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8-K - FORM 8-K - CORNERSTONE THERAPEUTICS INC | b85265e8vk.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
Cornerstone Therapeutics Reports Fiscal Year 2010 Financial Results
| Net revenues increased 14% year-over-year to a record $125.3 million | ||
| Curosurf® achieved new market share high for full year 2010 | ||
| Cash balance at year end grew to $50.9 million |
CARY, N.C., March 3, 2011- Cornerstone Therapeutics Inc. (NASDAQ: CRTX) today reported full year
and fourth quarter 2010 results. Total net revenues were $125.3 million for the full year of 2010,
representing a 14% increase over the $109.6 million reported for the full year of 2009. Total net
revenues for the fourth quarter of 2010 were $32.5 million representing a 6% increase over the
$30.8 million for the fourth quarter of 2009. Net product sales from strategic products were 60% of
total net revenues, or $74.7 million, for the full year of 2010, an increase from the 36% of total
net revenues, or $39.0 million, for the full year of 2009. Net product sales from strategic
products were 66% of total net revenues, or $21.4 million, for the fourth quarter of 2010, an
increase from the 52% of total net revenues, or $16.0 million, for the fourth quarter of 2009.
Net income for 2010 was $6.2 million, or $0.24 per diluted share, compared to net income of $10.2
million, or $0.54 per diluted share in 2009. Fourth quarter net income was $0.8 million, or $0.03
per diluted share, compared to $2.7 million, or $0.10 per diluted share, for the fourth quarter of
2009. On a non-GAAP basis, net income for 2010 was $18.9 million, or $0.73 per diluted share,
compared to non-GAAP net income of $17.4 million, or $0.93 per diluted share in 2009. On a non-GAAP
basis, fourth quarter net income was $5.2 million, or $0.20 per diluted share, compared to non-GAAP
net income of $5.5 million, or $0.21 per diluted share for the fourth quarter of 2009. Non-GAAP net
income and net income per diluted share exclude amortization of product rights, acquisition-related
expenses in connection with the 2009 transaction with Chiesi Farmaceutici S.p.A., and stock-based
compensation.
Cornerstone ended 2010 with record net sales, a strong cash position and a more focused product
portfolio, said Craig A. Collard, Cornerstones President and Chief Executive Officer. As a
result of the efforts of the companys dedicated employees, we achieved another record year in net
revenues, including a new market share high with Curosurf; we also successfully distributed the
remaining inventory as the final phase in our plan to cease manufacturing and distribution of
AlleRx® and HyoMax® and generated significant cash.
Mr. Collard continued, We believe that the momentum built in 2010 positions us to build a
portfolio of products that will leverage our presence in the respiratory and hospital markets while
we continue to advance our internal pipeline.
A breakdown of net revenues by product for the fourth quarter and year ended December 31, 2010 (in
thousands, except percentages) follows:
Three Months Ended December 31, | Change | Year Ended December 31, | Change | |||||||||||||||||||||||||||||
2010 | 2009 | $ | % | 2010 | 2009 | $ | % | |||||||||||||||||||||||||
Net Product Sales |
||||||||||||||||||||||||||||||||
Curosurf |
$ | 9,854 | $ | 8,310 | $ | 1,544 | 19 | % | $ | 33,621 | $ | 10,463 | $ | 23,158 | 221 | % | ||||||||||||||||
Zyflo® product family |
8,764 | 4,122 | 4,642 | 113 | 30,619 | 17,959 | 12,660 | 70 | ||||||||||||||||||||||||
Factive® |
963 | 1,087 | (124 | ) | (11 | ) | 5,126 | 1,178 | 3,948 | 335 | ||||||||||||||||||||||
Spectracef® product family |
1,849 | 2,494 | (645 | ) | (26 | ) | 5,327 | 9,390 | (4,063 | ) | (43 | ) | ||||||||||||||||||||
AlleRx Dose Pack products |
5,200 | 8,722 | (3,522 | ) | (40 | ) | 27,305 | 31,707 | (4,402 | ) | (14 | ) | ||||||||||||||||||||
HyoMax product family |
2,270 | 3,131 | (861 | ) | (27 | ) | 10,071 | 28,148 | (18,077 | ) | (64 | ) | ||||||||||||||||||||
Other Products (1) |
3,582 | 2,883 | 699 | 24 | 11,675 | 10,443 | 1,232 | 12 | ||||||||||||||||||||||||
Total net product sales |
32,482 | 30,749 | 1,733 | 6 | 123,744 | 109,288 | 14,456 | 13 | ||||||||||||||||||||||||
License and royalty agreement revenues |
32 | 39 | (7 | ) | (18 | ) | 1,573 | 276 | 1,297 | 470 | ||||||||||||||||||||||
Net Revenues |
$ | 32,514 | $ | 30,788 | $ | 1,726 | 6 | % | $ | 125,317 | $ | 109,564 | $ | 15,753 | 14 | % | ||||||||||||||||
(1) | Primarily propoxyphene/acetaminophen products. |
Gross margin percentage for the full year of 2010 was 74% compared to 82% for the full year of
2009. The lower gross margin percentage compared to the prior period was due to a relatively
higher portion of our net product sales in 2010 derived from products that have lower gross
margins, specifically Curosurf. Gross margin percentage for the fourth quarter was 70%, similar to
the fourth quarter of 2009.
