Cornerstone Therapeutics Reports Second Quarter 2010 Financial Results

CARY, N.C., Aug. 5 /PRNewswire-FirstCall/ -- Cornerstone Therapeutics Inc. (Nasdaq: CRTX) today reported financial results for the second quarter and six months ended June 30, 2010.  

Total net revenues were $28.5 million for the second quarter of 2010, representing a 14% increase over the $25.0 million reported for the second quarter last year.  Total net revenues for the first six months of 2010 were $64.9 million compared to the $55.7 million for the first six months of 2009.

Net product sales from strategic products were 64% of total net revenues, or $18.1 million, for the second quarter, a substantial increase from the 20% of total net revenues for the second quarter of 2009.  For the first six months of 2010, net product sales from strategic products were 55% of total net revenue, or $35.6 million, compared to 25% of net revenues for the same period in prior year.

Cornerstone continues to grow revenues from its strategic specialty products with sustainable growth potential.  In order to focus on these efforts, the Company has decided to cease manufacturing and distribution of its marketed unapproved products by the end of 2010.  Cornerstone believes that this reinforces its commitment to its strategy and positions the Company well to obtain NDA and ANDA approvals for its pipeline products.   Cornerstone also believes it is well positioned to manage this transition as the Company expects to begin to generate revenues from its lead pipeline product in 2011.  Following the discontinuance of its marketed unapproved products, the only legacy products that will continue to be manufactured and distributed will be its propoxyphene/acetaminophen products, which are marketed subject to approved NDAs or ANDAs.

"Cornerstone has made significant progress over the last two quarters toward becoming a leading specialty pharma company in respiratory and related markets," said Craig A. Collard, Cornerstone's President and Chief Executive Officer.  "We continue to advance our pipeline and to execute our plan of transitioning our business away from unapproved products, which has allowed us to cease the manufacturing and distribution of these products by the end of 2010."

Gross margin was 71% and 77% for the three and six months ended June 30, 2010, respectively, compared to 88% and 89% for the comparable periods of 2009.  The lower gross margins compared to the prior periods were due to a relatively higher portion of our net product sales in 2010 being derived from products that have lower gross margins, specifically Curosurf®.

Selling, general and administrative expenses increased $1.2 million, or 10%, in the second quarter of 2010 compared to the second quarter of 2009 and $4.4 million, or 21%, for the six months ended June 30, 2010 compared to the same period in prior year.  The increase in selling, general and administrative expenses was primarily due to the addition of our hospital sales force in September of 2009, partially offset by reduced legal and consulting costs in the three and six months ended June 30, 2010, as compared to the three and six months ended June 30, 2009 when we incurred significant expenses related to the acquisition of Curosurf.

Royalty expenses decreased $3.0 million, or 53%, during the second quarter of 2010 compared to the second quarter of 2009 and decreased $4.7 million, or 39%, for the first six months of 2010 compared to the same period in prior year.  The reduction in royalty expense was primarily due to the reduction in revenue from one of our legacy products, offset by royalties for Factive® and Zyflo CR®.  GAAP net loss was $400,000 for the second quarter of 2010, or net income of $2.5 million on a non-GAAP basis.  GAAP net income was $4.6 million for the first six months of 2010, or $9.4 million on a non-GAAP basis.

As of June 30, 2010, the Company had $46.4 million in cash and cash equivalents, an increase of $27.6 million compared to December 31, 2009.

Key Financial Metrics

Conference Call Information

Cornerstone Therapeutics will host a conference call today at 8:30 AM ET to discuss its financial results for the quarter and six months ended June 30, 2010.  Management will also provide an update on the Company's strategy, operations and product development pipeline.  To participate in the live conference call, please dial 800-561-2813 (U.S. callers) or 617-614-3529 (international callers), and provide passcode 12677542.  A live webcast of the call will also be available through the "Investors—Webcasts & Presentations" section of the Company's website at www.crtx.com.  Please allow extra time prior to the webcast to register for the webcast and to download and install any necessary audio software.

