Somaxon Reports Financial Results for Full Year and Fourth Quarter Ended December 31, 2011
Conference call scheduled today at 4:30 p.m. ET (1:30 p.m. PT);
Simultaneous
webcast at http://investors.somaxon.com/eventdetail.cfm
SAN DIEGO--(BUSINESS WIRE)--
Somaxon Pharmaceuticals, Inc. (Nasdaq: SOMX), a specialty pharmaceutical
company, today reported financial results for the full year and fourth
quarter ended December 31, 2011.
"While Silenor revenue did not achieve its full potential in 2011, we
were able to grow both prescriptions and wholesaler orders in each
quarter of the year," said Richard W. Pascoe, Somaxon's President and
Chief Executive Officer. "In the fourth quarter, we changed our
commercial strategy in order to significantly reduce our operating
expenses while continuing to focus on high-value Silenor prescribers. In
January of this year, we re-trained and re-deployed a more focused and
streamlined sales force resulting in the retention of over 85 percent of
our existing total prescriptions. Going forward, we intend to leverage
the promotional sensitivity of Silenor to continue to generate
prescriptions while managing our operating expenses in an effort to
drive towards positive cash flow and profitability."
"We will also continue to work with our strategic advisor, Stifel
Nicolaus Weisel, to evaluate strategic alternatives with the goal of
fully leveraging Silenor for the benefit of our stockholders," continued
Mr. Pascoe. "In addition, we will continue to defend our intellectual
property position for the product in an effort to protect Silenor's
market exclusivity."
Recent Highlights
-
On February 22, 2012, Somaxon announced that its licensee Paladin Labs
Inc. has filed a New Drug Submission (NDS) that has been accepted for
review by Health Canada for Silenor for the treatment of insomnia. If
approved, Silenor is expected to be the first and only prescription
product approved for the treatment of insomnia in Canada that is not a
controlled substance. Once Silenor is commercialized in Canada and/or
the other territories under the licenses to Paladin, Somaxon will be
eligible to receive sales-based milestone payments of up to US$128.5
million as well as a tiered double-digit percentage of net sales. To
date, the Canadian prescription sleep aid market has consisted mainly
of zopiclone, an older medication that despite its limitations, has
driven the market to exceed $87 million in 2011, an increase of 10%
vs. 2010.
-
In October 2011, Somaxon announced that in a meeting it and Procter &
Gamble (P&G) had with the U.S. Food & Drug Administration (FDA)
relating to the over-the-counter (OTC) development program for
Silenor, the FDA provided clinical and regulatory guidance that the
company believes provides a clear path forward toward an OTC version
of Silenor. Through the period ending on March 31, 2012, Somaxon and
P&G are working together to evaluate the potential to develop and
commercialize an OTC version of Silenor, including conducting market
research on a desired product profile at P&G's expense. If P&G
notifies Somaxon of its interest in negotiating for rights to an OTC
version of Silenor at any time prior to March 31, 2012, P&G will have
the exclusive right to negotiate with Somaxon relating to such rights
for 120 days from Somaxon's receipt of the notice, or such longer
period as may be mutually agreed by Somaxon and P&G.
Full Year and Fourth Quarter of 2011 Financial Results
For the full year of 2011, net product sales for Silenor was $16.2
million, compared to net product sales of $1.4 million for the full year
of 2010. For the fourth quarter of 2011, net product sales of Silenor
was $3.9 million, compared to net product sales for the fourth quarter
of 2010 of $1.3 million.
Total operating costs and expenses for the full year of 2011 were $73.5
million, including $5.2 million of non-cash, share-based compensation
expense, compared with $40.4 million, including $6.7 million of
non-cash, share-based compensation expense, for the full year of 2010.
