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8-K - FORM 8-K - CORNERSTONE THERAPEUTICS INC | b87372e8vk.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
Cornerstone Therapeutics Reports Second Quarter 2011 Financial Results
| Management introduced a new strategic vision in the second quarter with the goal of focused growth in the respiratory, hospital and related specialty markets | ||
| The balance sheet continued to strengthen providing capital to fund the growth strategy as cash increased 82% to $92.8 million as of June 30, 2011 compared to December 31, 2010 | ||
| Strategic products net product sales grew 3% and 11% for the three and six months ended June 30, 2011, respectively, compared to the same periods in 2010 | ||
| Curosurf® volume achieved an all-time high in the month of June and increased 6.2% in the second quarter compared to the second quarter of 2010 |
CARY, N.C., August 4, 2011 Cornerstone Therapeutics Inc. (NASDAQ: CRTX) today reported net
product sales from strategic products were 67% of total net product sales, or $18.7 million, for
the second quarter of 2011, an increase from the 64% of total net product sales, or $18.1 million,
for the second quarter of 2010. Net product sales from strategic products were 68% of total net
product sales, or $39.7 million, for the first six months of 2011, an increase from the 55% of
total net product sales, or $35.6 million, for the first six months of 2010. Overall, total net
revenues were $28.0 million for the second quarter of 2011, compared to $28.5 million for the
second quarter of 2010, and total net revenues for the first six months of 2011 were $58.0 million,
compared to $64.9 million for the same period in 2010.
Net income was $0.2 million, or $0.01 per diluted share, for the second quarter of 2011, compared
to a net loss of $0.4 million, or negative $0.02 per diluted share, for the second quarter of 2010.
For the first six months of 2011, net income was $1.9 million, or $0.07 per diluted share,
compared to net income of $4.6 million, or $0.18 per diluted share, for the first six months of
2010. On a non-GAAP basis, net income was $2.8 million, or $0.11 per diluted share, for the second
quarter of 2011, compared to non-GAAP net income of $2.5 million, or $0.10 per diluted share, for
the second quarter of 2010. For the first six months of 2011, on a non-GAAP basis, net income was
$8.8 million, or $0.34 per diluted share, compared to non-GAAP net income of $9.4 million, or $0.36
per diluted share, for the first six months of 2010. Non-GAAP net income and net income per
diluted share exclude amortization of product rights and stock-based compensation expense.
During the second quarter, we made advances in the execution of our strategy as we increased
market penetration with our strategic products and focused our development pipeline. said Craig A.
Collard, Cornerstones President and Chief Executive Officer. With available cash exceeding $92
million and no debt, we continue to evaluate opportunities to invest funds to drive our future
growth.
A breakdown of net revenues for the second quarter and first half of 2011 (in thousands, except
percentages) follows:
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
June 30, | Change | June 30, | Change | |||||||||||||||||||||||||||||
2011 | 2010 | $ | % | 2011 | 2010 | $ | % | |||||||||||||||||||||||||
Net Product Sales |
||||||||||||||||||||||||||||||||
Curosurf |
$ | 8,547 | $ | 8,619 | $ | (72 | ) | -1 | % | $ | 16,055 | $ | 15,716 | $ | 339 | 2 | % | |||||||||||||||
Zyflo® product family |
6,585 | 8,007 | (1,422 | ) | (18 | ) | 13,997 | 14,281 | (284 | ) | (2 | ) | ||||||||||||||||||||
Factive® |
1,664 | 1,206 | 458 | 38 | 4,464 | 3,313 | 1,151 | 35 | ||||||||||||||||||||||||
Spectracef® product family |
1,892 | 307 | 1,585 | 516 | 5,169 | 2,284 | 2,885 | 126 | ||||||||||||||||||||||||
Total strategic products |
18,688 | 18,139 | 549 | 3 | 39,685 | 35,594 | 4,091 | 11 | ||||||||||||||||||||||||
AlleRx® Dose Pack products |
9,173 | 5,924 | 3,249 | 55 | 20,754 | 18,293 | 2,461 | 13 | ||||||||||||||||||||||||
HyoMax® product family |
623 | 1,900 | (1,277 | ) | (67 | ) | 1,411 | 5,799 | (4,388 | ) | (76 | ) | ||||||||||||||||||||
Other products |
(520 | ) | 2,497 | (3,017 | ) | (121 | ) | (3,911 | ) | 5,166 | (9,077 | ) | (176 | ) | ||||||||||||||||||
Total net product sales |
27,964 | 28,460 | (496 | ) | (2 | ) | 57,939 | 64,852 | (6,913 | ) | (11 | ) | ||||||||||||||||||||
License and royalty agreement revenues |
75 | 5 | 70 | 1,400 | 97 | 19 | 78 | 411 | ||||||||||||||||||||||||
Net Revenues |
$ | 28,039 | $ | 28,465 | $ | (426 | ) | -1 | % | $ | 58,036 | $ | 64,871 | $ | (6,835 | ) | -11 | % | ||||||||||||||
Gross margin (exclusive of license and royalty agreement revenues and amortization of product
rights) was 75% for the second quarter of 2011, compared to 71% for the comparable period of 2010.
