CPEX reports $1.2M second-quarter net income vs $1.2M net loss year earlier

CPEX Pharmaceuticals, Inc. (NASDAQ: CPEX) today reported financial results for the second quarter ended June 30, 2010. For the quarter CPEX reported revenues of $5.8 million and net income of $1.2 million.

“We are pleased with the consistent quarter-to-quarter growth in royalties on Testim sales”

Second-Quarter Highlights

For the second quarter of 2010 compared to the second quarter of 2009:

• Revenues increased 29% to $5.8 million from $4.5 million.
• Operating expenses decreased 19% to $4.6 million from $5.7 million.
• Net income was $1.2 million compared to a net loss of $1.2 million. Basic and diluted income per common share was $0.46 and $0.43, respectively, compared to a loss of $0.48 per share.

The growth in revenues for the second quarter of 2010 was due to increased royalties on sales of Testim^®. This growth reflected a reported 12% increase in prescriptions for Testim during the second quarter of 2010 compared to the same period in 2009.

General and administrative expenses for the second quarter of 2010 increased $585,000 compared to the second quarter of 2009. The increase was primarily due to a $421,000 increase in advisory and consulting services and a $137,000 increase in employee related expenses, primarily severance costs.

Research and development expenses decreased $1.7 million in the second quarter of 2010 compared to the second quarter of 2009 due to a $1.7 million decrease in clinical trial expenses and $430,000 decrease in employee related expenses. Partially offsetting these decreases was a $421,000 increase in preclinical trial expenses.

As of June 30, 2010, CPEX had unrestricted cash of approximately $14.8 million, working capital of $19.4 million and no debt.

Research and development expenses are expected to vary from period to period. As a result, the results for the three and six months ended June 30, 2010 are not necessarily indicative of the results that may be expected for future periods.

Year-to-Date Highlights

For the first six months of 2010 compared to the same period in 2009:

• Revenues increased 31% to $11.1 million from $8.5 million.
• Operating expenses increased 7% to $10.9 million from $10.3 million.
• Net income was $225,000 compared to a net loss of $1.7 million. Basic and diluted income per common share was $0.09 compared to a loss of $0.67 per share.

The growth in revenues for the first six months of 2010 was due to increased royalties on sales of Testim^®. It has been reported that prescriptions for Testim increased approximately 13% during the first six months of 2010 compared to the same period in 2009.

General and administrative expenses for the first six months of 2010 increased $1.4 million compared to the same period last year. The increase was primarily due to a $1.1 million increase in advisory and consulting services and to an increase in severance costs.

Research and development expenses decreased $717,000 in the first six months of 2010 compared to the same period last year due to a $1.2 million decrease in clinical trial expenses and a $565,000 decrease in employee related expenses. Partially offsetting these decreases was a $1.1 million increase in preclinical trial expenses.

Management Comments

"We are pleased with the consistent quarter-to-quarter growth in royalties on Testim sales," said John A. Sedor, CPEX President and Chief Executive Officer. "In addition, as previously disclosed, the Board of Directors is reviewing strategic alternatives to maximize shareholder value and expects to announce the results of this process during the third quarter of 2010."