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8-K - FORM 8-K - Pernix Sleep, Inc. | c13356e8vk.htm |
Exhibit 99.1
Contacts: | Tran Nguyen / CFO Somaxon Pharmaceuticals, Inc. (858) 876-6500 Rob Whetstone PondelWilkinson, Inc. (310) 279-5963 |
SOMAXON REPORTS FINANCIAL RESULTS FOR FULL YEAR
AND FOURTH QUARTER ENDED DECEMBER 31, 2010
AND FOURTH QUARTER ENDED DECEMBER 31, 2010
Conference call scheduled today at 4:30 p.m. ET (1:30 p.m. PT);
Simultaneous webcast at http://investors.somaxon.com/eventdetail.cfm
Simultaneous webcast at http://investors.somaxon.com/eventdetail.cfm
SAN
DIEGO, CA March 3, 2011 Somaxon Pharmaceuticals, Inc. (Nasdaq: SOMX), a specialty
pharmaceutical company, today announced financial results for the full year and fourth quarter
ended December 31, 2010.
During 2010, we achieved our key corporate objectives that allowed us to successfully transition
from a development stage organization to a commercial specialty pharmaceutical company, including
the FDA approval of Silenor®, the commercial launch of Silenor alongside our primary care
co-promotion partner, Procter & Gamble, and strengthening our balance sheet, said Richard W.
Pascoe, Somaxons President and Chief Executive Officer. In 2011, we intend to build upon our
progress as we anticipate growing Silenor revenue, leveraging our commercial infrastructure to
broaden our business, extending the Silenor franchise and effectively managing our financial and
other corporate resources, with the goal of building a sustainable specialty pharmaceutical
business dedicated to delivering long-term shareholder value.
Recent Highlights
| On February 22, 2011, Somaxon announced that it had received from the U.S. Patent and Trademark Office a Notice of Allowance for claims in U.S. patent application no. 11/781,165, which significantly strengthened the Silenor intellectual property portfolio. This patent application generally relates to dosing Silenor at least three hours after a meal to promote faster onset of action and reduce the potential for next-day residual sedation. Because this food effect is described in the Silenor prescribing information, Somaxon will list the patent in the Orange Book once it is issued. | ||
| On February 8, 2011, Somaxon announced that based upon positive commercial trends in the fourth quarter of 2010, it had engaged its contract sales force partner Publicis Touchpoint Solutions, Inc. to recruit and deploy for Somaxon an additional 35 sales representatives that will exclusively promote Silenor. Somaxon expects the majority of these additional sales representatives to be deployed in the field by the end of the first quarter of 2011. | ||
| Somaxon has come to agreement with CVS/Caremark PCS Health, Blue Shield of California and Prime Therapeutics for unrestricted Tier 3 formulary placement of Silenor, and with the U.S. Department of Defense/TRICARE for Tier 2 formulary placement of Silenor. The CVS/Caremark entities and Prime Therapeutics are pharmacy benefit managers that manage commercial healthcare plans covering approximately 50 million lives and 2 million lives, respectively, Blue Shield of California covers approximately 3 million lives and TRICARE covers approximately 10 million lives. Silenor is currently reimbursed on other commercial plans representing approximately an additional 145 million lives, with final formulary positioning subject to final negotiation with such plans. |
| On February 8, 2011, Somaxon announced that it had obtained from Comerica Bank a two-year, revolving line of credit for up to $15 million for working capital needs and general corporate purposes. To date no amount of the revolving line of credit has been drawn down. | ||
| On February 3, 2011, Somaxon announced that it strengthened its senior management team through the hiring of Robert Cutler as Vice President of Business Development, responsible for driving Somaxons corporate growth strategy. |
Full Year and Fourth Quarter of 2010 Financial Results
For the full year of 2010, Somaxon recorded shipments of Silenor to its wholesale distributors
totaling $6.0 million, of which $1.4 million was recognized as net product sales. For the fourth
quarter of 2010, shipments of Silenor to wholesale distributors totaled $0.4 million and Somaxon
recognized net product sales of $1.3 million. In accordance with U.S. generally accepted
accounting principles, Somaxon defers revenue recognition of the amounts of Silenor shipments to
wholesale distributors that are not yet estimated to be dispensed through patient prescriptions.
As of December 31, 2010, deferred revenue totaled $3.5 million and is reported net of $0.8 million
of associated discounts and allowances on Somaxons balance sheet.
Cost of sales was $0.2 million for both the full year and the fourth quarter of 2010, which
represented the costs of product dispensed through prescriptions. Gross profit was $1.1 million
for both the full year and the fourth quarter of 2010. Expressed as a percentage of net product
sales, gross margin was 82.3% and 82.1% for the full year and the fourth quarter of 2010,
respectively.
