q3 2020 Q3 2019 % Change vs. 2019Adzenys XR-ODT $6.2MM $8.8MM (29.5)%Cotempla XR-ODT $5.6MM $7.2MM (22.2)%Adzenys ER* - $0.2MM -Generic Tussionex $0.7MM $1.3MM (46.2)% Total $12.5MM $17.5MM (28.5)%

* Adzenys ER revenue was negligible in Q3 2020.

-- Gross profit was $7.4 million for the three months ended September 30, 2020, compared to a gross profit of $11.1 million for the same period in 2019. -- Research and development expenses were $1.3 million for the three months ended September 30, 2020, compared to $1.6 million for the same period in 2019. -- Selling and marketing expenses were $4.8 million for the three months ended September 30, 2020, compared to $7.1 million for the same period in 2019. -- General and administrative expenses were $4.1 million for the three months ended September 30, 2020, compared to $2.8 million for the same period in 2019. -- For the third quarter of 2020, net loss was $4.9 million, or ($0.10) per share, compared to $2.1 million, or ($0.04) per share, in the third quarter of 2019. Loss from operations was $2.9 million for the three months ended September 30, 2020, compared to $0.4 million for the same period in 2019. -- At September 30, 2020, the Company held $12.7 million in cash and cash equivalents.

Conference Call Details Neos management will host a conference call and live audio webcast to discuss these results and provide a company update at 8:30 a.m. ET today. The live call may be accessed by dialing (877) 388-8985 for domestic calls, or +1 (562) 912-2654 for international callers, and referencing conference ID number 8053068. A live audio webcast for the conference call will be available on the Investor Relations page of the Companys website at http://investors.neostx.com/. Following the conclusion of the call, the webcast will be available for replay for 30 days.

About Neos TherapeuticsNeos Therapeutics, Inc.(NASDAQ: NEOS) is a commercial-stage pharmaceutical company developing and manufacturing central nervous system (CNS)-focused products. The Company markets Adzenys XR-ODT(amphetamine) extended-release orally disintegrating tablets (seeFull Prescribing Information, including Boxed WARNING), Cotempla XR-ODT(methylphenidate) extended-release orally disintegrating tablets (seeFull Prescribing Information, including Boxed WARNING), and Adzenys-ER(amphetamine) extended-release oral suspension (seeFull Prescribing Information, including Boxed WARNING), all for the treatment of ADHD. The Company also has a development candidate, NT0502, for the treatment of sialorrhea in patients with neurological conditions. Additional information about Neos is available atwww.neostx.com.

Forward-Looking StatementsAny statements in this press release about future expectations, plans and prospects for the Company, including statements about the Companys strategy, future operations, commercial products, clinical development of its therapeutic candidates, plans for potential future product candidates, financial condition and outlook, and other statements containing the words anticipate, believe, estimate, expect, intend, may, plan, predict, project, suggest, target, potential, will, would, could, should, continue, and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: the impact of COVID-19 on prescriptions for the Companys products and on the Companys business, revenues, results of operations and financial condition, including whether ADHD prescription volumes and the overall ADHD market are beginning to rebound from the impact of COVID-19; the net sales, profitability, and growth of the Companys commercial products; the Neos RxConnect network, including whether it will continue to be a key long-term growth driver for the Neos ADHD franchise; the status, timing, costs, results and interpretation of the Companys clinical trials or any future trials, including whether the Company will initiate a Phase 1 single ascending and multiple ascending dose study of NT0502 in the first half of 2021; the uncertainties inherent in conducting clinical trials; expectations for regulatory interactions, submissions and approvals; the financial condition and outlook for the Company, including whether the Company is on track to becoming operational cash flow positive and to maximize the financial contribution of the ADHD franchise over the next several years; availability of funding sufficient for the Companys foreseeable and unforeseeable operating expenses and capital expenditure requirements; uncertainties related to the Companys intellectual property; other matters that could affect the availability or commercial potential of the Companys commercial products or therapeutic candidates; and other factors discussed in the Risk Factors set forth in the Companys Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (SEC) and in other filings the Company makes with the SEC from time to time. In addition, the forward-looking statements included in this press release represent the Companys views only as of the date hereof. The Company anticipates that subsequent events and developments may cause the Companys views to change. However, while the Company may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so, except as may be required by law.

