Columbia Laboratories (CBRX)

Q2 2012 Earnings Call

August 8, 2012 11:00 am ET


Seth Lewis – The Trout Group, Columbia’s Investor Relations

Lawrence A. Gyenes – Senior Vice President, Chief Financial Officer & Treasurer

Frank C. Condella, Jr. – President & Chief Executive Officer


Raymond Myers – The Benchmark Co. LLC

Walter Schnecker – MAZ Partners

Harry Rosengart – HK & Associates

Raymond Myers – The Benchmark Co. LLC

James Dowling – Jefferies Capital Partners

Ralph Labriola – Stifel, Nicolaus & Co., Inc.

Christopher Castroviejo – Directional Research & Trading, Inc.



Good day, ladies and gentlemen. Welcome to Columbia Laboratories Second Quarter 2012 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session with instructions following at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

Now, I’ll turn the conference over to Seth Lewis from the Trout Group. Please begin.

Seth Lewis

Thank you, operator, and thank you for joining us this morning for Columbia Laboratories second quarter 2012 financials results conference call. I am Seth Lewis of The Trout Group, Columbia’s Investor Relations firm, and with me this morning are Frank Condella, President and CEO, and Larry Gyenes, Senior Vice President, CFO and Treasurer of Columbia.

If you have not already received it, you can access the press release Columbia issued this morning at under the Investor’s tab, and you can also access the live webcast of this call from there.

During the course of this call, management will make projections and other forward-looking remarks regarding the future events and the company’s future performance. These forward-looking statements reflect Columbia’s perspective on current trends and information, and can be identified by such words as “expect,” “plan,” “will,” “may,” “anticipate,” “believe,” “could,” “should,” “intend,” “estimate,” “project,” and other words of similar meaning.

Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in Columbia’s filings with the SEC on Forms 10-K, 10-Q, and 8-K. Actual results may differ materially from those projected in those forward-looking statements. Columbia disclaims any intent or obligation to update these forward-looking statements.

A replay of this call will be available two hours after completion through Wednesday, August 15. You’ll find the dial-in information in today’s press release and the archived webcast will be available for one year on the company’s website,

For the benefit of those who maybe listening to the replay, this call was held and recorded on August 8, 2012, and since then, Columbia may have made announcements related to topics discussed. So please reference the company’s most recent press releases and SEC filings.

With that, I’ll turn the call over to Larry Gyenes. Larry?

Lawrence A. Gyenes

Thanks, Seth, and good morning all. Today we are reporting total net revenues of $8.2 million for the second quarter of 2012. Total net revenues are comprised of net product revenues, royalties, and other revenues. Total net product revenues, which are primarily CRINONE sales to Merck Serono and Watson, were up $2.4 million from last year’s Q2 levels.

Net product revenues from Merck Serono increased 25% due to penetration of higher price country markets, while net product revenues from Watson increased nearly threefold on a 45% volume increase over second quarter of 2011 levels, as we moved quickly to convert some batches destined for the preterm birth market to the CRINONE and fertility market.

The gross profit margin on net product revenues remained the same at 39% compared with a year ago. Total net revenues were $8.2 million compared to $19.2 million in the same quarter last year. Last year’s quarter included $13.6 million in other revenues, which was the amortization of $8.6 million in revenue related to the gain on the sale of the progesterone assets to Watson in 2010, plus the $5 million milestone from Watson for the FDA’s acceptance for filing of the preterm birth NDA. There were no other special or non-recurring revenues in the 2012 second quarter. Since the amortization concluded in the second quarter of 2011 this is the last quarter in which we will see this.

Exclusive of the $2.5 million gain from the sale of STRIANT recognized in the second quarter of 2011, total operating expenses decreased by $1 million versus the same quarter last year. This was driven primarily by the absence of sales and marketing expenses and lower R&D and G&A costs, largely reflecting the workforce reduction earlier this year.

As a result, we posted operating income of $1.7 million in the second quarter of 2012. This compares to operating income of $15.7 million in the second quarter of 2011, but again that included the $13.6 million in other revenue. Without this other revenue and the gain from the sale of STRIANT, we would have generated an operating loss of $400,000 a year ago. After accounting for the non-cash change and the fair value of outstanding stock warrants, we reported net income for the second quarter of 2012 of $1.9 million or $0.02 per basic and diluted share.

Our balance sheet remains strong, with $23 million in cash, cash equivalents and short-term investments at June 30, 2012. This is a nearly $300,000 increase from the close of the first quarter in line with our stated financial guidance. We will continue to operate generally as cash flow neutral to positive for the foreseeable future. However, quarterly results may fluctuate due to the nature and timing of product orders. For further details on our financial results, please look to today’s press release, which is available at our website

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