Total operating expenses for the full year of 2010 were $40.1 million, including $6.7 million of
non-cash, share-based compensation expense, compared with $14.2 million, including $6.2 million of
non-cash, share-based compensation expense, for the full year of 2009. Total operating expenses
for the fourth quarter of 2010 were $17.3 million, including $1.4 million of non-cash, share-based
compensation expense, compared with $1.9 million, including $0.6 million of non-cash, share-based
compensation expense, for the fourth quarter of 2009. These increases in total operating expenses
are primarily due to an increase in selling, general and administrative (SG&A) expenses relating to
commercialization activities for Silenor.
SG&A expense was $36.6 million and $16.7 million for the full year and the fourth quarter of 2010,
respectively, compared to $10.9 million and $1.1 million for the full year and the fourth quarter
of 2009, respectively. These increases reflected the costs associated with the commercial launch
of Silenor and an increase in salary and personnel-related expenses due to an increase in overall
headcount.
Research and development expense was $3.6 million and $0.6 million for the full year and the fourth
quarter of 2010, respectively, compared to $4.3 million and $0.8 million for the full year and the
fourth quarter of 2009, respectively.
For the full year of 2010, net loss was $38.8 million, or $1.16 per share, compared with $14.4
million, or $0.69 per share, for the full year of 2009. For the fourth quarter of 2010, net loss
was $16.0 million, or $0.42 per share, compared with $1.9 million, or $0.08 per share, for the
fourth quarter of 2009.
At December 31, 2010, Somaxon had cash, cash equivalents and short-term investments totaling $54.8
million, compared to $5.2 million at December 31, 2009. The company believes, based on its current
operating plan, that its cash, cash equivalents and short-term investments as of December 31, 2010
will be sufficient to fund its operations through at least the first quarter of 2012.
Financial Guidance for Full Year of 2011
For the full year of 2011, total operating expense is expected to be approximately $78 to $83
million, including non-cash, share-based compensation expense. Non-cash, share-based compensation
expense is expected to be approximately $4 million. The projected increase compared to the full
year of 2010 primarily relates to expected increases in SG&A expense to support a full year of
commercial operations.
Actual financial results for the full year of 2011 could vary based upon many factors, including
but not limited to the rate of growth of Silenor sales and the actual cost of commercial
activities.
Conference Call Information and Forward-Looking Statements
On Thursday, March 3, 2010, Somaxon will conduct a conference call with interested parties
beginning at 4:30 p.m. ET (1:30 p.m. PT) to discuss results and highlights of the fourth quarter
and full year ended December 31, 2010.
The conference call will be available to interested parties through a live audio Internet broadcast
at http://investors.somaxon.com/eventdetail.cfm. The call will also be archived and accessible at
this site for approximately two weeks. Alternatively, callers may participate in the conference
call by dialing (877) 941-8609 (domestic) or (480) 629-9820 (international), conference call ID
4415379. A telephonic replay will be available for approximately two weeks following the
conclusion of the call by dialing (800) 406-7325 (domestic) or (303) 590-3030 (international), and
entering passcode 4415379.
Discussion during the conference call may include forward-looking statements regarding such topics
as, but not limited to, the companys commercial activities relating to Silenor, prescription
trends, the companys financial status and performance, including its 2011 financial guidance, the
expected issuance of a new patent, and any comments the company may make about its future plans or
prospects in response to questions from participants on the conference call.
To be added to Somaxons e-mail list, please visit http://bit.ly/Somaxon-email-list.
About Somaxon Pharmaceuticals, Inc.
Headquartered in San Diego, CA, Somaxon Pharmaceuticals, Inc. is a specialty pharmaceutical company
focused on the in-licensing, development and commercialization of proprietary branded products and
late-stage product candidates to treat important medical conditions where there is an unmet medical
need and/or high-level of patient dissatisfaction, currently in the central nervous system
therapeutic area. Somaxons product Silenor, now available by prescription in the United States,
is indicated for the treatment of insomnia characterized by difficulty with sleep maintenance.
For more information, please visit the companys web site at www.somaxon.com.
Safe Harbor Statement
Somaxon cautions readers that statements included in this press release and the conference call
that are not a description of historical facts are forward-looking statements. For example,
statements regarding commercial activities and plans regarding Silenor, the revenues and the growth
of the revenues from sales of Silenor, Somaxons and Publicis ability to effectively recruit
additional sales representatives and the timing thereof, Somaxons ability to broaden its business,
estimates regarding product prescriptions and returns, and the expected issuance of a new patent
are forward-looking statements. The inclusion of forward-looking statements should not be regarded
as a representation by Somaxon that any of its plans will be achieved.