The lower gross margin for the second quarter of 2010 was due to additional reserves for potential
product returns of approximately $3.0 million.
Selling, general and administrative expenses decreased $1.2 million, or 9%, in the second quarter
of 2011 compared to the second quarter of 2010. The decrease was primarily due to reduced
marketing and promotional spending for FACTIVE and decreases in co-promotion expenses related to
our propoxyphene/acetaminophen products, which were withdrawn from the market in November of 2010.
Royalty expenses decreased $0.5 million, or 19%, during the second quarter of 2011 compared to the
second quarter of 2010. The reduction in royalty expense was primarily due to the reduction in net
product sales from our HYOMAX products and the voluntary withdrawal of our
propoxyphene/acetaminophen products, partially offset by increased net product sales of ALLERX Dose
Pack products.
Research and development expenses decreased $1.2 million, or 66%, during the second quarter of 2011
compared to the second quarter of 2010. The reduction in R&D expense was primarily due to
decreased expenses related to CRTX 067 and the timing of other product development expenses,
consistent with our development plan.
As of June 30, 2011, we had $92.8 million in cash and cash equivalents, an increase of $41.8
million compared to December 31, 2010. The increase in cash for the first half of 2011 was driven
primarily by collections of receivables in connection with the ALLERX Dose Pack products.
Conference Call Information
Cornerstone Therapeutics will host a conference call today at 8:30 AM ET to discuss its financial
results for the quarter ended June 30, 2011. To participate in the live conference call, please
dial 800-817-8867 (U.S. callers) or 913-981-5572 (international callers), and provide passcode
8822874. 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 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 888-203-1112 (U.S. callers) or 719-457-0820
(international callers), and providing passcode 8822874.
About Cornerstone Therapeutics
Cornerstone Therapeutics Inc. (Nasdaq: CRTX), headquartered in Cary, N.C., is a specialty
pharmaceutical company focused on developing, acquiring, and commercializing products for the
respiratory, hospital and related specialty markets. Key elements of the Companys strategy are to
focus on identifying therapeutic niches within respiratory, hospital and related specialty markets
to leverage existing business and create new opportunities; promote the Companys current products
to high prescribing physicians through the Companys respiratory sales force and to hospital-based
healthcare professionals through the Companys hospital sales force; license or 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 the Companys development
projects and further build a robust pipeline; and generate revenues by marketing approved generic
products through the Companys 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 and compensation 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. For more information about these non-GAAP
measures, please see Part I, Item 2 of our Quarterly Report on Form 10-Q filed with the Securities
and Exchange Commission, or SEC, on May 12, 2011.
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 critical accounting estimates; 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 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 develop and
commercialize our product candidates before our competitors develop and commercialize competing
products; 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 SEC on March 3, 2011 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 only 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, except as required by law.
