Columbia Laboratories Reports Second Quarter 2011 Financial Results
LIVINGSTON, N.J. --(Business Wire)--
Columbia Laboratories, Inc. (Nasdaq: CBRX) today reported financial results for the three- and six-month periods ended June 30, 2011. Highlights of the second quarter include:
"Of Columbia's many accomplishments during the second quarter of 2011, most important was the acceptance for filing by the FDA of our NDA for PROCHIEVE progesterone vaginal gel to reduce the risk of preterm birth in women with a short cervix at mid pregnancy," said Frank Condella, Columbia's President and Chief Executive Officer. "We are working closely with FDA to ensure a thorough review of the NDA with the ultimate aim of its approval. We are also preparing for the product's potential launch. If FDA approves PROCHIEVE for the preterm birth/short cervix indication, we expect Watson would launch PROCHIEVE in the preterm birth indication shortly thereafter."
Second Quarter Financial Results
Total net revenues for the second quarter of 2011 were comprised of the gain on the sale of progesterone assets to Watson; a milestone payment from Watson; net product revenues primarily for domestic and international sales of CRINONE to Watson and Merck Serono, respectively, and sales of STRIANT; and royalties primarily from Watson.
Total net revenues for the second quarter of 2011 were $19.2 million, compared to $9.4 million for the second quarter of 2010. The increase in total net revenues was driven primarily by $8.6 million in revenue related to the gain on the sale of the progesterone assets to Watson in July 2010 and the $5.0 million milestone payment from Watson for the acceptance of the NDA filing, offset by the absence of in-market sales of CRINONE and PROCHIEVE by Columbia in the U.S.
Net product revenues were $4.9 million in the second quarter of 2011, compared to $9.5 million in the second quarter of 2010, primarily as a result of the transfer to Watson on July 2, 2010, of the U.S. CRINONE and PROCHIEVE assets as part of the sale transaction, including responsibility for U.S. product sales.
Total royalties were $0.7 million in the second quarter of 2011. There were no royalty revenues in the second quarter of 2010. Royalties on sales by Watson were approximately $0.6 million, compared to approximately $0.5 million in the first quarter of 2011.
Gross profit margin was 84% in the second quarter of 2011, compared to 78% in the second quarter of 2010, including the recognition of the deferred gain on the sale of the progesterone assets to Watson and the $5.0 million milestone payment from Watson. Excluding the deferred gain recognition and the milestone payment, the gross profit margin for the second quarter of 2011 would have been 47%, primarily reflecting the product sales to Watson on a cost-plus-10% basis and lower unit selling prices to Merck Serono.
Total net operating expenses were $0.5 million in the second quarter of 2011, compared to $10.2 million in the prior year period. The decrease is attributable to the following:
Operating income in the second quarter of 2011 was $15.7 million, compared to an operating loss of $2.8 million in the prior year period. The increase primarily reflects the $8.6 million in revenue related to the gain on the sale of the progesterone assets to Watson, the $5.0 million milestone payment from Watson for FDA acceptance of the NDA filing, plus a $7.1 million reduction in operating expenses.
Other income and expense aggregated to net income of $2.6 million for the second quarter of 2011, compared to a net expense of $1.4 million in the second quarter of 2010, primarily reflecting the elimination of interest expense as a result of the debt repayment in July 2010. This was more than offset by the recognition of the $2.7 million change in fair value of the warrants issued in conjunction with the October 2009 stock issuance resulting from the decrease in Columbia's stock price from March 31, 2011, to June 30, 2011.
As a result, the Company reported net income of $18.3 million, or $0.21 per basic and $0.16 per diluted share, for the second quarter of 2011, compared to a net loss of $4.2 million, or $0.06 per basic and diluted share, for the second quarter of 2010.
Cash and Equivalents
At June 30, 2011, Columbia had cash and cash equivalents of $21.8 million, compared to cash and cash equivalents of $21.6 million at December 31, 2010. The $0.2 million cash increase primarily reflected the exercise of employee stock options and warrants, which more than offset the use of cash for operating and investing activities.
