Columbia Laboratories, Inc. (Nasdaq: CBRX) today reported financial results for the three- and nine-month periods ended September 30, 2012. Highlights of the third quarter include:
- Total net revenues increased 35% to $6.7 million in the third quarter of 2012, compared to $4.9 million in the third quarter of 2011.
- Net product revenues were $5.6 million, compared to $4.1 million in the third quarter of 2011, due to higher sales of CRINONE® (progesterone gel) to Merck Serono S.A. (“Merck Serono”) and Watson Pharmaceuticals, Inc. (NYSE:WPI)(“Watson”).
- Gross profit on net product revenues was 43%, compared to 24% in the third quarter of 2011, due primarily to greater sales in higher-margin country markets.
- Operating income was $1.4 million, versus an operating loss of $0.6 million in the third quarter of 2011, reflecting the higher revenues and a $0.4 million decrease in operating expenses from prior year levels.
- Cash, cash equivalents and short-term investments increased by $2.6 million in the quarter to $25.6 million at September 30, 2012.
“We are pleased to report our second consecutive quarter of positive operating income and operating cash flows,” said Frank Condella, Columbia's President and CEO. “Our third quarter results reflect our streamlined operations as well as higher CRINONE net product revenues and royalties from our partners, Watson and Merck Serono.”
“We are obviously disappointed that the FDA recently denied Watson's attempts to determine a viable pathway to approval for PROCHIEVE to reduce the incidence of preterm birth in women with a short cervix. In the near term, we will continue to focus on maximizing income and cash generation from our base business while we explore Columbia's strategic options,” Condella concluded.
Third Quarter Financial Results
Total net revenues for the third quarter of 2012 were comprised of net product revenues primarily for domestic and international sales of CRINONE to Watson and Merck Serono, respectively, and royalties from Watson.
Total net revenues for the third quarter of 2012 were $6.7 million, compared to $4.9 million for the third quarter of 2011. The increase in total net revenues was driven primarily by a $1.5 million increase in net product revenues and, to a lesser extent, higher royalty revenues.
- Net product revenues increased to $5.6 million in the third quarter of 2012 as compared to $4.1 million in the third quarter of 2011, primarily due to higher sales to Merck Serono and Watson.
- Total royalty revenues were $1.0 million in the third quarter of 2012, compared to $0.8 million in the third quarter of 2011, primarily reflecting royalty revenues from Watson on CRINONE products.
- There were essentially no other revenues in the third quarter of 2012 or 2011.
Gross profit margin on total net revenues was 52% for the third quarter of 2012, compared to 37% in the third quarter of 2011. Gross profit on net product revenues for the third quarter of 2012 was 43% compared with 24% for the same period in 2011. The higher profit margins in the 2012 quarter resulted primarily from the shift in sales mix to Merck Serono in favor of higher-margin country markets.
General and administrative costs were $1.9 million in the third quarter of both 2012 and 2011. Higher professional fees for business development activities and securities litigation costs were offset by lower personnel costs following the 2012 workforce reduction.
Research and development costs were $0.1 million in the third quarter of 2012, compared to $0.5 million in the 2011 quarter. The $0.4 million decrease primarily reflects lower personnel costs following the 2012 workforce reduction and lower project expenses.
As a result, total net operating expenses decreased to $2.0 million in the third quarter of 2012 as compared to $2.4 million in the prior year period.
Operating income was $1.4 million in the third quarter of 2012, compared to an operating loss of $0.6 million in the prior year period. The change primarily reflects the $1.5 million increase in net product revenues and $0.2 million increase in royalty revenues, coupled with the $0.4 million decrease in operating expenses, in the third quarter of 2012.
Other income and expense aggregated to a net loss of $1.0 million for the third quarter of 2012, compared to net income of $5.0 million in the third quarter of 2011, primarily reflecting the recognition of the $1.1 million change in the fair value of the warrants issued in conjunction with the October 2009 stock issuance resulting from the increase in Columbia's stock price from June 30, 2012 to September 30, 2012.
As a result, the Company reported net income of $0.4 million, or $0.00 per basic and diluted share, compared to net income of $4.4 million, or $0.05 per basic and $(0.01) per diluted share, for the third quarter of 2011.
At September 30, 2012, Columbia had cash, cash equivalents and short-term investments of $25.6 million, compared to cash, cash equivalents and short-term investments of $23.0 million at June 30, 2012, and $25.1 million at December 31, 2011. The Company believes its cash, cash equivalents and short-term investments will sustain its operations for the foreseeable future.
On October 26, 2012, it was confirmed that the FDA has denied Watson's Formal Dispute Resolution Request (FDRR) related to its New Drug Application (NDA 22-139) for PROCHIEVE for the prevention of preterm birth in women with a short cervical length. Watson filed its FDRR in August of 2012.