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;
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 OPERATIONS
(In thousands, except share and per share data)
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Net revenues |
$ | 28,039 | $ | 28,465 | $ | 58,036 | $ | 64,871 | ||||||||
Costs and expenses: |
||||||||||||||||
Cost of
product sales (exclusive of amortization of product rights) |
7,041 | 8,153 | 14,578 | 14,972 | ||||||||||||
Selling, general and administrative |
11,604 | 12,814 | 24,874 | 25,239 | ||||||||||||
Royalties |
2,148 | 2,648 | 4,645 | 7,246 | ||||||||||||
Research and development |
614 | 1,795 | 1,173 | 2,701 | ||||||||||||
Amortization of product rights |
6,092 | 3,595 | 9,686 | 7,190 | ||||||||||||
Total costs and expenses |
27,499 | 29,005 | 54,956 | 57,348 | ||||||||||||
Income (loss) from operations |
540 | (540 | ) | 3,080 | 7,523 | |||||||||||
Other expenses: |
||||||||||||||||
Interest expense, net |
(42 | ) | (9 | ) | (83 | ) | (10 | ) | ||||||||
Total other expenses |
(42 | ) | (9 | ) | (83 | ) | (10 | ) | ||||||||
Income (loss) before income taxes |
498 | (549 | ) | 2,997 | 7,513 | |||||||||||
(Provision for) benefit from income taxes |
(301 | ) | 149 | (1,058 | ) | (2,900 | ) | |||||||||
Net income (loss) |
$ | 197 | $ | (400 | ) | $ | 1,939 | $ | 4,613 | |||||||
Net income (loss) per share, basic |
$ | 0.01 | $ | (0.02 | ) | $ | 0.08 | $ | 0.18 | |||||||
Net income (loss) per share, diluted |
$ | 0.01 | $ | (0.02 | ) | $ | 0.07 | $ | 0.18 | |||||||
Weighted-average common shares, basic |
25,673,667 | 25,405,165 | 25,577,314 | 25,377,575 | ||||||||||||
Weighted-average common shares, diluted |
26,246,073 | 25,405,165 | 26,167,997 | 25,997,176 | ||||||||||||
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)
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 92,793 | $ | 50,945 | ||||
Accounts receivable, net |
25,833 | 76,476 | ||||||
Inventories, net |
14,043 | 15,174 | ||||||
Prepaid and other current assets |
3,343 | 5,111 | ||||||
Income tax receivable |
1,409 | 197 | ||||||
Deferred income tax asset |
5,490 | 6,599 | ||||||
Total current assets |
142,911 | 154,502 | ||||||
Property and equipment, net |
1,576 | 1,486 | ||||||
Product rights, net |
102,642 | 112,328 | ||||||
Goodwill |
13,231 | 13,231 | ||||||
Amounts due from related parties |
38 | 38 | ||||||
Long-term accounts receivable |
| 7,866 | ||||||
Other assets |
1,312 | 687 | ||||||
Total assets |
$ | 261,710 | $ | 290,138 | ||||
Liabilities and Stockholders Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 9,029 | $ | 7,671 | ||||
Accrued expenses |
38,593 | 46,599 | ||||||
License agreement liability |
1,449 | 1,368 | ||||||
Current portion of capital lease |
86 | 83 | ||||||
Current portion of deferred revenue |
30,871 | 37,616 | ||||||
Total current liabilities |
80,028 | 93,337 | ||||||
Capital lease, less current portion |
102 | 146 | ||||||
Deferred revenue, less current portion |
1,558 | 19,578 | ||||||
Deferred income tax liability |
4,038 | 4,679 | ||||||
Total liabilities |
85,726 | 117,740 | ||||||
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; 25,769,664 and
25,472,963
shares issued and outstanding as of June
30,
2011 and December 31, 2010, respectively |
26 | 25 | ||||||
Additional paid-in capital |
161,752 | 160,106 | ||||||
Retained earnings |
14,206 | 12,267 | ||||||
Total stockholders equity |
175,984 | 172,398 | ||||||
Total liabilities and stockholders
equity |
$ | 261,710 | $ | 290,138 | ||||
