Columbia Laboratories, Inc. (Nasdaq: CBRX) today reported financial
results of the three- and twelve-months periods ended December 31, 2009.
“Our 2009 revenues were
only 3% less than 2008 levels, once adjusted for the one-time
recognition of STRIANT licensing fees in 2008, primarily due to foreign
pricing pressures.”
Fourth Quarter Highlights
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Net revenues increased 21% to $8.5 million, as compared to $7.1
million for the fourth quarter of 2008.
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Total progesterone sales increased 23% with domestic sales of CRINONE®
8% (progesterone gel) increasing 31% and international sales
increasing 24%, partially offset by a decline in sales of PROCHIEVE®
8% (progesterone gel), as compared to the fourth quarter of 2008.
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Net loss of $5.4 million ($0.09 per basic and diluted share) compared
to a net loss of $3.5 million ($0.06 per basic and diluted share) in
the fourth quarter of 2008.
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Advanced enrollment in the PREGNANT Study and added 11 new study
centers to accelerate enrollment in 2010.
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Four presentations of new data supporting the use of CRINONE 8% over
other progesterone formulations were given at the annual meeting of
the American Society of Reproductive Medicine.
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$10.7 million in net proceeds raised through the sale of common stock
and warrants.
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Frank C. Condella, Jr. appointed interim chief executive officer.
2009 Highlights
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Net revenues decreased 11% to $32.2 million, compared to net revenues
of $36.2 million in 2008 which included $2.9 million in previously
deferred revenue for STRIANT® (testosterone buccal system)
licensing fees from Ardana as a results of its bankruptcy.
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Domestic progesterone product net revenues rose 5%, driven by a 14%
increase in CRINONE prescriptions, as compared to 2008 levels.
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Net loss of $21.9 million ($0.39 per basic and diluted share) versus a
net loss of $14.1 million ($0.27 per basic and diluted share) in 2008,
due to the combination of lower revenues and higher operating
expenses, including higher costs of the PREGNANT Study.
“In 2009, we effectively executed our strategy to grow CRINONE in the
United States. Unit volumes increased 10%, and total prescriptions were
up 14%, despite the harsh economic climate which negatively impacted the
substantially patient-paid infertility market,” said Frank C. Condella,
Jr., Columbia’s interim chief executive officer. “Our 2009 revenues were
only 3% less than 2008 levels, once adjusted for the one-time
recognition of STRIANT licensing fees in 2008, primarily due to foreign
pricing pressures.”
“We continued to invest in the PREGNANT study of PROCHIEVE 8% to reduce
the risk of preterm birth in women with a short cervix at mid-pregnancy.
With 393 of the planned 450 patients now enrolled and very strong
monthly enrollment rates, we remain confident that this study will be
fully enrolled in the second quarter of 2010. We look forward to
reporting results shortly after the last infant is born and the analysis
of results is completed in late 2010 and, if positive, to filing with
the FDA in 2011 for this promising new indication.”
Subsequent Material Events
Watson Agreement
On March 3, 2010, Columbia entered into a definitive agreement to sell
substantially all of its progesterone related assets and 11.2 million
shares of common stock to Watson Pharmaceuticals, Inc. (NYSE: WPI) for a
$47 million upfront payment plus royalties of 10 to 20 percent of annual
net sales of certain progesterone products. Additional payments up to
$45.5 million can be earned by the successful completion of clinical
development milestones in the PREGNANT Study, regulatory filings,
receipt of regulatory approvals and product launches. Watson will fund
the development of a second-generation vaginal progesterone product as
part of a comprehensive life-cycle management strategy. Watson will also
have the right to designate a member of Columbia's Board of Directors.
After the sale of these assets, Columbia’s business will consist of
domestic and international royalties and milestone payments,
manufacturing revenues from CRINONE and PROCHIEVE, STRIANT sales, and
its bioadhesive drug delivery technologies, which include bioadhesive
vaginal gel, buccal system and progressive hydration tablet delivery
mechanisms. Expenses related to sales, marketing, and related support
functions will be eliminated. Also, Columbia will retain certain assets
and rights to its progesterone business, including all rights necessary
to perform its obligations under its agreement with Merck Serono S.A.