Total operating costs and expenses for the fourth quarter of 2011 were
$14.2 million, including $1.0 million of non-cash, share-based
compensation expense, compared with $17.6 million, including $1.4
million of non-cash, share-based compensation expense, for the fourth
quarter of 2010. The increase in operating costs and expenses in 2011 as
compared to 2010 was primarily due to an increase in selling, general
and administrative (SG&A) expense relating to commercial activities for
Silenor in 2011. The decrease in operating costs and expenses during the
fourth quarter of 2011 as compared to the comparable prior year period
was primarily due to the reduction of the company's marketing efforts
and the company's reduction in force in the fourth quarter of 2011.
Cost of sales was $2.5 million and $1.0 million for the full year and
the fourth quarter of 2011, respectively. Cost of sales for the full
year and the fourth quarter of 2011 included a write-down of $0.6
million for excess inventory. Cost of sales was $0.2 million and gross
profit was $1.1 million for both the full year and the fourth quarter of
2010.
Gross profit was $13.7 million and $2.9 million for the full year of
2011 and the fourth quarter of 2011, respectively. Expressed as a
percentage of net product sales, gross margin was 84.6% and 74.1% for
the full year and the fourth quarter of 2011, respectively, and 82.3%
and 82.1% for the full year and the fourth quarter of 2010,
respectively. Excluding the write-down of excess inventory, gross margin
would have been 88.1% and 88.6% for the full year and fourth quarter of
2011, respectively. A reconciliation of GAAP to non-GAAP gross profit
and gross margin is included with this press release.
SG&A expense was $69.8 million and $13.0 million for the full year and
the fourth quarter of 2011, respectively, compared to $36.6 million and
$16.7 million for the full year and the fourth quarter of 2010,
respectively. The increase in SG&A expense in 2011 as compared to 2010
was primarily due to the increase in costs associated with commercial
activities of Silenor as Silenor was initially made commercially
available during the third quarter of 2010. The decrease in SG&A expense
during the fourth quarter of 2011 as compared to the comparable prior
year period was primarily due to the reduction of the company's
marketing efforts and the company's reduction in force in the fourth
quarter of 2011.
Research and development expense was $1.3 million and $0.2 million for
the full year and the fourth quarter of 2011, respectively, compared to
$3.6 million and $0.6 million for the full year and the fourth quarter
of 2010, respectively.
For the full year of 2011, net loss was $59.3 million, or $1.27 per
share, compared with $38.8 million, or $1.16 per share, for the full
year of 2010. For the fourth quarter of 2011, net loss was $10.3
million, or $0.21 per share, compared with $16.0 million, or $0.42 per
share, for the fourth quarter of 2010.
At December 31, 2011, Somaxon had cash, cash equivalents and short-term
investments totaling $10.7 million, compared to $54.8 million at
December 31, 2010.
Financial Guidance for the Full Year of 2012
For the full year of 2012, Somaxon is lowering the range of its expected
total non-GAAP operating expense to approximately $15 to $16 million,
excluding non-cash, share-based compensation expense. Non-cash,
share-based compensation expense is expected to be approximately $3
million. The projected decrease in total non-GAAP operating expense for
the full year of 2012 compared to previous guidance primarily relates to
expected decreases in SG&A expense due to the reduced size of our sales
force and our overall headcount and the cancellation of the company's
planned direct-to-consumer advertising campaign for Silenor.
Actual financial results for the full year of 2012 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.
A reconciliation of non-GAAP operating expense to GAAP operating expense
is included with this press release.
Conference Call Information and Forward-Looking Statements
On Thursday, March 8, 2012, 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, 2011.
The conference call will be available to interested parties through a
live audio Internet broadcast at http://investors.somaxon.com/events.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) 941-6009 (domestic) or (480) 629-9819
(international), conference call ID 4516082. A telephonic replay will be
available for approximately two weeks following the conclusion of the
call by dialing (303) 590-3030, and entering passcode 4516082.