Selling, general and administrative expenses increased $7.5 million, or 16%, for the full year of
2010 compared to 2009. The increase was primarily related to our incurring a full year of expenses
in 2010 for our hospital sales force that we created in September 2009, co-promotion expenses
relating to Zyflo CR and increased sample usage for both Zyflo CR and Factive, partially offset by
lower stock compensation and reduced legal and consulting costs during 2010 as compared to 2009
when we incurred significant expenses related to the Chiesi transaction. Selling, general and
administrative expenses during the fourth quarter increased $4.0 million, or 36%, compared to the
fourth quarter of 2009. The increase was primarily related to co-promotion expenses relating to
Zyflo CR and AlleRx and increased sample usage for both Zyflo CR and Factive.
Royalty expenses decreased $6.1 million, or 32%, during 2010 compared to 2009. The reduction in
royalty expense was primarily due to lower net revenues from our HyoMax products, partially offset
by increased royalties for Zyflo CR and Factive. Royalty expenses increased $0.6 million, or 28%
during the fourth quarter of 2010 compared to the fourth quarter of 2009 primarily due to product
mix.
As of December 31, 2010, the Company had $50.9 million in cash and cash equivalents, an increase of
170%, compared to $18.9 million as of December 31, 2009.
Conference Call Information
Cornerstone Therapeutics will host a conference call today at 8:30 AM ET to discuss its financial
results for the quarter and twelve months ended December 31, 2010. To participate in the live
conference call, please dial 866-730-5770 (U.S. callers) or 857-350-1594 (international callers),
and provide passcode 99190634. A live webcast of the call will also be available through the
InvestorsWebcasts & Presentations section of the Companys website at http://www.crtx.com.
Please allow extra time prior to the webcast to register for the webcast and to download and
install any necessary audio software.
The conference call and the webcast will be archived for 30 days. The telephone replay of the call
will be available today at 11:30 AM ET, by dialing 888-286-8010 (U.S. callers) or 617-801-6888
(international callers), and providing passcode 56948345.
About Cornerstone Therapeutics
Cornerstone Therapeutics Inc. (Nasdaq: CRTX), headquartered in Cary, N.C., is a specialty
pharmaceutical company focused on acquiring, developing and commercializing products for the
respiratory and related markets. Key elements of the Companys strategy are to leverage commercial
capabilities by promoting respiratory and related products to high prescribing physicians through
its respiratory sales force and to hospital-based healthcare professionals through its hospital
sales force; acquire rights to existing patent- or trade secret-protected, branded products, which
can be promoted through the same channels to generate on-going high-value earnings streams; advance
its development projects and further build a robust pipeline; and generate revenues by marketing
approved generic products through its wholly owned subsidiary, Aristos Pharmaceuticals, Inc.
Use of Non-GAAP Financial Measures
This press release highlights the Companys financial results on both a GAAP and a non-GAAP basis.
The GAAP results include certain costs and charges that are excluded from non-GAAP results. By
publishing the non-GAAP financial measures, management intends to provide investors with additional
information to further analyze the Companys performance and underlying trends. Management
evaluates results and makes operating decisions using both GAAP and non-GAAP measures included in
this press release. Non-GAAP results are not prepared in accordance with GAAP, and non-GAAP
information should be considered a supplement to, and not a substitute for, financial statements
prepared in accordance with GAAP. Investors and potential investors are encouraged to review the
reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures
attached to this press release.
Safe Harbor Statement
Statements in this press release regarding the progress and timing of our product development
programs and related trials; our future opportunities; our strategy, future operations,
anticipated financial position, future revenues and projected costs; our managements prospects,
plans and objectives; and any other statements about managements future expectations, beliefs,
goals, plans or prospects constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995.
Any statements that are not statements of historical fact (including, without limitation,
statements containing the words anticipate, believe, could, estimate, expect, intend,
may, plan, should, target, will, would and similar expressions) should also be
considered to be forward-looking statements.
