Another small cap that I own achieves operating profitability for the first time:
Press Release Source: Connetics Corporation
Connetics Reports Record Product Sales and Profitability
Tuesday October 21, 4:04 pm ET
Company Raises 2003 Revenue Guidance, Introduces Fourth Quarter EPS Guidance
PALO ALTO, Calif., Oct. 21 /PRNewswire-FirstCall/ -- Connetics Corporation (Nasdaq: CNCT - News), a specialty pharmaceutical company that develops and commercializes dermatology products, today reported its first quarter of operating profitability with third quarter 2003 net income of $1.6 million, or $0.05 per share on a fully diluted basis. This compares with a net loss in the 2002 third quarter of $2.5 million, or $0.08 per share.
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Total revenues for the 2003 third quarter rose 45% to $19.7 million, compared with $13.6 million last year. Product sales for the third quarter of 2003 rose 42% to $17.7 million, compared with $12.4 million in the comparable prior-year quarter. OLUX® sales rose 52% to $12.9 million, and Luxiq® sales rose 21% to $4.7 million, both compared with the 2002 third quarter. Contract and royalty revenues for the third quarter of 2003 were $2.1 million, consisting primarily of royalties on product sales, and revenue related to the assignment of relaxin. This compares with contract and royalty revenues of $1.2 million in the 2002 third quarter.
Total operating expenses for the third quarter of 2003 were $17.8 million, compared with $16.6 million in the third quarter of 2002. The increase in expenses primarily was attributable to higher selling, general and administrative costs reflecting additional headcount, partially offset by a decline in research and development costs as the Extina(TM) and Actiza(TM) Phase III clinical programs were concluded.
At September 30, 2003, cash, cash equivalents and investments totaled $109 million.
"We have successfully achieved our goal of profitability, which we believe is an important milestone for the company and validates the value of our products and delivery technologies. It is also a reflection of the commitment and talent of our employees, whose hard work and dedication were instrumental in achieving this milestone," said Thomas G. Wiggans, President and Chief Executive Officer of Connetics. "While our progress is extremely gratifying, much remains to be accomplished. We continue to advance our clinical programs, as evidenced by our recently announced favorable Phase III trial results and plans to file an NDA for Actiza by the end of 2003, and our July filing of an NDA for Extina. In addition, with our strong cash position we will continue to explore opportunities to expand our pipeline, ensuring we are strongly positioned to continue product sales growth and increase value to our shareholders."
Highlights From the Third Quarter Include:
The announcement of the successful completion of the trial for Actiza(TM), an investigational new drug formulation of 1% clindamycin delivered in the Company's proprietary Versafoam(TM) delivery system, as a potential new topical treatment for acne. With this news, the Company is on track with plans to build a strong franchise in acne, the leading category in the U.S. dermatology market. Connetics anticipates filing an NDA with the FDA by year end.
The sale of the relaxin program, to BAS Medical for up to $1 million in licensing and milestone fees, as well as royalties on future product sales. In conjunction with the sale in the third quarter, Connetics received a $100,000 upfront assignment fee and recognized $661,000 in previously deferred revenue relating to previous relaxin license agreements. Connetics discontinued development of relaxin in 2001 to devote all resources to its dermatology business.
Hiring Lincoln Krochmal, M.D. as Executive Vice President, Research and Product Development to lead and manage Connetics' product development efforts with specific responsibilities for pre-clinical research, Connetics' Center for Skin Biology, clinical operations, medical affairs and project management.
Year-to-Date Financial Results
For the nine months ended September 30, 2003, total revenues were $55.0 million, a 45% increase compared with $37.8 million for the prior-year nine- month period. Product sales for the first nine months of 2003 rose 40% to $47.5 million, compared with $34.0 million in the comparable prior-year period. OLUX sales rose 47% to $33.8 million, and Luxiq sales rose 25% to $13.6 million, both compared with the nine months ended September 30, 2002. Contract and royalty revenues for the 2003 year-to-date period were $7.5 million, compared with $3.8 million last year.
Total operating expenses for the first nine months of 2003 were $59.2 million, compared with $51.6 million for the comparable period in 2002, which included a one-time charge of $312,000 related to the Relaxin program and a $2 million in-process R&D charge related to the in-license of Velac. The increase in expenses for 2003 was primarily attributable to increases in R&D costs associated with the greater number of products in clinical testing, including Extina, Actiza and Velac® Gel.
Connetics Raises 2003 Financial Guidance
Connetics is raising guidance for contract and royalty revenues for the remainder of 2003. For the year, contract and royalty revenues are now projected to be approximately $8.5 million, up from prior guidance of $6 million. Product sales are projected to be at the high end of the previously guided range of $64 million to $66 million. Projected full-year 2003 total revenues are projected to be between $72.5 and $74.5 million, up from prior guidance of $70 million to $72 million.
Total sales, general and administrative and research and development expenses for 2003 are now projected to be approximately $70 million, up from the original forecast of $67 million to $69 million.
The Company also expects to report fourth quarter 2003 net income of approximately $900,000 to $1.3 million or $0.03 to $0.04 per share on a fully diluted basis.
Conference Call
Connetics will host a conference call to discuss third quarter results beginning today at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time. During that call, Company executives will update investors on various operating issues, including sales and marketing initiatives, and the status of clinical trials and regulatory matters. To participate in the live call via telephone in the U.S., please call 888-328-2575. To access the call from outside the U.S., please call +706-643-0459. The conference call also will be broadcast live over the Internet by following the Investor Relations link at www.connetics.com. |