Discussion during the conference call may include forward-looking
statements regarding such topics as, but not limited to, the company's
commercial activities relating to Silenor, prescription trends, the
company's financial status and performance, including its 2012 financial
guidance, Somaxon's evaluation of strategic alternatives and any
comments the company may make about its future plans or prospects in
response to questions from participants on the conference call.
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. Somaxon's product Silenor, 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 company's web site at www.somaxon.com.
Safe Harbor Statement
Somaxon cautions readers that statements included in this press
release that are not a description of historical facts are
forward-looking statements. For example, statements regarding the
commercial performance and prospects of Silenor, the potential to
license OTC rights to Silenor to Procter & Gamble, Somaxon's financial
guidance and ability to maintain operating expenses at reasonable
levels, the process of seeking strategic alternatives and the ability to
derive stockholder value from one or more related transactions and
Somaxon's other activities and plans 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 Somaxon's business,
including, without limitation, Somaxon's ability to successfully market
and sell Silenor; the market potential for insomnia treatments, and
Somaxon's ability to compete within that market; the potential to enter
into an agreement with Procter & Gamble or any other third party
relating to over-the-counter rights for Silenor; Somaxon's ability,
together with any partner, to receive FDA approval for an
over-the-counter version of Silenor; Somaxon's ability, together with
its strategic advisor Stifel Nicolaus Weisel, to successfully enter into
one or more transactions to enhance stockholder value; Somaxon's 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; 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; Somaxon's ability to successfully enforce its intellectual
property rights and defend its patents, including any developments
relating to the 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 for Silenor; changes in
healthcare reform measures and reimbursement policies; the ability of
Somaxon to ensure adequate and continued supply of Silenor to
successfully meet anticipated market demand; Somaxon's ability to
operate its business without infringing the intellectual property rights
of others; Somaxon's reliance on its licensee, Paladin Labs, for
critical aspects of the commercial sales process for Silenor outside of
the United States; the performance of Paladin and its adherence to the
terms of its contracts with Somaxon; inadequate therapeutic efficacy or
unexpected adverse side effects relating to Silenor that could adversely
impact commercial success, 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 FDA's
agreement with Somaxon's interpretation of such results; and other risks
detailed in Somaxon's prior press releases as well as in its periodic
filings with the SEC.
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.
|
|
|
|
|
|
|
|
|
|
|
|
SOMAXON PHARMACEUTICALS, INC.
|
|
SUMMARY STATEMENTS OF OPERATIONS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended December 31,
|
|
Year ended December 31,
|
|
|
|
|
|
2011
|
|
|
|
2010
|
|
|
|
2011
|
|
|
|
2010
|
|
|
|
|
|
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Net product sales
|
|
$
|
3,915
|
|
|
$
|
1,344
|
|
|
$
|
16,155
|
|
|
$
|
1,382
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
1,015
|
|
|
|
241
|
|
|
|
2,493
|
|
|
|
244
|
|
|
|
Selling, general and administrative
|
|
|
12,991
|
|
|
|
16,702
|
|
|
|
69,758
|
|
|
|
36,579
|
|
|
|
Research and development
|
|
|
178
|
|
|
|
625
|
|
|
|
1,296
|
|
|
|
3,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
|
14,184
|
|
|
|
17,568
|
|
|
|
73,547
|
|
|
|
40,389
|
|
|
Loss from operations
|
|
|
(10,269
|
)
|
|
|
(16,224
|
)
|
|
|
(57,392
|
)
|
|
|
(39,007
|
)
|
|
Interest and other income
|
|
|
22
|
|
|
|
252
|
|
|
|
52
|
|
|
|
262
|
|
|
Interest and other expense
|
|
|
(15
|
)
|
|
|
(55
|
)
|
|
|
(1,940
|
)
|
|
|
(68
|
)
|
|
Net loss
|
|
$
|
(10,262
|
)
|
|
$
|
(16,027
|
)
|
|
$
|
(59,280
|
)
|
|
$
|
(38,813
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share
|
|
$
|
(0.21
|
)
|
|
$
|
(0.42
|
)
|
|
$
|
(1.27
|
)
|
|
$
|
(1.16
|
)
|
|
Shares used to calculate net loss per share
|
|
|
48,002
|
|
|
|
38,604
|
|
|
|
46,541
|
|
|
|
33,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOMAXON PHARMACEUTICALS, INC.