There are a number of important factors that could cause our actual results or events to differ
materially from those indicated by such forward-looking statements, including risks relating to
our ability to develop and maintain the necessary sales, marketing, supply chain, distribution and
manufacturing capabilities to commercialize our products; our ability to replace the revenues from
our marketed unapproved products, which we ceased manufacturing and distributing at the end of
2010, and from our propoxyphene products, which we voluntarily withdrew from the U.S. market in
November 2010 at the request of the U.S. Food and Drug Administration, or FDA; patient, physician
and third-party payor acceptance of our products as safe and effective therapeutic products; our
heavy dependence on the commercial success of a relatively small number of currently marketed
products; our ability to maintain regulatory approvals to market and sell our products with
FDA-approved marketing applications; our ability to obtain FDA approval to market and sell our
products under development; our ability to enter into additional strategic licensing product
acquisition, collaboration or co-promotion transactions on favorable terms, if at all; our ability
to maintain compliance with NASDAQ listing requirements; adverse side effects experienced by
patients taking our products; our ability to develop and commercialize our product candidates
before our competitors develop and commercialize competing products; difficulties
relating to clinical trials, including difficulties or delays in the completion of patient
enrollment, data collection or data analysis; the results of preclinical studies and clinical
trials with respect to our product candidates and whether such results will be indicative of
results obtained in later clinical trials; our ability to satisfy FDA and other regulatory
requirements; our ability to obtain, maintain and enforce patent and other intellectual property
protection for our products and product candidates and the other factors described in Item 1A
(Risk Factors) of our Annual Report on Form 10-K filed with the Securities and Exchange Commission
(the SEC) on March 4, 2010 and in our subsequent filings with the SEC. If one or more of these
factors materialize, or if any underlying assumptions prove incorrect, our actual results,
performance or achievements may vary materially from any future results, performance or
achievements expressed or implied by these forward-looking statements.
In addition, the statements in this press release reflect our expectations and beliefs as of the
date of this release. We anticipate that subsequent events and developments will cause our
expectations and beliefs to change. However, while we may elect to update these forward-looking
statements publicly at some point in the future, we specifically disclaim any obligation to do so,
whether as a result of new information, future events or otherwise. Our forward-looking statements
do not reflect the potential impact of any acquisitions, mergers, dispositions, business
development transactions, joint ventures or investments that we may make or enter into. These
forward-looking statements should not be relied upon as representing our views as of any date
after the date of this release.
Trademarks
Curosurf® is owned by Chiesi Farmaceutici S.p.A. Spectracef® is owned by Meiji Seika Kaisha Ltd.
Factive® is owned by LG Life Sciences, Ltd. Curosurf, Spectracef and Factive are licensed to
Cornerstone Therapeutics for sales and marketing purposes in the United States and, with respect
to Factive, certain other countries.
FINANCIAL TABLES FOLLOW
Contacts
Investor Relations Contacts:
Westwicke Partners, John Woolford, +1-443-213-0506, john.woolford@westwicke.com or Westwicke
Partners, Stefan Loren, Ph.D., +1-443-213-0507, sloren@westwicke.com;
Westwicke Partners, John Woolford, +1-443-213-0506, john.woolford@westwicke.com or Westwicke
Partners, Stefan Loren, Ph.D., +1-443-213-0507, sloren@westwicke.com;
Media Relations Contact:
Fleishman-Hillard, Andrea Moody, +1-919-457-0743, andrea.moody@fleishman.com
Fleishman-Hillard, Andrea Moody, +1-919-457-0743, andrea.moody@fleishman.com
###
CORNERSTONE THERAPEUTICS INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(Unaudited) | ||||||||||||||||
Net revenues |
$ | 32,514 | $ | 30,788 | $ | 125,317 | $ | 109,564 | ||||||||
