Egalet announces business highlights, financial results for first quarter 2015

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May 7 2015Egalet Corporation

Egalet Corporation (Nasdaq: EGLT) ("Egalet"), a fully integrated specialty pharmaceutical company focused on developing, manufacturing and marketing innovative pain treatments, today reported business highlights and financial results for the three months ended March 31, 2015.

First quarter and recent highlights include:

Acquired SPRIX® (ketorolac tromethamine) Nasal Spray and in-licensed OXAYDO™ (oxycodone HCI, USP) tablets for oral use only –CII both approved by the U.S. Food and Drug Administration (FDA);
To fund these transactions, Egalet entered into a $15 million debt financing with Hercules Technology Growth Capital;
Appointed Deanne Melloy as chief commercial officer;
Announced positive top-line results from oral human abuse liability clinical study of abuse-deterrent morphine, Egalet-001;
Provided positive top-line results from 15 and 30 mg bioequivalence study of Egalet-001 compared to MS Contin;
Received supportive feedback from the FDA regarding pursing a bioequivalence (BE) route of approval of Egalet-001 and thus accelerated the new drug application (NDA) filing date to fourth quarter 2015;
Earned $10.0 million milestone payment triggered by the advancement of Shionogi's product candidate, S-718632, an abuse-deterrent, extended-release hydrocodone developed using Egalet's Guardian™ Technology;
Appointed Nicholas Nicolaides, Ph.D. and John Osborn to board of directors; and
Completed $60.0 million offering of convertible senior notes due 2020.

"The first quarter has been a transformative period for Egalet as we have evolved from a development company to a commercial organization with the acquisition of SPRIX and in-license of OXAYDO," said Bob Radie, Egalet's president and chief executive officer. "We have made substantial progress building our commercial capabilities and expect to launch personal promotion of SPRIX in the second quarter followed by OXAYDO in the third quarter. In addition, we have accelerated our timelines with our abuse-deterrent morphine, Egalet-001, designed using our proprietary Guardian™ Technology. Having received positive results from our 15 and 30 mg bioequivalence study combined with supportive feedback from the FDA, we plan to submit an NDA at the end of 2015 following completion of our pivotal 60 mg BE study."

First Quarter of 2015 Financial Results

Cash Position: Cash as of March 31, 2015 was $53.9 million compared to $52.7 million as of December 31, 2014. The net increase in cash of $1.2 million in the first quarter 2015, primarily consisted of cash inflows of $14.6 million in net proceeds from the Hercules term loan and $14.5 million in deferred revenue related to the sale of SPRIX product to our distributor, which was partially offset by cash outflows of $13.3 million for the acquisition of SPRIX and the license of OXAYDO and the net loss for the period of $16.7 million, which was offset by non-cash items of $1.9 million.
Revenue: Revenues increased to $805,000 for the three months ended March 31, 2015 from $256,000 for the three months ended March 31, 2014. The increase in revenues was from our sales of SPRIX and related party revenues that consisted of the amortization of deferred revenue and certain research and development services performed under our collaboration agreement with Shionogi.
Costs of Sales: Cost of sales were $94,000 for the three months ended March 31, 2015 attributable entirely to sales of SPRIX compared to no cost of sales in 2014 due to no product sales.
G&A Expenses: General and administrative expenses increased to $4.9 million for the three months ended March 31, 2015 compared to $3.3 million for the same period in 2014. This increase was primarily attributable to an increase in employee compensation of $1.1 million as we continue to grow our U.S. operations and $1.0 million in fees associated with the acquisition of SPRIX. These increases were offset by a decrease in stock compensation expense of $325,000.
S&M Expenses: Sales and marketing expenses were $1.6 million for the three months ended March 31, 2015 related to the establishment of the sales and marketing departments in the United States and pre-launch activities for SPRIX and OXAYDO compared to minimal sales and marketing costs in the same period in 2014.
R&D Expenses: Research and development expenses were $10.3 million for the three months ended March 31, 2015 compared to $2.8 million for the same period in 2014. This increase was driven primarily by an increase in our development costs for Egalet-002 of $3.5 million, an increase in our development costs for Egalet-001 of $2.4 million and an increase in employee compensation of $243,000.
Interest Expense: Interest expense decreased to $451,000 for the three months ended March 31, 2015 from $7.1 million for the same period in 2014. The decrease was primarily attributable to the $7.0 million in additional interest expense we recognized in 2014 related to the accretion of our premium that was recorded in connection with our August 2013 convertible debt issuance. Interest expense for the three months ended March 31, 2105 consisted entirely of interest on the Hercules debt financing.
Net Loss: Net loss increased to $16.7 million, or a loss of $1.02 per share, for the three months ended March 31, 2015 from a net loss of $12.9 million, or a loss of $1.34 per share, for the three months ended March 31, 2014.

Upcoming Milestones

Second quarter

Complete build out of commercial organization including 50- to 60-person sales force;
Begin promoting SPRIX to target healthcare professionals;
Initiate Phase 3 program for Egalet-002;
Complete Category 3 oral human abuse liability study of Egalet-002;

Third quarter