The Company's March 2, 2010, Purchase and Collaboration Agreement with Watson provides for a Clinical Trial Results Milestone payment to Columbia of either $6 million or $8 million based upon certain statistical results of the PREGNANT study, as agreed to by the FDA. The Company provided statistical analyses to Watson and claimed the $6 million milestone. Watson did not agree that the milestone had been achieved pursuant to the terms of the contract. The parties tried without success to resolve the dispute. Columbia has now decided not to pursue this milestone further after careful review by legal counsel and consideration of the costs and uncertain outcome in arbitration of the dispute under the contract. The working relationship between the two parties remains very collaborative in advancing the NDA submission and filing with the FDA and development of a next-generation vaginal progesterone product. No revenue has been recognized for this milestone payment.
The robust PREGNANT study results formed the basis for the NDA filing. If successful in obtaining FDA approval of PROCHIEVE for the preterm birth indication, the Company will receive a $30 million milestone payment from Watson upon commercial launch in the U.S. The FDA's PDUFA goal is to review and act on the PROCHIEVE NDA by February 26, 2012.
The Company has begun making investments to increase manufacturing capacity to ensure its ability to meet Watson's forecasts for the anticipated launch of PROCHIEVE and facility improvements to ensure compliant manufacturing operations.
Depending on the timing of the expected investment in manufacturing capacity, cash balances will fluctuate throughout the remainder of 2011. The Company believes its cash on hand will sustain its operations for the foreseeable future.
As previously announced, Columbia Laboratories will hold a conference call to discuss financial results for the second quarter ended June 30, 2011, as follows:
The teleconference replay will be available two hours after completion through Thursday, August 11, 2011, at (855) 859-2056 (U.S. & Canada) or (404) 537-3406. The conference ID for the replay is 84126999. The archived webcast will be available for one year on the Company's website, www.columbialabs.com, in the 'Investor' section under 'Events'.
About Columbia Laboratories
Columbia Laboratories, Inc. is developing products that utilize its novel bioadhesive drug delivery technologies to optimize drug delivery in a controlled, sustained manner. The Company has developed and sold six products for the U.S. market including CRINONE® (progesterone gel), for which Columbia receives royalties on annual net sales from Watson Pharmaceuticals. CRINONE is commercialized outside the U.S. by Merck Serono. The Company's NDA for PROCHIEVE® (progesterone gel) in the preterm birth indication was accepted for filing by the FDA with a February 26, 2012, PDUFA date.
Columbia's press releases and other company information are available online at www.columbialabs.com.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This communication contains forward-looking statements, which statements are indicated by the words "may," "will," "plans," "believes," "expects," "intends," "anticipates," "potential," "should," and similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those projected in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Factors that might cause future results to differ include, but are not limited to, the following: the successful marketing of CRINONE® by Watson Pharmaceuticals, Inc., in the United States; the successful marketing of CRINONE by Merck Serono outside the United States; successful development of a next-generation vaginal progesterone product; the outcome of further analyses by the FDA of the clinical data generated during the PREGNANT study; success in obtaining timely FDA approval of PROCHIEVE® in the preterm birth indication; the ability of our third-party manufacturers to supply CRINONE, PROCHIEVE and STRIANT®; the impact of competitive products and pricing; the timely and successful negotiation of partnerships or other transactions; the strength of the United States dollar relative to international currencies, particularly the euro; competitive economic and regulatory factors in the pharmaceutical and healthcare industry; general economic conditions; and other risks and uncertainties that may be detailed, from time-to-time, in Columbia's reports filed with the SEC (News - Alert). Columbia does not undertake any responsibility to revise or update any forward-looking statements contained herein.
CRINONE® and PROCHIEVE® are registered trademarks
of Watson Pharmaceuticals, Inc.
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