Neos Therapeutics, Inc. and SubsidiariesCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except share and per share data)(unaudited)

September30, December31, 2020 2019 ASSETS Current Assets: Cash and cash equivalents $ 12,744 $ 16,830 Short-term investments ? 8,064 Accounts receivable, net ofallowances for chargebacks and cashdiscounts of $1,899 and $4,848 at 20,386 26,563 September30,2020 andDecember31,2019, respectivelyInventories, net 8,436 11,010 Prepaid expenses and other current 2,443 4,092 assetsTotal current assets 44,009 66,559 Property and equipment, net 5,824 7,345 Operating lease right-of-use assets 2,655 3,044 Intangible assets, net 11,074 12,543 Other assets 1,022 1,382 Total assets $ 64,584 $ 90,873 LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities: Accounts payable $ 8,443 $ 6,650 Accrued expenses 31,233 40,188 Current portion of operating lease 693 681 liabilitiesShort-term line of credit 7,320 ? Current portion of long-term debt 19,472 15,836 Total current liabilities 67,161 63,355 Long-Term Liabilities: Long-term debt, net of current 13,720 29,099 portionOperating lease liabilities 2,741 3,254 Derivative liability 1,456 1,135 Other long-term liabilities 58 160 Total long-term liabilities 17,975 33,648 Stockholders' Deficit: Preferred stock, $0.001 par value,5,000,000 shares authorized, noshares issued or outstanding at ? ? September30,2020 andDecember31,2019Common stock, $0.001 par value,100,000,000 shares authorized atSeptember30,2020 andDecember31,2019; 49,788,895 and49,755,094 shares issued and 50 50 outstanding, respectively, atSeptember30,2020; 49,766,472 and49,732,671 shares issued andoutstanding, respectively, atDecember31,2019Treasury stock, at cost, 33,801shares at September30,2020 and (352 ) (352 ) December31,2019Additional paid-in capital 332,004 328,056 Accumulated deficit (352,254 ) ) (333,885Accumulated other comprehensive ? 1 incomeTotal stockholders' deficit (20,552 ) (6,130 ) Total liabilities and stockholders' $ 64,584 $ 90,873 deficit

Neos Therapeutics, Inc. and SubsidiariesCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except share and per share data)(unaudited)

Three Months Ended Nine Months Ended September30, September30, 2020 2019 2020 2019 Revenues: Net product $ 12,535 $ 17,540 $ 40,161 $ 47,817 sales Cost of goods 5,120 6,447 17,387 17,942 soldGross profit 7,415 11,093 22,774 29,875 Research anddevelopment 1,310 1,551 4,668 6,757 expensesSelling andmarketing 4,844 7,125 17,650 21,463 expensesGeneral andadministrative 4,177 2,850 12,135 10,355 expenses Loss from (2,916 ) (433 ) (11,679 ) (8,700 ) operations Interest (2,005 ) (1,869 ) (6,131 ) (5,971 ) expenseOther income 12 251 (557 ) 1,257 (expense), net Loss before (4,909 ) (2,051 ) (18,367 ) (13,414 ) income taxesIncome tax 2 ? 2 ? expenseNet loss $ (4,911 ) $ (2,051 ) $ (18,369 ) $ (13,414 ) Weightedaverage commonsharesoutstandingused to 49,755,094 49,730,755 49,747,076 49,720,780 compute netloss pershare, basicand diluted Net loss pershare ofcommon stock, $ (0.10 ) $ (0.04 ) $ (0.37 ) $ (0.27 ) basic anddiluted

Contacts:

Richard EisenstadtChief Financial OfficerNeos Therapeutics, Inc.(972) 4081389reisenstadt@neostx.com

Sarah McCabeStern Investor Relations,Inc.(212) 3621200sarah.mccabe@sternir.com