Costs and expenses: |
||||||||||||||||
Cost of product sales (exclusive of
amortization of product rights) |
9,599 | 9,212 | 32,313 | 19,457 | ||||||||||||
Selling, general and administrative |
15,109 | 11,112 | 53,198 | 45,731 | ||||||||||||
Royalties |
2,856 | 2,240 | 12,702 | 18,775 | ||||||||||||
Research and development |
740 | 1,163 | 4,488 | 3,608 | ||||||||||||
Amortization of product rights |
3,943 | 3,587 | 14,728 | 6,115 | ||||||||||||
Total costs and expenses |
32,247 | 27,314 | 117,429 | 93,686 | ||||||||||||
Income from operations |
267 | 3,474 | 7,888 | 15,878 | ||||||||||||
Other expenses: |
||||||||||||||||
Interest expense, net |
(38 | ) | (15 | ) | (85 | ) | (128 | ) | ||||||||
Other expense, net |
| | (25 | ) | | |||||||||||
Total other expenses |
(38 | ) | (15 | ) | (110 | ) | (128 | ) | ||||||||
Income before income taxes |
229 | 3,459 | 7,778 | 15,750 | ||||||||||||
Benefit from (provision for) income taxes |
563 | (771 | ) | (1,609 | ) | (5,547 | ) | |||||||||
Net income |
$ | 792 | $ | 2,688 | $ | 6,169 | $ | 10,203 | ||||||||
Net income per share, basic |
$ | 0.03 | $ | 0.11 | $ | 0.24 | $ | 0.58 | ||||||||
Net income per share, diluted |
$ | 0.03 | $ | 0.10 | $ | 0.24 | $ | 0.54 | ||||||||
Weighted-average common shares, basic |
25,463,467 | 24,972,954 | 25,412,636 | 17,651,668 | ||||||||||||
Weighted-average common shares, diluted |
26,093,755 | 25,751,756 | 26,036,544 | 18,776,588 | ||||||||||||
CORNERSTONE THERAPEUTICS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 50,945 | $ | 18,853 | ||||
Accounts receivable, net |
76,476 | 16,548 | ||||||
Inventories, net |
15,174 | 18,106 | ||||||
Prepaid and other current assets |
5,111 | 4,808 | ||||||
Income tax receivable |
197 | | ||||||
Deferred income tax asset |
6,599 | 3,507 | ||||||
Total current assets |
154,502 | 61,822 | ||||||
Property and equipment, net |
1,486 | 1,312 | ||||||
Product rights, net |
112,328 | 126,806 | ||||||
Goodwill |
13,231 | 13,231 | ||||||
Amounts due from related parties |
38 | 38 | ||||||
Long-term accounts receivable and other assets |
8,553 | 113 | ||||||
Total assets |
$ | 290,138 | $ | 203,322 | ||||
Liabilities and Stockholders Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 7,671 | $ | 7,172 | ||||
Accrued expenses |
46,599 | 23,703 | ||||||
Current portion of license agreement liability |
1,368 | 1,019 | ||||||
Current portion of capital lease |
83 | 10 | ||||||
Current portion of deferred revenue |
37,616 | | ||||||
Income taxes payable |
| 1,606 | ||||||
Total current liabilities |
93,337 | 33,510 | ||||||
License agreement liability, less current portion |
| 1,341 | ||||||
Capital lease, less current portion |
146 | 39 | ||||||
Deferred revenue, less current portion |
19,578 | | ||||||
Deferred income tax liability |
4,679 | 4,564 | ||||||
Total liabilities |
117,740 | 39,454 | ||||||
Stockholders equity |
||||||||
Preferred stock $0.001 par value,
5,000,000 shares authorized; no shares issued
and outstanding |
| | ||||||
Common stock $0.001 par value, 90,000,000
shares authorized; 25,472,963 and 25,022,644
shares issued and outstanding as of December
31, 2010 and December 31, 2009, respectively |
25 | 25 | ||||||
Additional paid-in capital |
160,106 | 157,745 | ||||||
Retained earnings |
12,267 | 6,098 | ||||||
Total stockholders equity |
172,398 | 163,868 | ||||||
Total liabilities and stockholders equity |
$ | 290,138 | $ | 203,322 | ||||
CORNERSTONE THERAPEUTICS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31, | ||||||||
2010 | 2009 | |||||||
Cash flows from operating activities |
||||||||
Net income |
$ | 6,169 | $ | 10,203 | ||||
Adjustments to reconcile net income to net cash provided by
operating activities: |
||||||||
Amortization and depreciation |
14,778 | 6,392 | ||||||
Provision for prompt payment discounts |
3,903 | 3,157 | ||||||
Provision for inventory allowances |
1,340 | 1,474 | ||||||
Loss on sale of property and equipment |
25 | | ||||||
Impairment of product rights |
350 | | ||||||
Stock-based compensation |
1,339 | 3,291 | ||||||
Benefit from deferred income taxes |
(2,977 | ) | (3,632 | ) | ||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(63,831 | ) | (6,718 | ) | ||||
Inventories |
1,592 | (8,202 | ) | |||||
Prepaid expenses, long-term accounts receivable and other assets |
(8,743 | ) | (3,121 | ) | ||||