Columbia has streamlined the organization to operate as cash flow neutral-to-positive. The Company is currently evaluating potential strategic transactions to add value for its stockholders. Any significant expenses resulting from pursuing a possible strategic transaction could affect cash flow in the quarters incurred.
As previously announced, Columbia Laboratories will hold a conference call to discuss financial results for the third quarter ended September 30, 2012, as follows:
|Date:||Thursday, November 8, 2012|
|Time:||11:00 am EST|
|Dial-in numbers:||(877) 303-9483 (U.S. & Canada) or (760) 666-3584|
www.columbialabs.com, under 'Investor'
The teleconference replay will be available two hours after completion through Thursday, November 15, 2012, at (855) 859-2056 (U.S. & Canada) or (404) 537-3406. The conference ID for the replay is 57130054. 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 a publicly traded specialty pharmaceutical company with a successful history of developing proprietary, vaginally administered products for women’s health indications. The Company receives sales and royalty revenues from CRINONE® 8% (progesterone gel), which is marketed by Watson Pharmaceuticals, Inc. in the United States and by Merck Serono S.A. in over 60 foreign countries.
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: Watson's and Merck Serono's success in marketing CRINONE for use in infertility in their respective markets; Columbia's ability to timely regain compliance with the Nasdaq minimum closing bid price rule; successful development by Watson of a next-generation vaginal progesterone product; difficulties or delays in manufacturing; the availability and pricing of third-party sourced products and materials; successful compliance with FDA and other governmental regulations applicable to manufacturing facilities, products and/or businesses; changes in the laws and regulations, including Medicaid; the ability to obtain and enforce patents and other intellectual property rights; the impact of competitive products and pricing; the evaluation of potential strategic 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. 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.
COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
|Cash and cash equivalents|
|Accounts receivable, net||4,866,249||4,695,410|
|Prepaid expenses and other current assets||503,731||667,927|
|Total current assets||34,641,275||34,137,229|
|Property and equipment, net||2,019,996||1,481,071|
LIABILITIES AND SHAREHOLDER'S EQUITY
|Series C redeemable shares||550,000||600,000|
|Total current liabilities||5,164,933||7,236,517|
|Common stock warrant liability||2,769,277||8,168,846|
|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)
Series E convertible preferred stock, 22,740 shares issued and
outstanding (liquidation preference of $2,274,000)
Common Stock $.01 par value; 150,000,000 shares authorized;
87,543,781 and 87,367,313 shares issued in 2012 and 2011, respectively
|Capital in excess of par value||278,695,861||278,060,138|
|Less cost of 36,448 treasury shares||(125,381||)||(125,381||)|
|Accumulated other comprehensive income||279,856||104,902|
|TOTAL SHAREHOLDERS' EQUITY||28,729,179||20,630,807|
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY|
COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Nine Months Ended|
Three Months Ended|
|Net product revenues (including amounts from related party:|
|2012 - $3,590,073; 2011 - $1,513,296)|
|Royalties (including amounts from related party:|
|2012 - $2,232,397; 2011 - $1,845,154)||2,532,197||2,070,226||1,017,609||782,694|
|Other revenues (including amounts from related party:|
|2012 - $0; 2011 - $21,974,383)||103,568||22,078,785||34,540||34,888|
|Total net revenues||18,737,115||36,685,152||6,673,038||4,946,694|
|COST OF PRODUCT REVENUES|
|Cost of product revenues (including amounts from related party:|
|2012 - $3,263,376; 2011 - $1,453,720)||9,655,624||8,161,210||3,186,792||3,124,284|
|Selling and distribution||—||87,669||—|
|General and administrative||6,376,561||6,765,420||1,901,880||1,908,616|
|Research and development (net of reimbursement from related|
|party: 2012 - $435,199; 2011 - $2,690,163)||856,545||2,362,434||143,795||508,884|
|Net gain on U.S. sale of STRIANT||—||(2,533,127)||—||—|
|Total operating expenses||7,233,106||6,682,396||2,045,675||2,417,500|
|Income (loss) from operations||1,848,385||21,841,546||1,440,571||(595,090)|
|OTHER INCOME (EXPENSE):|
|Change in fair value of redeemable warrants||—||(2,721,205)||—||—|
|Change in fair value of stock warrants||5,399,569||2,790,337||(1,065,498)||5,050,520|
|Total other income (expense)||5,442,565||(259,287)||(1,049,500)||5,045,537|
|Income before taxes||7,290,950||21,582,259||391,071||4,450,447|
|Provision for income taxes||(5,018)||(37,710)||(2,342)||(33,206)|
|NET INCOME PER COMMON SHARE:|
WEIGHTED AVERAGE NUMBER OF COMMON SHARES