POZEN Inc. (NASDAQ: POZN), a pharmaceutical company committed to transforming medicine that transforms lives, today announced results for the fourth quarter and year ended December 31, 2013.
2013 and Recent Corporate Highlights
In September 2013, POZEN and Sanofi US announced the signing of an exclusive license agreement for the commercialization of PA8140/PA32540. Under the terms of the agreement, Sanofi US will have exclusive rights to commercialize all PA combinations that contain 325 mg or less of enteric-coated aspirin in the United States. POZEN received an upfront payment of $15 million and will be eligible for pre-commercial milestone payments of up to $20 million and other future milestone payments and royalties on product sales. Sanofi US has responsibility for all sales, marketing, ongoing manufacturing and future development for the licensed PA products in the U.S. POZEN retains responsibility for obtaining approval of the NDA, after which time POZEN will transfer the NDA to Sanofi US.
In November 2013, AstraZeneca AB and Horizon Pharma USA, Inc. (NASDAQ: HZNP) announced that they entered into an agreement for Horizon to acquire the U.S. rights for VIMOVO® (naproxen / esomeprazole magnesium) delayed release tablets. Under the terms of the agreement, POZEN will continue to receive a 10% royalty on net sales of products sold in the United States, with guaranteed annual minimum royalty payments of $5 million in 2014, and $7.5 million each year thereafter, provided that the patents owned by POZEN which cover VIMOVO are in effect and no generic forms of VIMOVO are on the market. Also under the agreement, Horizon has assumed AstraZeneca's right to lead the on-going Paragraph IV litigation for VIMOVO and will assume all patent-related defense costs relating to such litigation, including reimbursement for a specified amount of the cost of counsel retained by POZEN. AstraZeneca will continue to have rights to commercialize VIMOVO outside of the United States.
The POZEN Board of Directors declared a special cash distribution of $1.75 per share to all stockholders of record as of the close of business on December 11, 2013, and payment was made on December 30, 2013. This distribution represented a surplus of corporate cash and was treated as a return of capital to stockholders.
Results from POZEN's Phase 1 study, PA10040-101, demonstrated that PA10040, POZEN's proprietary combination of aspirin (100 mg) and omeprazole (40 mg), had comparable bioavailability, and is bioequivalent to a European Union (E.U.) reference listed enteric-coated (EC) aspirin (100 mg). The 100 mg dose of aspirin is most commonly used in Europe and in other ex-U.S. regions.
Q4 2013 global net sales of VIMOVO by AstraZeneca, as defined under our agreement, were $25 million, up 36% vs. Q4 2012 and up 9% from Q3 2013. POZEN earned a royalty of $1.7 million in Q4 2013. Total 2013 net sales of VIMOVO were $91 million, up 42% from 2012, and POZEN earned a royalty of $6.3 million, up 30% year on year. We anticipate continued growth in VIMOVO sales and royalties this year.
Fourth Quarter Results
For the fourth quarter of 2013, POZEN reported total revenue of $4.7 million, resulting from $1.7 million VIMOVO royalty and $3.0 million from the amortization of the $15 million upfront fee for the licensing of PA. The upfront payment is being amortized over fifteen months starting in September 2013. For the fourth quarter of 2012, the Company reported total revenue of $1.4 million of VIMOVO royalty.
Operating expenses for the fourth quarter of 2013 totaled $6.9 million, as compared to $7.5 million for the comparable period in 2012. The decrease in operating expenses in the fourth quarter of 2013 was primarily a result of lower development and pre-commercialization costs for PA.
The Company reported a net loss of $(2.2) million, or $(0.07) loss per share for the fourth quarter of 2013, compared to net loss of $(6.1) million, or $(0.20) per share on a diluted basis, for the fourth quarter of 2012.
Twelve Month Results
For the twelve months ended December 31, 2013, POZEN reported revenue of $10.3 million compared to $5.3 million in 2012, up 93% year over year. The 2013 revenue is comprised of $6.3 million royalty revenue from sales of VIMOVO and $4.0 million amortization of the PA upfront licensing fee. The 2012 revenue is primarily royalty revenue from sales of VIMOVO.
Operating expenses for the twelve months ended December 31, 2013 were $27.1 million compared to $30.9 million in the same period in 2012. The decrease in operating expenses was primarily a result of lower PA32540 development and pre-commercialization costs, partially offset by PA deal related costs and higher intellectual property litigation costs.
For the full year of 2013, the Company reported a net loss of $(16.7) million, or $(0.55) per share compared to net loss of $(25.3) million, or $(0.84) per share on a diluted basis, for the same period in 2012.
At December 31, 2013, cash and cash equivalents totaled $32.8 million, after payment of the $53.6 million distribution on December 30, 2013.
2014 Strategic Direction
The Company was pleased to return $1.75 per share of surplus corporate cash to shareholders in 2013. For 2014, the Company's areas of strategic focus are: obtaining FDA approval for PA8140/PA32540; transitioning all licensed know-how relating to PA8140/PA32540 in the United States and fulfilling all contractual obligations to Sanofi US; completing study PA10040-102, an additional Phase 1 pharmacodynamics study; preparing the regulatory filing document for PA product candidates in the European Union; finding partners for the PA asset in ex-U.S. territories; and controlling expenses. As part of controlling expenses, we have reduced our R&D staff and other costs and in the future will continue to reduce staff not required to support our ongoing business activities. Our board of directors and management team continue to explore potential ways to return value to our shareholders, including future cash distributions when we accumulate surplus cash as a result of receiving milestones and royalties from our commercial partners.