Somaxon Pharmaceuticals' CEO Discusses Q2 2012 Results - Earnings Call Transcript

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

Welcome to the Somaxon Pharmaceuticals' second quarter 2012 conference call. (Operator Instructions) I would now like to turn the conference over to our host, Mr. Matt Sheldon, Investor Relations for Somaxon's.

Matt Sheldon

Good afternoon, everyone, and thank you for joining us today to discuss Somaxon Pharmaceuticals' second quarter 2012 financial results. On the call today are Richard Pascoe, the company's President and Chief Executive Officer; and Tran Nguyen, the company's Senior Vice President and Chief Financial Officer.

First some housekeeping issues before we start, earlier today Somaxon issued a news release announcing the company's financial results for the second quarter of 2012. If you have not received this news release, if you'd like to be added to Somaxon's fax and e-mail list to receive company information, or if you would like to change your contact information, please contact Somaxon Investor Relations at 858-876-6500. We encourage everyone to read today's news release as well as Somaxon's quarterly report on Form 10-Q that will be filed later today.

In addition, be advised that this conference call is being broadcast live on the Internet at investors.somaxon.com/eventdetail.cfm. A playback of this call will be available and may be accessed at that site.

Please note that certain of the information discussed on the call today is covered under the Safe Harbor Provisions of the Private Securities Litigation Reform Act. I caution listeners that during this call Somaxon management will be making forward-looking statements. Actual results could differ materially from those stated or implied by the forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the cautionary statements contained in Somaxon's press releases and SEC filings including its annual report on Form 10-K and quarterly reports on Form 10-Q.

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

More from Stocks

One-on-One With Carnival Corporation CEO Arnold Donald (Watch)

One-on-One With Carnival Corporation CEO Arnold Donald (Watch)

Replay: Jim Cramer on the Markets, Tiffany, Micron Technology and Union Pacific

Replay: Jim Cramer on the Markets, Tiffany, Micron Technology and Union Pacific

Carnival CEO Arnold Donald: China Will Become the Largest Cruise Market

Carnival CEO Arnold Donald: China Will Become the Largest Cruise Market

Stocks Finish Higher After Release of Fed Minutes

Stocks Finish Higher After Release of Fed Minutes

Has Wall Street Completely Lost Its Mind on General Electric?

Has Wall Street Completely Lost Its Mind on General Electric?