Adolor announces $14.6M net product sales of ENTEREG for year ended December 31, 2009

Adolor Corporation (NasdaqGM: ADLR) today reported a net loss of $47.9 million, or $(1.03) per basic and diluted share, for the year ended December 31, 2009, compared to a net loss of $30.1 million, or $(0.65) per basic and diluted share, for the year ended December 31, 2008. The prior year net loss was favorably impacted by a $20.0 million milestone payment received from GlaxoSmithKline (GSK) in the second quarter of 2008 upon the approval of ENTEREG® (alvimopan) by the U.S. Food and Drug Administration.

“2009 was a year of progress for Adolor”

Net product sales of ENTEREG for the year ended December 31, 2009 were $14.6 million compared to $1.2 million for the year ended December 31, 2008, primarily as a result of a full year of sales in 2009 and growth in the number of ordering hospitals.

In addition to its progress with ENTEREG, Adolor has advanced its research and development programs. Highlights include:

• Initiation with Pfizer Inc. of a Phase 2a proof-of-concept study for the two delta opioid receptor agonist compounds, ADL5859 and ADL5747, in patients suffering from osteoarthritis;
• Initiation in January 2010 of a Phase 2a proof-of-concept study of ADL5747 in patients suffering from post-herpetic neuralgia;
• Initiation of clinical testing of ADL7445 in a Phase 1, single ascending dose trial in healthy volunteers that will assess safety and tolerability of the compound; and
• The in-license from Eli Lilly of ADL5945 in September 2009 and the initiation of clinical study of the compound in February 2010.

“2009 was a year of progress for Adolor,” said Michael R. Dougherty, President and Chief Executive Officer. “The highlight of the year was the rebuilding of our clinical development pipeline, with multiple compounds now in development in both our delta opioid receptor agonist and opioid bowel dysfunction (OBD) programs. 2009 also was our first full year of commercial sales of ENTEREG, and we saw growth in the number of ordering hospitals and increasing acceptance of the benefits of ENTEREG within the marketplace.”

Operating Highlights

For the three months ended December 31, 2009, ENTEREG net shipments were $4.9 million. Net product sales of ENTEREG for the fourth quarter of 2009 were $7.5 million, $2.6 million of which represents product shipped to hospitals through September 30, 2009, but not recognized as revenue at the time of shipment under the Company’s previous revenue recognition policy. Effective as of the beginning of the fourth quarter of 2009, the Company began to recognize net product sales upon the shipment of ENTEREG to the hospital. Net product sales for the three months ended December 31, 2008 were $1.1 million.

During 2009, inclusion of ENTEREG on hospital formularies increased by 500 to approximately 800 hospitals as of December 31, 2009, including approximately 500 of the 1,400 hospitals that collectively perform approximately 80% of the bowel resection surgeries in the United States. In addition, hospitals registered under the ENTEREG Access Support and Education (E.A.S.E.™) Program increased during the year. Of the above-noted 1,400 hospitals, approximately 875 hospitals are registered under the E.A.S.E. Program as of December 31, 2009 compared to approximately 500 registered hospitals as of December 31, 2008.

Contract revenues were $22.8 million and $48.2 million for the years ended December 31, 2009 and 2008, respectively. In 2008, contract revenues included a $20.0 million milestone payment received from GSK upon FDA approval of ENTEREG. Contract revenues were $5.5 million and $7.3 million for the three months ended December 31, 2009 and 2008, respectively.

Research and development expenses were $43.9 million and $52.7 million for the years ended December 31, 2009 and 2008, respectively, and were $8.5 million and $13.8 million for the three months ended December 31, 2009 and 2008, respectively. Research and development expenses decreased compared to the 2008 periods due to a reduction in headcount and depreciation expense resulting from the Company’s June 2009 restructuring as well as lower costs of certain clinical studies incurred during 2009 and lower expenses in the Company’s preclinical programs. These decreases were partially offset by higher expenses related to the OBD program, including a $2.0 million payment in the third quarter of 2009 to in-license ADL5945 as a clinical-stage OBD candidate.

Selling, general and administrative expenses were $36.9 million and $31.1 million for the years ended December 31, 2009 and 2008, respectively, and were $10.9 million and $10.5 million for the three months ended December 31, 2009 and 2008, respectively. The increase in 2009 was driven primarily by increased marketing and selling expenses associated with ENTEREG, partially offset by lower general and administrative expenses compared to 2008.

Net loss for the three months ended December 31, 2009 was $7.1 million, or $(0.15) per basic and diluted share, compared to a net loss for the three months ended December 31, 2008 of $15.3 million, or $(0.33) per basic and diluted share.

As of December 31, 2009, the Company had $83.2 million in cash, cash equivalents and short-term investments.

2010 Net Product Sales Guidance

The following guidance provided by Adolor is a projection, based upon numerous assumptions, all of which are subject to certain risks and uncertainties. For a discussion of the risks and uncertainties associated with this forward-looking statement, please see “Forward-Looking Statements” below.

ENTEREG net product sales are expected to be $30 million to $35 million for the year ending December 31, 2010.