CollaGenex Pharmaceuticals Reports Revenues and Earnings for the First Quarter of 2004
Tuesday April 27, 7:00 am ET
Net Loss Allocable to Common Stockholders of $0.03 per Share Reflects $0.14 per Share One-time Charge Relating to Mutual Settlement
NEWTOWN, Pa.--(BUSINESS WIRE)--April 27, 2004-- CollaGenex Pharmaceuticals, Inc. (Nasdaq:CGPI - News) today reported financial results for the first quarter ended March 31, 2004. Total revenues increased 10% to $13.4 million compared to $12.2 million in the first quarter of 2003. Net product sales were $13.3 million in the first quarter of 2004, a 17% increase over net product sales of $11.4 million recorded in the first quarter of 2003.
During the first quarter of 2004, the Company reported a net loss of $34,000 compared to net income of $1.2 million during the first quarter of 2003. Net loss allocable to common stockholders for the first quarter of 2004 was $434,000, or $0.03 per basic and diluted share, compared to net income of $828,000, or $0.07 per basic and diluted share, in the first quarter of 2003. The net loss in the first quarter of 2004 included a charge of $2.0 million, or $0.14 per basic and diluted share, for a one-time payment to URL/Mutual Pharmaceuticals Company, Inc. ("Mutual") in connection with the settlement of all outstanding litigation between Mutual and CollaGenex announced on April 8, 2004. CollaGenex is entitled to deduct costs incurred in defense of its patents, including this payment, from current and future royalties due to the State University of New York on sales of Periostat®.
"Our first quarter 2004 net product sales and earnings before the one-time Mutual settlement charge were significantly higher than the first quarter of 2003," said Colin W. Stewart, president and chief executive officer of CollaGenex. "The most significant development in the quarter was the successful resolution of the outstanding litigation between CollaGenex and Mutual Pharmaceuticals. This agreement removes the risk of a possible adverse outcome and allows us to move forward and execute our strategic plan in both the dental and dermatology sectors of our business. In addition, we can now move forward aggressively to invest in our R&D portfolio and the long term growth of our company."
During the first quarter of 2004, the Company announced the positive results of a 134-patient Phase III clinical trial that evaluated the efficacy of Periostat to treat rosacea, a disease characterized by inflammatory lesions and erythema (skin redness) affecting the nose, cheeks and forehead. The clinically and statistically significant results showed that the patients who had been administered Periostat during the 16-week course of the trial improved markedly better than the patients on placebo. The data and information generated from this trial form the basis for designing two Phase III trials to evaluate Periostat MR in the treatment of rosacea. These studies are expected to begin during the second quarter of 2004.
CollaGenex recently initiated patient screening and enrollment of a Phase III clinical study to evaluate the efficacy of Periostat MR for the treatment of adult periodontitis. The periodontitis study will enroll more than 200 patients and provides for nine months of dosing with either Periostat MR or placebo and will analyze the changes in clinical attachment level and periodontal pocket depth. The initiation of this study is an important milestone in CollaGenex's efforts to improve patient compliance with its once-daily formulation and extend the patent life of Periostat.
CollaGenex also recently announced the realignment of its sales force into two dedicated units, one focused on dentistry and the other on dermatology. Prior to the reorganization, virtually all of CollaGenex's 115-person pharmaceutical sales force called on both dentists and dermatologists to market the Company's products. After the restructuring, CollaGenex will be covering virtually the same number of doctors with a 56-person dental sales force calling on a highly targeted group of 10,000 high prescribing dentists and a 33-person dermatology sales force calling on the 5,600 dermatologists who are the highest prescribers of acne, rosacea and dermatitis products.
"The realignment of our sales organization into dedicated dental and dermatology sales forces will focus our representatives' time on the top decile prescribers in each therapeutic area. This should increase our yield on each call and maintain sales growth with fewer representatives. It will also significantly reduce our selling, general and administrative cost base," commented Nancy C. Broadbent, CollaGenex's chief financial officer. "The savings from this reorganization, coupled with lower expected legal expenses following our settlement with Mutual, will reduce our 2004 selling, general and administrative expenses, excluding the one-time charge for the Mutual settlement, to approximately $30 million compared to $33.7 million during 2003."
"We believe that our sales force realignment will also facilitate the addition of in-licensed and/or co-promoted products," continued Ms. Broadbent. "Our co-promotion agreements with Merck, Novartis and Sirius Laboratories expired in accordance with their terms or were mutually terminated at the end of 2003, which accounts for the drop in contract revenues from the first quarter of 2003 to the first quarter of 2004. We are in discussions with several potential marketing partners to add new products to our portfolio, and our formation of dedicated dental and dermatology sales forces has been viewed very positively by these potential partners."
CollaGenex continued its commitment to research and development in the first quarter of 2004. "We invested in our pipeline by increasing our R&D spending compared to the first quarter of 2003 by about $366,000, or more than 35%, primarily to fund the clinical development of Periostat MR and the development of products based on our Restoraderm® technology platform. This is consistent with our stated plans to increase our investment in the development of our proprietary product pipeline. We anticipate our total R&D investment during 2004 to be in the range of $8.5 to $9.0 million compared to $5.5 million in 2003," continued Ms. Broadbent.
As previously announced, the License and Supply Agreement with Mutual provides for the shipment during the second quarter of 2004 of an initial stocking order, including a one-time promotional allowance. CollaGenex expects this to affect its quarterly sales patterns and profitability during 2004. Thereafter, the Company anticipates that reported sales will be primarily driven by end-user demand... |