Accounts payable |
499 | (3,116 | ) | |||||
Accrued expenses |
23,154 | 2,053 | ||||||
Income taxes payable/receivable |
(1,803 | ) | (1,331 | ) | ||||
Deferred revenue |
57,194 | | ||||||
Net cash provided by operating activities |
32,989 | 450 | ||||||
Cash flows from investing activities |
||||||||
Proceeds from sale of marketable securities |
| 300 | ||||||
Proceeds from sale of property and equipment |
2 | | ||||||
Purchase of property and equipment |
(375 | ) | (635 | ) | ||||
Purchase of product rights |
(250 | ) | (5,169 | ) | ||||
Net cash used in investing activities |
(623 | ) | (5,504 | ) | ||||
Cash flows from financing activities |
||||||||
Proceeds from exercise of common stock options and warrants |
544 | 437 | ||||||
Proceeds from issuance of shares of common stock |
| 15,465 | ||||||
Payments for cancellation of warrants |
| (41 | ) | |||||
Excess tax benefit from stock-based compensation |
478 | 1,269 | ||||||
Principal payments on license agreement liability |
(1,250 | ) | (2,500 | ) | ||||
Principal payments on capital lease obligation |
(46 | ) | (9 | ) | ||||
Net cash (used in) provided by financing activities |
(274 | ) | 14,621 | |||||
Net increase in cash and cash equivalents |
32,092 | 9,567 | ||||||
Cash and cash equivalents as of beginning of year |
18,853 | 9,286 | ||||||
Cash and cash equivalents as of end of year |
$ | 50,945 | $ | 18,853 | ||||
Supplemental disclosure of cash flow information |
||||||||
Cash paid during the year for interest |
$ | 318 | $ | 531 | ||||
Cash paid during the year for income taxes |
$ | 6,780 | $ | 9,260 | ||||
Supplemental schedule of non-cash investing and financing
activities |
||||||||
Purchase of property and equipment with capital leases |
$ | 226 | $ | | ||||
Acquisition of product rights through equity issued and
liabilities assumed |
$ | | $ | 110,050 | ||||
CORNERSTONE THERAPEUTICS INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except share and per share data unaudited)
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except share and per share data unaudited)
The following tables show the non-GAAP financial measures used in this press release reconciled to the most directly comparable GAAP
financial measures.
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
GAAP income from operations |
$ | 267 | $ | 3,474 | $ | 7,888 | $ | 15,878 | ||||||||
Add: stock-based compensation1 |
369 | 321 | 1,339 | 1,478 | ||||||||||||
Add: amortization of product rights |
3,943 | 3,587 | 14,728 | 6,115 | ||||||||||||
Add: acquisition-related expenses2 |
| | | 3,563 | ||||||||||||
Non-GAAP income from operations |
$ | 4,579 | $ | 7,382 | $ | 23,955 | $ | 27,034 | ||||||||
GAAP net income |
$ | 792 | $ | 2,688 | $ | 6,169 | $ | 10,203 | ||||||||
Add: stock-based compensation1 |
369 | 321 | 1,339 | 1,478 | ||||||||||||
Add: amortization of product rights |
3,943 | 3,587 | 14,728 | 6,115 | ||||||||||||
Add: acquisition-related expenses2 |
| | | 3,563 | ||||||||||||
Less: tax effects related to above items3 |
58 | (1,108 | ) | (3,324 | ) | (3,927 | ) | |||||||||
Non-GAAP net income |
$ | 5,162 | $ | 5,488 | $ | 18,912 | $ | 17,432 | ||||||||
GAAP net income per share, diluted |
$ | 0.03 | $ | 0.10 | $ | 0.24 | $ | 0.54 | ||||||||
Non-GAAP net income per share, diluted |
$ | 0.20 | $ | 0.21 | $ | 0.73 | $ | 0.93 | ||||||||
Shares used in diluted net income per share calculation: |
||||||||||||||||
GAAP net income |
26,093,755 | 25,751,756 | 26,036,544 | 18,776,588 | ||||||||||||
Non-GAAP net income |
26,093,755 | 25,751,756 | 26,036,544 | 18,776,588 | ||||||||||||
1 | Stock-based compensation excludes stock-based compensation charges incurred in connection with the Chiesi transaction, which are included in acquisition-related expenses. | |
2 | Acquisition-related expenses include stock-based compensation charges and legal, accounting and related costs that resulted from or were incurred in connection with the Chiesi transaction. During 2009, acquisition-related stock-based compensation charges include $1.8 million of charges that were included in selling, general and administrative expenses. | |
3 | Tax effects for the three months ended December 31, 2010 and 2009 are calculated using effective tax rates of (1.3)% and 28.4%, respectively. Tax effects for 2010 and 2009 are calculated using effective tax rates of 20.7% and 35.2%, respectively. |