The transaction was unanimously approved by Columbia’s Board of
Directors. Its closing is subject to customary conditions, including
approval by Columbia’s stockholders. It is expected to close during the
second quarter of 2010.
Debt Pre-payment Agreements
On March 3, 2010, Columbia entered into a contingent agreement with
PharmaBio Development, an affiliate of Quintiles Transnational Corp., to
pre-pay the approximately $16 million balance of the minimum royalty
payments on U.S. net sales of STRIANT due in November 2010.
On March 3, 2010, Columbia entered into contingent agreements to pre-pay
the $40 million in convertible notes due December 31, 2011. Note holders
will receive their proportional share of the following:
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$26 million in cash (plus accrued and unpaid interest up to, but
excluding, the closing date),
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Warrants to purchase 7.75 million shares of Columbia's common stock,
and,
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$10 million in shares of Columbia's common stock.
The strike price of the warrants and the pricing of the common shares of
$1.35 was determined by taking a 10% premium to the 10-day closing
average prior to the announcement of the transaction but no less than
100% of the last closing price prior to the time of signing. The
warrants become exercisable 180 days after the closing and expire five
years later, unless earlier exercised or terminated.
The closings of the transactions under the note pre-payment agreements
are subject to various closing conditions, including stockholder
approval and the closing of the Watson transaction. In connection with
the contingent note pre-payment agreements, the notes were amended so
that the Watson transaction would not trigger the change of control put
right in the notes. This amendment expires on August 31, 2010, if the
closings do not occur on or prior to that date. The net effect of these
contingent agreements is that at the closing of the Watson transaction,
Columbia’s debt will be retired.
“We believe this agreement with Watson Pharmaceuticals represents the
best interests of the Company and our stockholders. It offers a fair
value for our current infertility business, and places our products with
a well-respected pharmaceutical company with a strong presence in and
commitment to women's health, and a clear understanding of the
importance of product lifecycle management. It protects holders of our
common stock against downside risk while preserving for them the
significant upside potential of the preterm birth opportunity. With
stockholder approval of this transaction, Columbia will emerge debt-free
with a stronger balance sheet, ongoing royalty revenues and potential
milestone revenues, significantly lower operating costs, and a clear
path to profitability,” concluded Condella.
Fourth Quarter Financial Results
Net revenues for the fourth quarter of 2009 were $8.5 million compared
to $7.1 million for the fourth quarter of 2008.
Total net revenues from Progesterone Products increased 23% to $6.3
million in the fourth quarter of 2009, as compared to $5.2 million in
the fourth quarter of 2008. Net revenues from domestic CRINONE sales
increased 31%, and foreign CRINONE net revenues increased 24%, from the
fourth quarter of 2008. Net revenues for PROCHIEVE 8%, which the Company
is no longer actively promoting for infertility, were $0.1 million lower
than for the same period in 2008.
Net revenues from Other Products, primarily RepHresh®, Replens®,
and STRIANT, were $2.1 million in the fourth quarter of 2009, compared
to $1.9 million in the fourth quarter of 2008. Our supply agreement with
Lil’ Drug Store Products, Inc., (“LDS”) for RepHresh and Replens expired
on October 31, 2009, and Columbia no longer supplies LDS with RepHresh
and Replens and expects no further revenues from these products.
Gross profit was $6.0 million in the fourth quarter of 2009, compared to
$4.9 million in the fourth quarter of 2008, with gross margins improving
to 71% from 69% last year. The increase is primarily attributable to the
improved sales of higher margin Progesterone Products.
Total operating expenses were $9.5 million in the fourth quarter of
2009, compared to $7.3 million in the prior year period. The increase is
attributable to the following: