Columbia Laboratories, Inc. (Nasdaq: CBRX) today reported financial results for the three-month period ended March 31, 2012. Highlights of the first quarter include:
- Total net revenues were $3.8 million, compared to $12.5 million for the first quarter of 2011. The 2011 quarter included $8.4 million of the amortization of the $34 million gain on the sale of the progesterone assets in July 2010 to Watson Pharmaceuticals, Inc. (“Watson”); amortization concluded in the second quarter of 2011.
- Net product revenues were $3.1 million in the first quarter of 2012, compared to $3.5 million in the first quarter of 2011 due to the absence of sales of STRIANT, coupled with relatively flat sales to Merck Serono S.A. (“Merck Serono”) and Watson, in 2012.
- Net income was $5.0 million, including a $6.2 million positive non-cash adjustment, or $0.06 per basic and $(0.02) per diluted share.
- Cash, cash equivalents and short-term investments at March 31, 2012 were $22.7 million.
- Transferred the new drug application (“NDA”) for progesterone vaginal gel 8% for preterm birth to Watson, for which Watson received a Complete Response Letter (“CRL”) from the U.S. Food and Drug Administration (“FDA”).
- Completed a 42% workforce reduction that will generate annual savings of $1.5 million.
- Engaged Cowen and Company as the Company's independent financial advisor to assist in evaluating potential strategic transactions.
“We are pleased that Watson sees a potential pathway to approval for progesterone vaginal gel 8% for preterm birth and remains in active, productive discussions with the FDA. After Watson received the CRL for the preterm birth NDA we took decisive action, including a 42% workforce reduction, to streamline the Company's operations. As a result, we expect to be cash flow neutral-to-positive beginning in the second quarter of this year,” Condella concluded.First Quarter Financial Results Total net revenues for the first quarter of 2012 were comprised of net product revenues primarily for domestic and international sales of CRINONE ® (progesterone gel) to Watson and Merck Serono, respectively, and royalties from Watson. In the first quarter of 2011, total net revenues also included sales of STRIANT ® (testosterone buccal system) and the amortization of deferred revenue recognized from the sale of assets to Watson. In the first quarter of 2012, net product revenues were $3.1 million, compared to $3.5 million in the first quarter of 2011. The decrease was primarily due to a $0.4 million decline in STRIANT revenues due to the sale of STRIANT to Actient Pharmaceuticals, LLC (“Actient”) in April 2011, coupled with relatively flat sales to Merck Serono and Watson. Sales were flat primarily due to a batch of product planned for Merck Serono that did not meet specifications and could not be shipped in the quarter. Total royalty revenues were $0.7 million in the first quarter of 2012, compared to $0.6 million in the first quarter of 2011, primarily reflecting royalty revenues from Watson on CRINONE products. There were no other revenues in the first quarter of 2012, compared to other revenues of $8.4 million in the first quarter of 2011 due to the amortization of the deferred revenue recognized from the sale of assets to Watson. The Company amortized $34 million in deferred gains over four quarters from July 2, 2010 through June 30, 2011, representing the estimated remaining development period for progesterone vaginal gel 8% in the preterm birth indication.
As a result, total net revenues for the first quarter of 2012 were $3.8 million, compared to $12.5 million for the first quarter of 2011.Gross profit margin on total net revenues was 48% for the first quarter of 2012, compared to 84% in the first quarter of 2011. Gross profit on net product revenues for the first quarter of 2012 was 36% compared with 41% in the same period in 2011. The lower profit margin in the 2012 quarter resulted primarily from an inventory reserve for the CRINONE batch order which did not meet specifications and was destined for certain of Merck Serono's higher-margin markets. Total net operating expenses were $3.1 million in the first quarter of 2012 compared to $3.8 million in the prior year period.
- There were no selling and distribution expenses in the first quarter of 2012, reflecting the sale of STRIANT to Actient.
- General and administrative costs were $2.6 million in the first quarter of 2012 compared to $2.4 million in the 2011 quarter. The increase was due to severance costs related to the workforce reduction announced in March 2012 offset, in part, by lower legal and consulting expenses.
- Research and development costs were $0.6 million in the first quarter of 2012, compared to $1.3 million in the 2011 quarter, primarily reflecting the reimbursement by Watson of all R&D expenses related to the investigational preterm birth indication, offset by severance costs recorded in the quarter.