|
|
SUMMARY BALANCE SHEETS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(in thousands)
|
|
ASSETS
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
10,668
|
|
$
|
21,008
|
|
Short-term investments
|
|
|
-
|
|
|
33,809
|
|
Current portion of restricted cash
|
|
|
50
|
|
|
-
|
|
Accounts receivable, net
|
|
|
1,950
|
|
|
5,584
|
|
Inventory
|
|
|
264
|
|
|
991
|
|
Other current assets
|
|
|
1,003
|
|
|
1,882
|
|
Total current assets
|
|
|
13,935
|
|
|
63,274
|
|
Long-term portion of restricted cash
|
|
|
201
|
|
|
-
|
|
Property and equipment, net
|
|
|
634
|
|
|
755
|
|
Intangibles, net
|
|
|
1,089
|
|
|
1,102
|
|
Total assets
|
|
$
|
15,859
|
|
$
|
65,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Accounts payable
|
|
$
|
1,774
|
|
$
|
1,709
|
|
Accrued liabilities
|
|
|
7,054
|
|
|
5,699
|
|
Deferred revenue
|
|
|
-
|
|
|
3,459
|
|
Total current liabilities
|
|
|
8,828
|
|
|
10,867
|
|
Other long-term liabilities
|
|
|
490
|
|
|
-
|
|
Total stockholders' equity
|
|
|
6,541
|
|
|
54,264
|
|
Total liabilities and stockholders' equity
|
|
$
|
15,859
|
|
$
|
65,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOMAXON PHARMACEUTICALS, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of GAAP Gross Profit ($) and Gross Margin (%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
December 31,
|
|
Year ended
December 31,
|
|
|
|
|
|
|
2011
|
|
|
|
2011
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
Net product sales
|
|
|
$
|
3,915
|
|
|
$
|
16,155
|
|
|
Less: Cost of sales
|
|
|
|
1,015
|
|
|
|
2,493
|
|
|
GAAP gross profit
|
|
|
$
|
2,900
|
|
|
$
|
13,662
|
|
|
|
|
|
|
|
|
|
|
GAAP gross margin (expressed as a percentage of net product sales)
|
|
|
|
74.1
|
%
|
|
|
84.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP 2011 Gross Profit and Gross
Margin disclosure
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
December 31,
|
|
Year ended
December 31,
|
|
|
|
|
|
|
2011
|
|
|
|
2011
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
GAAP gross profit
|
|
|
$
|
2,900
|
|
|
$
|
13,662
|
|
|
Add back: Write-down of potentially excess inventory
|
|
|
|
570
|
|
|
|
570
|
|
|
Non-GAAP gross profit
|
|
|
$
|
3,470
|
|
|
$
|
14,232
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP gross margin (expressed as a percentage of net product
sales)
|
|
|
88.6
|
%
|
|
|
88.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP 2012 Operating Expense Guidance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
December 31,
|
|
|
|
|
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
GAAP operating expense
|
|
|
|
|
$
|
18 - 19
|
|
|
Deduct: Share-based compensation expense
|
|
|
|
|
|
3
|
|
|
Non-GAAP operating expense
|
|
|
|
|
$
|
15 - 16
|
|
Somaxon Pharmaceuticals, Inc.
Tran Nguyen / CFO
(858) 876-6500
or
PondelWilkinson,
Inc.
Rob Whetstone
(310) 279-5963
Source: Somaxon Pharmaceuticals, Inc.
News Provided by Acquire Media
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