First Quarter 2011 Highlights:
- Qutenza® (capsaicin) 8% patch purchased by 321 institutions, up from 239 in Q4 2010
- Revenue of $3.2 million including $0.6 million U.S. Qutenza product revenue
- Operational focus enables lower planned expense growth in 2011
- Qutenza sales initiated in Poland and Czech Republic by Astellas
- NGX-1998 Phase 2 clinical trial continues in postherpetic neuralgia (PHN) patients surpassing 65% enrollment
NeurogesX, Inc. (Nasdaq: NGSX), a biopharmaceutical company focused on developing and commercializing novel pain management therapies, today reported results for its first quarter ended March 31, 2011.
Anthony DiTonno, President and CEO, commented, "We are now one full year into the U.S. launch of Qutenza. We made progress in our goal of creating awareness of Qutenza among our target physician groups and in establishing a base of Qutenza treatment sites from which to build. As we move into our second year post launch, we are focusing our sales organization on growing the number of sites of care that can optimally utilize Qutenza and building patient awareness and increased physician usage."
Qutenza Launch Metrics
NeurogesX is executing the U.S. launch strategy for Qutenza by establishing a national network of Qutenza referral sites (QPROs) and continuing to expand marketing activities to reach patients treated in the primary care setting. Key Qutenza launch metrics as of March 31, 2011 were as follows:
- Qutenza on formulary or available without restriction in 137 institutions as of March 31, 2011, up from 102 at year end 2010
- 321 institutions purchased Qutenza through first quarter 2011, an increase of 34% from 239 in the fourth quarter 2010
- Percentage of repeat institutional customers grew to 60% of all institutional customers ordering in the first quarter 2011, up from 46% in fourth quarter 2010
- The cumulative number of private physician customers that have ordered Qutenza rose to 221 through March 31, 2011, up from 159 at December 31, 2010
- Training activity continues with 1,535 physicians and institutions trained by March 31, 2011, up from 1,127 at December 31, 2010
First Quarter 2011 Results
Total revenue for the first quarter ended March 31, 2011 was $3.2 million, which consisted of $2.6 million in collaboration revenue, primarily from the amortization of upfront license fees received under the Astellas Agreement, and $0.6 million of Qutenza product sales.
During the three months ended March 31, 2011, the Company recorded sales of Qutenza to its specialty distribution and specialty pharmacy customers totaling $0.6 million. Under the Company's revenue recognition policy, the Company recognized revenue during the three months ended March 31, 2011 totaling $0.6 million.
Due to the limited history of product returns and cash collections, NeurogesX recognizes revenue at the later of the time the product is shipped by its customers to healthcare professionals and the date of cash collection. As of March 31, 2011, the Company had $0.6 million of deferred product revenue. Deferred revenue is reported net of associated cost of goods sold on the Company's balance sheet. Of the deferred revenue total, $0.4 million was sold through to end users (i.e., physicians, clinics and hospitals) and the deferral resulted from cash payments not yet being due under the payment terms, while $0.2 million represented deferral of sales into the Company's distribution channel, recognition of which will be based ultimately upon sales of those units to end users.
Cost of goods sold for the first quarter 2011 totaled $0.1 million. Cost of goods sold includes product costs, fixed monthly charges related to the Company's third party logistics provider for warehousing, shipping activities, and royalty obligations due to intellectual property licensors.
Research and development expenses for the first quarter 2011 were $4.0 million, compared to $2.1 million in the year ago period. The year-over-year change included increases of $0.9 million associated with the NGX-1998 Phase 2 study and $0.3 million of non-clinical research and development for NGX-1998. In the most recent period the Company recorded a $0.3 million increase in costs related to the planned supplemental NDA for Qutenza in the HIV-AN patient population.
Selling, General and Administrative (SG&A) expenses for the first quarter 2011 were $10.3 million, up from $8.8 million in the first quarter 2010. In the first quarter of 2011, $1.8 million of the increase was due to a full quarter of salary and related expenses for the Company's sales organization, while in 2010 the sales organization staffing occurred late in the quarter, and $0.9 million related to marketing events held in the first quarter of 2011. These increases were partially offset by $1.2 million in lower marketing materials costs and $0.3 million in lower training costs, as the Company incurred significant pre-launch costs for Qutenza in the first quarter of 2010.
Net loss for the first quarter 2011 was $13.4 million, or $0.75 per share, compared to a net loss of $9.2 million, or $0.52 per share, for the first quarter 2010.
Cash, cash equivalents and short-term investments were $34.7 million at March 31, 2011, compared to $46.8 million at December 31, 2010.
Stephen Ghiglieri, EVP, COO and CFO, commented, "In the last month, we reassessed our spending levels and narrowed our focus in a number of operational areas including a refocusing of our sales organization on larger institutions and large private practices who can become QPRO sites. These initiatives allowed us to moderate planned spending growth and as a result, we have reduced our planned operating expenses for 2011 by approximately 14% from prior guidance. Our 2011 operating expenses are now expected to be in the range of $50 million to $53 million. Our primary focus remains on ensuring the continued adoption of Qutenza, recognizing the longer term nature of the investments necessary for success. Other key activities include submission of a supplemental NDA for Qutenza for the management of neuropathic pain associated with HIV-associated neuropathy (HIV-AN) as well as advancing the clinical development of NGX-1998, our topical liquid formulation containing a high concentration capsaicin. With our reduced expenses and continued focus on our key operational initiatives, we continue to pursue opportunities to increase our capital."