Somaxon Pharmaceuticals, Inc. (SOMX) Q2 2012 Earnings Call August 7, 2012 4:30 pm ET Executives Matt Sheldon - IR Richard Pascoe - President and CEO Tran Nguyen - SVP and CFO Analysts Graig Suvannavejh - Jefferies Presentation Operator
This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, August 7, 2012. Somaxon undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call.With that said, let me turn the call over to Richard Pascoe. Rich? Richard Pascoe Thank you, Matt, and good afternoon everyone. We appreciate you joining us to discuss our financial results for the second quarter of 2012 and our future plans and outlook. Since the beginning of the second quarter of 2012, we have continued to make progress towards our corporate objective of increasing stockholder value. Importantly, we recently settled our Silenor paragraph IV litigation with Mylan, Par and Zydus, representing three of the four generic filers. We also increased Silenor net revenues for the second quarter as compared to the first quarter of this year, and we continue to manage our operating expenses in an effort to drive towards profitability. In addition, we bolstered our balance sheet through a registered direct offering of common stock and warrants, which we believe positions us to achieve positive cash generation in 2013. We are also continuing to see to maximize the value of Silenor for our stockholders through our previously announced strategic alternatives process, led by advisor, Stifel Nicolaus Weisel. I will provide more detail regarding our activities and progress in a few minutes. But first, I would like to have Tran, briefly review our financial results for the second quarter of 2012. Tran? Tran Nguyen Thanks Rich, and good afternoon, everyone. For the second quarter of 2012, we reported total revenue of $3.4 million consisting of net product sales of Silenor of $2.9 million and license fee revenue from our South Korean license deal of $0.4 million. Net product sales of Silenor for the comparable second quarter of 2011, was $6.2 million.
As a reminder, in the second quarter of 2011, we began recognizing revenue for sales of Silenor at the time of delivery of the product to our wholesale pharmaceutical distributors and other customers, resulting in a one-time increase in net product sales of $3.2 million in that quarter from the recognition of previously deferred product sales revenue. As a result, a better competitor of net product sales for the second quarter of 2012 maybe the first quarter of 2012, for which net product sales of Silenor was $2.7 million.Our total operating costs and expenses for the second quarter of 2012 were $5.6 million, including $0.7 million of non-cash, share-based compensation expense compared with $21.2 million, including $1.4 million of non-cash share-based compensation expense for the second quarter of 2011. The decrease compared to the comparable prior-year period was primarily due to the reduction of our marketing efforts and the our reduction in force in the fourth quarter of 2011. Cost of product sales was $0.3 million for the second quarter of 2012 compared to cost of product sales for the second quarter of 2011 of $0.7 million. Gross profit was $2.7 million for the second quarter of 2012 and $5.6 million for the second quarter of 2011. Expressed as a percentage of net product sales, gross margin was 91% for the second quarter of 2012 and 89% for the second quarter of 2011. SG&A expense was $5.3 million for the second quarter of 2012 compared to $20.1 million for the second quarter of 2011. The decrease in SG&A expense was primarily due to the reduction of our marketing efforts and our reduction in force in the fourth quarter of 2011, as we discussed earlier. Read the rest of this transcript for free on seekingalpha.com