Other income and expense aggregated to net income of $6.2 million for the first quarter of 2012, compared to a net expense of $7.9 million in the first quarter of 2011, primarily reflecting the recognition of the decrease in the fair value of the warrants issued in conjunction with the October 2009 stock issuance resulting from the decrease in Columbia's stock price from December 31, 2011, to March 31, 2012.As a result, the Company reported net income of $5.0 million, including a $6.2 million positive non-cash adjustment, compared to a net loss of $1.2 million for the first quarter of 2011. On a per share basis, net income was $0.06 per basic and $(0.02) per diluted share for the first quarter of 2012, versus $(0.01) per basic and diluted share for the first quarter of 2011. Cash and Equivalents At March 31, 2012, Columbia had cash, cash equivalents and short-term investments of $22.7 million, compared to cash, cash equivalents and short-term investments of $25.1 million at December 31, 2011. The decrease was driven primarily by the $1.0 million required to complete the capacity expansion program and a $1.6 million increase in inventory in anticipation of the approval and launch of the 8% progesterone gel for the preterm birth indication. This inventory is now being re-worked to support CRINONE sales. Financial Outlook Columbia has streamlined the organization to operate as cash flow neutral-to-positive, while maintaining its significant upside potential from milestone payments and royalties if Watson is successful in gaining FDA approval and commercializing a progesterone product for the preterm birth indication. Other assets include potential net operating loss carryforwards; issued and pending patents globally; and two early-stage drug candidates. The Company is evaluating potential strategic transactions to add value for its stockholders. Conference Call As previously announced, Columbia Laboratories will hold a conference call to discuss financial results for the first quarter ended March 31, 2012, as follows:
|Date:||Friday, May 4, 2012|
|Time:||11:00 am ET|
|Dial-in numbers:||(877) 303-9483 (U.S. & Canada) or (760) 666-3584|
|Live webcast:||www.columbialabs.com, under 'Investor'|
CRINONE ® is a registered trademark of Watson Pharmaceuticals, Inc.STRIANT ® is a registered trademark of Actient Pharmaceuticals, LLC.
|COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS|
|March 31, 2012 (unaudited)||December 31, 2011|
|Cash and cash equivalents||$||7,551,395||$||10,114,163|
|Accounts receivable, net||2,827,235||4,695,410|
|Prepaid expenses and other current assets||988,645||667,927|
|Total current assets||31,401,252||34,137,229|
|Property and equipment, net||2,389,478||1,481,071|
|LIABILITIES AND SHAREHOLDER'S EQUITY|
|Total current liabilities||5,694,035||6,636,517|
|Common stock warrant liability||1,909,479||8,168,846|
|COMMITMENTS AND CONTINGENCIES|
|Contingently redeemable series C preferred stock, 600 shares issued and outstanding (liquidation preference of $600,000)||600,000||600,000|
|Preferred stock, $.01 par value; 1,000,000 shares authorized,|
|Series B convertible preferred stock, 130 shares issued and outstanding (liquidation preference of $13,000)||1||1|
|Series E convertible preferred stock,22,740 shares issued and outstanding (liquidation preference of $2,274,000)||227||227|
|Common Stock $.01 par value; 150,000,000 shares authorized; 87,367,313 shares issued||873,673||873,673|
|Capital in excess of par value||278,372,073||278,060,138|
|Less cost of 36,448 treasury shares||(125,381||)||(125,381||)|
|Accumulated other comprehensive income||214,333||104,902|
|TOTAL SHAREHOLDERS' EQUITY||26,006,566||20,630,807|
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY||$||34,253,215||$||36,082,586|
|COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)|
|Three Months Ended March 31,|
|Net product revenues (including amounts from related parties:|
|2012 - $240,401; 2011 - $426,780)||$||3,118,632||$||3,464,944|
|Royalties (including amounts from related parties:|
|2012 - $600,000; 2011 - $540,000)||680,377||600,813|
|Other revenues (including amounts from related parties:|
|2012 - $0; 2011 - $8,393,926)||34,532||8,428,582|
|Total net revenues||3,833,541||12,494,339|
|COST OF PRODUCT REVENUES|
|Cost of product revenues (including amounts from related parties:|
|2012 - $218,546; 2011 - $388,133)||2,002,986||2,034,838|
|Selling and distribution||—||57,842|
|General and administrative||2,551,325||2,356,478|
|Research and development||553,678||1,345,601|
|Total operating expenses||3,105,003||3,759,921|
|(Loss) income from operations||(1,274,448||)||6,699,580|
|OTHER INCOME (EXPENSE):|
|Change in fair value of redeemable warrants||—||(2,721,205||)|
|Change in fair value of stock warrants||6,259,367||(5,058,111||)|
|Total other income (expense)||6,231,517||(7,883,539||)|
|Income (loss) before taxes||4,957,069||(1,183,959||)|
|Provision for income taxes||(2,676||)||(2,928||)|
|NET INCOME (LOSS)||$||4,954,393||$||(1,186,887||)|
|NET INCOME (LOSS) PER COMMON SHARE:|
|WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:|