Bentley ends 2006 on a flat note

Bentley Pharmaceuticals finished with a lackluster fourth quarter of 2006, and ended the year in a virtual wash, its $10 million profit nearly wiped out with the settlement of a European law suit and the compensation of its chief executives.

While sales of the Exeter-based generic drug manufacturer increased in the last quarter by 7 percent to $27.1 million, operating income was only $2.9 million compared to $4.4 million reported in the same quarter of 2005. The company net income — $4.4 million or 19 cents a diluted share – was up slightly, but that was because of the tax impact from the $11 million adverse settlement with Ethypharm, a European firm that alleges that Bentley illegally appropriated Ethypharm’s pellet technology.

The Ethypharm settlement cost the company some $7.8 million, after taxes. When shared-based compensation costs to executives of $1.8 million and executive severance costs of $600,000 were added to the bottom line, the company’s net income of some $11.2 million was knocked down to $974,000, the company reported.

In 2005, the company posted net income of $10.9 million.

New regulations imposed by the Ministry of Health in Spain – where the company manufactures and sells much of its products – have already started cooling off sales even before they were approved at the end of the year in anticipation of the new reimbursement rates which started yesterday.

The high expense of the company research and development of the inter-nasal insulin product – which should cost as much as $16 million this year – might also affect the bottom line.

But the results of the research, which is now in expanded phase II trials in the United States, “is very encouraging,” said John Sedor, president of Bentley, who said he hopes that it will expand the company’s pipeline and profitability in the future. — BOB SANDERS