CORNERSTONE THERAPEUTICS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended June 30, | ||||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
Cash flows from operating activities |
||||||||
Net income |
$ | 1,939 | $ | 4,613 | ||||
Adjustments to reconcile net income to net cash provided by
operating activities: |
||||||||
Amortization and depreciation |
7,429 | 7,365 | ||||||
Provision for prompt payment discounts |
1,998 | 2,049 | ||||||
Recovery of inventory allowances |
(235 | ) | (367 | ) | ||||
Impariment of product rights |
2,500 | | ||||||
Stock-based compensation |
884 | 655 | ||||||
Benefit from (provision for) deferred income taxes |
468 | (2,431 | ) | |||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
48,645 | 323 | ||||||
Inventories |
1,366 | (1,659 | ) | |||||
Prepaid expenses, long-term accounts receivable and other
assets |
9,009 | 2,086 | ||||||
Accounts payable |
1,358 | (1,809 | ) | |||||
Accrued expenses and license agreement liability |
(7,925 | ) | 4,305 | |||||
Income taxes receivable |
(1,212 | ) | 954 | |||||
Deferred revenue |
(24,765 | ) | 10,822 | |||||
Net cash provided by operating activities |
41,459 | 26,906 | ||||||
Cash flows from investing activities |
||||||||
Purchase of property and equipment |
(333 | ) | (278 | ) | ||||
Net cash used in investing activities |
(333 | ) | (278 | ) | ||||
Cash flows from financing activities |
||||||||
Proceeds from exercise of common stock options and warrants |
311 | 516 | ||||||
Excess tax benefit from stock-based compensation |
452 | 455 | ||||||
Principal payments on capital lease obligation |
(41 | ) | (6 | ) | ||||
Net cash provided by financing activities |
722 | 965 | ||||||
Net increase in cash and cash equivalents |
41,848 | 27,593 | ||||||
Cash and cash equivalents as of beginning of year |
50,945 | 18,853 | ||||||
Cash and cash equivalents as of end of year |
$ | 92,793 | $ | 46,446 | ||||
CORNERSTONE THERAPEUTICS INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
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 June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
GAAP income (loss) from operations |
$ | 540 | $ | (540 | ) | $ | 3,080 | $ | 7,523 | |||||||
Add: stock-based compensation |
505 | 375 | 884 | 655 | ||||||||||||
Add: amortization of product rights |
6,092 | 3,595 | 9,686 | 7,190 | ||||||||||||
Non-GAAP income from operations |
$ | 7,137 | $ | 3,430 | $ | 13,650 | $ | 15,368 | ||||||||
GAAP net income (loss) |
$ | 197 | $ | (400 | ) | $ | 1,939 | $ | 4,613 | |||||||
Add: stock-based compensation |
505 | 375 | 884 | 655 | ||||||||||||
Add: amortization of product rights |
6,092 | 3,595 | 9,686 | 7,190 | ||||||||||||
Less: tax effects related to above items1 |
(3,987 | ) | (1,077 | ) | (3,731 | ) | (3,028 | ) | ||||||||
Non-GAAP net income |
$ | 2,807 | $ | 2,493 | $ | 8,778 | $ | 9,430 | ||||||||
GAAP net income (loss) per share, diluted |
$ | 0.01 | $ | (0.02 | ) | $ | 0.07 | $ | 0.18 | |||||||
Non-GAAP net income per share, diluted |
$ | 0.11 | $ | 0.10 | $ | 0.34 | $ | 0.36 | ||||||||
Shares used in diluted net income per share calculation: |
||||||||||||||||
GAAP net income |
26,246,073 | 25,405,165 | 26,167,997 | 25,997,176 | ||||||||||||
Non-GAAP net income |
26,246,073 | 26,042,093 | 26,167,997 | 25,997,176 | ||||||||||||
1 | Tax effects for the three months ended June 30, 2011 and 2010 are calculated using effective tax rates of 60.4% and 27.1% respectively. | |
Tax effects for the six months ended June 30, 2011 and 2010 are calculated using effective tax rates of 35.3% and 38.6% respectively. |