Actual results may differ
materially from those set forth in this release due to the risks and uncertainties inherent in
Somaxons business, including, without limitation, Somaxons ability to successfully commercialize
Silenor; Somaxons reliance on its co-promotion partner, Procter & Gamble, and its contract
sales force provider, Publicis, for critical aspects of the commercial sales process for Silenor;
the performance of Procter & Gamble and Publicis and their adherence to the terms of their
contracts with Somaxon; the ability of Somaxons sales management personnel to effectively manage
the sales representatives employed by Publicis; Somaxons ability to comply with the covenants
under the Comerica secured loan agreement; the potential for an event of default under the secured
loan agreement, and the corresponding risk of acceleration of repayment and potential foreclosure
on the assets pledged to secure the line of credit; the scope, validity and duration of
patent protection and other intellectual property rights for Silenor; whether the approved label
for Silenor is sufficiently consistent with such patent protection to provide exclusivity for
Silenor; the ability of Somaxon to ensure adequate and continued supply of Silenor to successfully
meet anticipated market demand; Somaxons ability to successfully enforce its intellectual property
rights and defend its patents, including any developments relating to the recent submission of
abbreviated new drug applications for generic versions of Silenor 3 mg and 6 mg and related patent
litigation; the possible introduction of generic competition of Silenor; Somaxons
ability to raise sufficient capital to fund its operations, and the impact of any such financing
activity on the level of its stock price; the impact of any inability to raise sufficient capital
to fund ongoing operations, including any patent infringement litigation; Somaxons ability to
operate its business without infringing the intellectual property rights of others; the market
potential for insomnia treatments, and Somaxons ability to compete within that market; inadequate
therapeutic efficacy or unexpected adverse side effects relating to Silenor that could adversely
affect commercialization, or that could result in recalls or product liability claims; other
difficulties or delays in development, testing, manufacturing and marketing of Silenor; the timing
and results of post-approval regulatory requirements for Silenor, and the FDAs agreement with
Somaxons interpretation of such results; and other risks detailed in Somaxons prior press
releases as well as in its periodic filings with the Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak
only as of the date hereof. All forward-looking statements are qualified in their entirety by this
cautionary statement, and Somaxon undertakes no obligation to revise or update this press release
to reflect events or circumstances after the date hereof. This caution is made under the safe
harbor provisions of Section 21E of the Securities Exchange Act of 1934.
# # #
FINANCIAL TABLES FOLLOW
SOMAXON PHARMACEUTICALS, INC.
SUMMARY STATEMENTS OF OPERATIONS
(Unaudited)
SUMMARY STATEMENTS OF OPERATIONS
(Unaudited)
Quarter ended December 31, | Year ended December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
Net product sales |
$ | 1,344 | $ | | $ | 1,382 | $ | | ||||||||
Cost of sales |
241 | | 244 | | ||||||||||||
Gross profit |
1,103 | | 1,138 | | ||||||||||||
Operating expenses |
||||||||||||||||
Selling, general and administrative |
16,702 | 1,081 | 36,579 | 10,874 | ||||||||||||
Research and development |
625 | 840 | 3,566 | 4,337 | ||||||||||||
License fees |
| | | (999 | ) | |||||||||||
Total operating expenses |
17,327 | 1,921 | 40,145 | 14,212 | ||||||||||||
Loss from operations |
(16,224 | ) | (1,921 | ) | (39,007 | ) | (14,212 | ) | ||||||||
Interest and other income |
252 | 4 | 262 | 30 | ||||||||||||
Interest and other (expense) |
(55 | ) | (2 | ) | (68 | ) | (261 | ) | ||||||||
Net loss |
$ | (16,027 | ) | $ | (1,919 | ) | $ | (38,813 | ) | $ | (14,443 | ) | ||||
Basic and diluted net loss per share |
$ | (0.42 | ) | $ | (0.08 | ) | $ | (1.16 | ) | $ | (0.69 | ) | ||||
Shares used to calculate net loss per share |
38,604 | 24,138 | 33,593 | 20,952 |
SOMAXON PHARMACEUTICALS, INC.
SUMMARY BALANCE SHEETS
(Unaudited)
SUMMARY BALANCE SHEETS
(Unaudited)
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
(in thousands) | ||||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 21,008 | $ | 5,165 | ||||
Short-term investments |
33,809 | | ||||||
Accounts receivable, net |
5,584 | | ||||||
Inventory |
991 | | ||||||
Other current assets |
1,882 | 409 | ||||||
Total current assets |
63,274 | 5,574 | ||||||
Property and equipment, net |
755 | 777 | ||||||
Intangibles, net |
1,102 | | ||||||
Other assets |
| 60 | ||||||
Total assets |
$ | 65,131 | $ | 6,411 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities |
||||||||
Accounts payable |
$ | 1,709 | $ | 355 | ||||
Accrued liabilities |
5,699 | 1,815 | ||||||
Deferred revenue |
3,459 | | ||||||
Total current liabilities |
10,867 | 2,170 | ||||||
Total stockholders equity |
54,264 | 4,241 | ||||||
Total liabilities and stockholders equity |
$ | 65,131 | $ | 6,411 | ||||