The webcast will be archived for 30 days, and a telephone replay of the call will be available for seven days, beginning today at 11:30 AM ET, by dialing 888-286-8010 (U.S. callers) or 617-801-6888 (international callers), and providing passcode 28082122.

About Cornerstone Therapeutics

Cornerstone Therapeutics Inc. (Nasdaq: CRTX), headquartered in Cary, N.C., is a specialty pharmaceutical company focused on acquiring, developing and commercializing significant products primarily for the respiratory and related markets. The Company currently promotes multiple marketed products in the United States to respiratory-focused physicians, key retail pharmacies and hospitals with its specialty sales forces. The Company also has a late-stage clinical pipeline with a recent regulatory submission filing and four additional regulatory approval submissions targeted within the next three years. Key elements of the Company's strategy are to in-license or acquire rights to underpromoted, patent-protected, branded respiratory or related pharmaceutical products, or late-stage product candidates; implement life cycle management strategies to maximize the potential value and competitive position of the Company's currently marketed products, newly acquired products and product candidates that are currently in development; grow product revenue through the Company's specialty sales forces; and maintain and strengthen the intellectual property position of the Company's currently marketed products, newly acquired products and product candidates.

Use of Non-GAAP Financial Measures

This press release highlights the Company's financial results on both a GAAP and a non-GAAP basis.  The GAAP results include certain costs and charges that are excluded from non-GAAP results.  By publishing the non-GAAP financial measures, management intends to provide investors with additional information to further analyze the Company's performance and underlying trends.  Management evaluates results and makes operating decisions using both GAAP and non-GAAP measures included in this press release.  Non-GAAP results are not prepared in accordance with GAAP, and non-GAAP information should be considered a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP.  Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures attached to this press release.

Safe Harbor Statement

Statements in this press release regarding the progress and timing of our product development programs and related trials; our future opportunities; our strategy, future operations, anticipated financial position, future revenues and projected costs; our management's prospects, plans and objectives; and any other statements about management's future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Any statements that are not statements of historical fact (including, without limitation, statements containing the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "should," "target," "will," "would" and similar expressions) should also be considered to be forward-looking statements.

There are a number of important factors that could cause our actual results or events to differ materially from those indicated by such forward-looking statements, including risks relating to our ability to develop and maintain the necessary sales, marketing, supply chain, distribution and manufacturing capabilities to commercialize our products; our ability to replace the revenues from our marketed unapproved products, which we plan to cease manufacturing and distributing at the end of 2010; the possibility that the Food and Drug Administration (the FDA) will take enforcement action against us or one or more of our marketed drugs that do not have FDA-approved marketing applications prior to the end of 2010; patient, physician and third-party payor acceptance of our products as safe and effective therapeutic products; our ability to maintain regulatory approvals to market and sell our products with FDA-approved marketing applications; our ability to obtain FDA approval to market and sell our products under development; difficulties relating to clinical trials, including difficulties or delays in the completion of patient enrollment, data collection or data analysis; the results of preclinical studies and clinical trials with respect to our products under development and whether such results will be indicative of results obtained in later clinical trials; and the other factors described in Item 1A (Risk Factors) of our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the SEC) on March 4, 2010 and in our subsequent filings with the SEC. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements.

In addition, the statements in this press release reflect our expectations and beliefs as of the date of this release. We anticipate that subsequent events and developments will cause our expectations and beliefs to change. However, while we may elect to update these forward-looking statements publicly at some point in the future, we specifically disclaim any obligation to do so, whether as a result of new information, future events or otherwise. Our forward-looking statements do not reflect the potential impact of any acquisitions, mergers, dispositions, business development transactions, joint ventures or investments that we may make or enter into. These forward-looking statements should not be relied upon as representing our views as of any date after the date of this release.

Trademarks

Curosurf® is owned by Chiesi Farmaceutici S.p.A.  Factive® is owed by LG Life Sciences, Ltd.  Each of these trademarks is licensed to Cornerstone Therapeutics for sales and marketing purposes in the United States and, with respect to Factive®, certain other countries.

FINANCIAL TABLES FOLLOW

SOURCE Cornerstone Therapeutics Inc.