MiddleBrook Pharmaceuticals, Inc. (Nasdaq: MBRK) today announced its 2009 fourth quarter and full-year results, that it is further restructuring to reduce expenses, and that it is evaluating strategic alternatives to maximize shareholder value.
“On behalf of the Company and the entire board of directors, I’d like to thank John for taking on this challenge and building MOXATAG to its current level of over 6,500 prescriptions per week during very tough economic times.”
Reduction in Force:
MiddleBrook announced that effective Monday, March 15, 2010, it will be eliminating its field sales force and significantly reducing its corporate staff to preserve cash resources as it explores its strategic options. The Company will rely on its partnership with DoctorDirectory.com, Inc. for continued MOXATAG® promotion through DoctorDirectory.com’s virtual marketing solution, IncreaseRx®, in its efforts to commercialize and gain market acceptance of MOXATAG.
As part of the reduction in force, John Thievon, the Company’s current president and chief executive officer and a director, announced his resignation effective Monday, March 15, 2010, to further reduce operating expenses. David Becker, the Company’s current chief financial officer, will assume the role of acting president and chief executive officer.
R. Gordon Douglas, M.D., the Company’s chairman of the board, said, “On behalf of the Company and the entire board of directors, I’d like to thank John for taking on this challenge and building MOXATAG to its current level of over 6,500 prescriptions per week during very tough economic times.” Dr. Douglas further stated, “John has committed to being available to assist the Board and management during the strategic process to help ensure the best value for the Company and its stakeholders.”
Strategic Alternatives:
Additionally, MiddleBrook has engaged Broadpoint Gleacher Securities Group, Inc. as its financial advisor to assist the board of directors in identifying and evaluating strategic alternatives for the Company, including a possible merger or sale of the Company. The board of directors has not set a definitive timetable for the completion of its evaluation, and there can be no assurance that the process will result in a transaction. The Company does not intend to disclose developments regarding this process unless and until the board of directors has approved a specific transaction.
Financial Results:
MiddleBrook reported fourth quarter 2009 revenue of $2.6 million, compared to revenue of $1.7 million in the fourth quarter of 2008. Revenue for the full year of 2009 totaled $14.8 million, a 67.7% increase compared to the prior year revenue of $8.8 million. The quarter-over-quarter and full-year increases in revenue are primarily driven by sales of MOXATAG, which MiddleBrook launched in March 2009.
Net loss was $15.8 million for the 2009 fourth quarter, compared to a net loss of $11.6 million in the fourth quarter of 2008. Net loss per share during the fourth quarter of 2009 was $0.18, compared to a net loss per share of $0.13 in the 2008 fourth quarter. Net loss was $62.3 million for 2009, compared to a net loss attributable to MiddleBrook of $41.6 million for 2008. Net loss per share for the full year of 2009 was $0.72, compared to a net loss of $0.64 per share for 2008. The number of shares used in the 2009 fourth quarter and full-year per share calculation was 86.5 million. The number of shares used in the 2008 fourth quarter per share calculation was 86.4 million, while the 2008 full-year per share calculation included 65.2 million and the weighted-average impact of the 30.3 million new shares purchased by EGI in September 2008. As a result of the Company’s recurring operating losses and management’s substantial doubt about the Company’s ability to continue as a going concern for at least 12 months following the balance sheet date of Dec. 31, 2009, the Company’s auditors have included a going concern explanatory paragraph in their audit opinion for the year ended Dec. 31, 2009.
The Company reported cost of goods sold in the amount of $0.7 million in the 2009 fourth quarter, compared to $0.3 million in the 2008 fourth quarter. Cost of goods sold for the full year of 2009 was $2.3 million compared to $1.6 million in the prior year. The higher cost of goods sold is due to higher sales in 2009.
Research and development (R&D) expenses in the 2009 fourth quarter were $0.4 million, compared to 2008 fourth quarter R&D expenses of $4.8 million. The decrease in the 2009 fourth quarter R&D expenses is primarily due to the reclassification of all personnel and related expenses from R&D to Selling, general and administrative (SG&A) after the Company indefinitely delayed the development of its KEFLEX PULSYS product candidate following the FDA’s response to the Company’s Special Protocol Assessment for the KEFLEX PULSYS development program. The 2008 fourth quarter also included expenses associated with the Company’s decision to vacate portions of its R&D facilities in Maryland. R&D expense was $5.3 million for the full year of 2009, compared to $19.1 million in the prior year. The decrease in full-year R&D expenses was primarily due to the reclassification of all personnel and related expenses from R&D to SG&A as detailed above and a reduction in R&D activities, combined with decreased depreciation and lower facility costs after vacating portions of the Company’s R&D facilities in 2008.
SG&A expenses were $17.2 million in the fourth quarter of 2009, compared to $8.7 million in the 2008 fourth quarter. The increase in the 2009 fourth quarter SG&A expenses was primarily driven by an increase in employee-related expenses, such as salaries, benefits and stock compensation, combined with marketing costs related to the marketing of MOXATAG and the addition of internal costs to SG&A which had previously been classified as R&D. SG&A expenses for the full year of 2009 were $69.9 million, up from $24.4 million in 2008. The year-over-year increase is due primarily to increased personnel and marketing expenses for MOXATAG.
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